Business owners
Incorporated and leaving money in the company? Make it work harder.
Salary or dividends. What to do with surplus cash. What happens to the business if something happens to you. We work through all of it with your accountant.
Sound familiar?
If any of this is you, you're in the right place
Cash is building up in the company and sitting in a bank account
You're paying the low small-business rate on it, which is good. It's earning almost nothing, which isn't.
You take dividends because someone said so, not because you checked
Dividends mean no CPP and no RRSP room. Salary means both, plus a deduction for the corporation. The right mix changes with your situation.
Your business partner's share would go to their family if something happened
Without a funded agreement, you could end up in business with your partner's spouse. Or they with yours.
What we do about it
Use the corporation the way it was designed to be used
- Decide how to pay yourself. Salary, dividends or a mix, worked out with your accountant for your income and your province.
- Put the surplus to work. Invest inside the corporation without tripping the passive income rule that erodes your small business rate.
- Protect the business. Key-person coverage, a funded buy-sell agreement, and disability coverage for the person the business can't run without.
- Plan the exit. How to take money out in retirement, and how to pass the business or its value on, without handing half of it to tax.
What it costs
The plan costs you nothing
You will not receive a bill for the call, the written plan or the yearly reviews. When we put your plan into action, we're compensated by the financial institution it's placed with. We explain exactly how that works before you decide anything, and there is no obligation after the call. Full details here.
Who you'll work with
Planners who've sat where you sit
Most of our advisors built their careers after arriving in Canada. We know what it's like to earn well and have no idea how the system works here. Meet the team →
Answers
Questions people ask us before they book
Common questions
Questions people ask us
Should I pay myself salary or dividends from my corporation?
Salary is deductible to the corporation, builds RRSP room and CPP, but costs CPP contributions. Dividends don't build RRSP room or CPP, but can be simpler and sometimes lower-tax depending on your province and income. Most owners end up with a mix, worked out each year with their accountant. Zenith Advisory coordinates this with the rest of your plan.
What happens to investment income inside my corporation?
Passive investment income (interest, dividends, capital gains) inside a corporation is taxed at a high rate initially, with part refunded when you pay dividends out. Separately, if passive income exceeds $50,000 in a year, your small business deduction limit shrinks by $5 for every $1 over, disappearing entirely at $150,000. Planning around this rule is one of the main things we do for incorporated clients.
Do I need key-person or buy-sell insurance?
If the business would struggle to survive the death or disability of you or a partner, yes. Key-person coverage gives the company cash to recover. A funded buy-sell agreement gives the surviving owner the money to buy the deceased partner's share from their family. Both can usually be owned and paid by the corporation.
How do I take money out of my corporation in retirement?
Through a combination of dividends, winding down the corporation gradually, an Individual Pension Plan, and in some cases corporately owned insurance that creates a tax-free capital dividend. The right order depends on how much is inside, your other income and your estate goals.
Will you work with my accountant?
Yes, always. Your accountant handles the tax filing and the corporate structure; we handle the planning, protection and investments. The two have to fit together, so we talk to each other.
Get started
Your next step is a 30-minute conversation
- Book your free call. 30 minutes, no prep, no obligation.
- Get your written plan. Where you are, where you're going, and exactly what to do, in one document you can read.
- Put it to work. We implement it with you and review it every year.