Planning for Your Corporate Taxes
You work hard for your money (cue Donna Summer). You’ve been smart and built a team of advisors, some of whom have helped you to incorporate your business. Incorporating your business can provide immediate tax relief, a layer of creditor protection, and may also allow for your business to succeed well into the future. But with success comes the question: What do you do with your growing cash?
As your business grows, cash begins to accumulate. Choosing to take it out of the company leaves you facing a hefty tax bill. When accounting for the taxes paid on corporate income, plus the taxes paid on dividends, you’re looking at around 47-48% in total taxes paid in Alberta. On the other hand, investing inside of your company used to make a lot of sense, but with taxes on passive assets currently over 48%, and new rules on passive income for small businesses, it is becoming a less favourable option. What is a business owner to do? Luckily, you have options.
It is important to determine what you want to do with your hard-earned money. There are many avenues you can take when it comes to your financial future. Whether you wish to plan for retirement or set up future generations, a plan should always be in place.
Have you been neglecting your retirement planning? As a business owner, it is common to put off planning your retirement as your focus has been on your ongoing business. However, it is still important to keep retirement in your line of sight.
An Individual Pension Plan (IPP) might fit the bill:
- Significant tax-sheltered investment opportunities
- Immediate transfer of corporate assets to personal creditor proof options
Maybe you’re more interested in making sure your future generations are set up financially. If that’s the case, you have options including a concept referred to as a Corporate Estate Bond which allow the business owner to:
- Shelter sizeable retained earnings within your corporation in a creditor protected, tax efficient manner
- Have increased control of the future of assets of your corporation
- Possibly pass on a significant tax-free legacy to your heirs
If your intent is multi-generational, there are significant planning opportunities using insurance, philanthropy, and leverage with corporate assets.
We’re on your side
Sometimes, it is not a particular concept that fits the bill but making sure you have someone on your side that speaks your language. The team at Sagium is happy to help you with your corporate tax, retirement, and succession planning to ensure your hard-earned business assets are assured.
Contact your Sagium Wealth Strategist if you need support. We are here to help!