Running a business is not easy! You have a lot to consider and of course on top of that you must run your underlying business. Along with this, there are several planning and structural changes that we can consider. You can focus on running your business or practice and I can help you make that more tax efficient and help you save for your future. While I cannot explain the full mechanics and how it could apply to you directly below, here are a few considerations:
Use your business to pay for a pension plan for the employee(s), AKA, you! Sometimes when you run your own corporation, you can look longingly at the pension plans that companies offer their employees and think it would be great to have this for yourself. Well, we can set that up for you! This is an incredibly attractive possibility for you because the corporation gets the tax advantage, and the savings are for you individually. There is also the potential here to have the savings exceed what is allowable in your RRSP.
One of the issues facing business-owners and those who are eligible to have Professional Corporations, is the tax on passive income. This tax can be avoided by investing within an insurance policy, which is of significant benefit. There are also estate planning and business transfer planning options that we can implement here, assuming this is sensible in your situation (it is not for everyone).
Having cash in your business and investing this can be taxed heavily to say the least. In Alberta, in 2019, that tax exceeds 50%, and there are other problems that arise from this as well. That said, I have a strategy that we can implement that allows you to invest through your corporation and not receive a tax distribution or tax slip. That means the tax is deferred, which is an enormous benefit for your business!
How much should you be saving? Will you have enough to support your lifestyle during retirement? Will you outlive your savings? These are all critical questions on the mind of most pre-retirees. I can work through these questions with you and provide concrete answers and strategies to deall with these factors.
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