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Investing as a Business Owner

November 30, 2019/in Blog, Business Owners, corporate, Investment, rrsp, Tax Free Savings Account /by Keyens Financial Services

Investing as a Business Owner

Many business owners have built up earnings in their corporation and are looking for tax efficient ways to pull the earnings out to achieve their personal and business financial goals such as:

  • building and protecting your savings

  • providing for loved ones

  • planning for retirement

Factors to consider when investing as a corporation:

What’s the purpose of the investment? First, think about what you’ll be doing with your savings. This will help dictate what savings vehicle is best suited for your situation. Then consider the following factors:

  • Taxes: As a small business owner, you have access to the small business tax rate which is typically lower than your personal tax rate. (See table below.) Also, as of January 1, 2019, the Federal Budget decreased the small business limit for corporations with a set threshold of income generated from passive investments.

2019 Corporate Income Tax Rates

  • Taxes on investment growth: Depending on what you invest in, you will want to review this as different asset types are taxed at different rates.

  • Timing: You can control the timing of the payout which means you could potentially defer paying out the money until you need it and determine if you’d like to pay it out as salary or dividend.

  • Creditor Protection: Sometimes, investments held inside a corporation can be vulnerable to creditors, therefore you may want to consider using a holding company or trust or pay out money to yourself personally. This can be complex and requires professional advice.

  • Capital Gains Exemption: If your investment grows too large, it may endanger your qualification for the lifetime capital gains exemption that ‘s available when shares of a qualified small business corporation are sold or transferred.

For business owners, before investing personally or corporately, it’s certainly worth seeking professional advice to ensure that it suits your individual circumstances. 

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  • Investing as a Business OwnerNovember 30, 2019 - 8:00 pm
  • Business Owners: 2019 Tax Planning Tips for the End of the YearNovember 28, 2019 - 7:45 pm
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Keyens Financial Services Inc.
Narendra Sukheja
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451-2 County Court Blvd
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L6W 3W8

Latest News

  • Investing as a Business OwnerNovember 30, 2019 - 8:00 pm
  • Business Owners: 2019 Tax Planning Tips for the End of the YearNovember 28, 2019 - 7:45 pm
  • 2019 Tax Tips for EmployeesNovember 21, 2019 - 10:00 pm

About

Narendra is Canadian Chartered Investment Manager, Certified Financial Planner, Retirement Planning Specialist & Licenced Insurance adviser, he is also qualified Indian Chartered Accountant & Cost & Management Accountant with more than 25 years of progressive experience and strong knowledge in Insurance, retirement planning, financial planning, risk management, cash flow management, investment and portfolio management, accounting, bookkeeping, personal & small business taxes.

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