I am a shareholder in an S corp in the state of MO. Can you explain how profits are to be distributed. I am not an employee.

An S corporation is a regular corporation that has elected "S corporation" tax status. Distribution of profits in an S-corporation is governed by Subchapter S of the IRS code.

In a regular corporation (also known as a C corporation), the company itself is taxed on business profits. The owners pay individual income tax only on money they receive from the corporation as salary, bonuses, or dividends.

By contrast, in an S corporation, all business profits and losses "pass through" directly to the owners, who report them on their personal tax returns (as in sole proprietorships, partnerships, and LLCs). The S corporation itself does not pay any income tax, although an S corporation with more than one owner must file an informational tax return, like a partnership or LLC, to report each shareholder's portion of the corporate income. This is what is referred to as a "pass-through" business entity.

S-corporations may only have one class of stock, and the distribution of profits is based on a percentage ownership. So, if your corporation is showing a profit, in theory the profits should be passing through to you in the form of cash or check based on your percentage ownership. If you are not recieving any distributions, it could be because one of the other shareholders has a great basis than you (accounting in a S-Corp is very similar to partnership accounting, in that actual investment in the company is treated as a basis for distribution of income and losses). Any distributions of profit would be reflected on the K-! you receive each year. The best person to discuss this with would probably be your corporation's accountant, if you know who that is, or the corporation's treasurer.