What should you do with money in your corporation?
You’ve left money in the company. Should it stay there, come out to you, or help fund retirement? Start with what the business needs and what you want the money to do.
See how the options differ and what we could review together.
No details needed. Start with the question on your mind.
THE BUSINESS OWNER’S NOTEBOOK02
Bring the important pieces together.
01
For the business
Operations. Reserves. Opportunity.
+
02
For your future
Retirement. Family. Transition.
Start with the question on your mind.
THE STARTING POINT
Retained earnings are accumulated profits kept in the company, not a separate pot of cash. Some of that value may already be tied up in equipment, inventory or unpaid invoices. Start with available cash after obligations, not the retained-earnings balance alone. [1]
01
Today
What resources does the business need?
02
Tomorrow
What income and flexibility will you need?
03
Coordination
How do tax, legal and retirement decisions fit?
A FEW MINUTES. BETTER QUESTIONS.
Start with a situation.
Choose a situation and save the questions you would like to discuss. These prompts are general information, not individual advice.
AN ILLUSTRATIVE SITUATION
The company has cash. Is it all surplus?
An owner sees a healthy bank balance after a good year, but taxes, payroll and a planned equipment purchase are still ahead. Money needed soon has a different job from money that can stay invested for years.
WHAT TO COMPARE
Set aside operating needs and a reserve first. Then compare reinvesting in the business with setting aside a long-term surplus. Investing money you may need shortly can leave you selling at the wrong time.
Illustration only. Your circumstances and contract terms matter. [1]
What would you like to discuss?
Choose the questions that fit.
AN ILLUSTRATIVE SITUATION
You want company money to support personal goals.
An incorporated owner wants to pay down a mortgage or add to personal savings. Moving company money to a personal account needs a proper payment and tax treatment.
WHAT TO COMPARE
Ask your accountant to compare salary, dividends and any other legitimate amounts payable to you. Compare the after-tax amount you keep, timing, payroll requirements and retirement effects. A shareholder loan is not a general tax-free withdrawal route.
Illustration only. Your circumstances and contract terms matter. [1]
What would you like to discuss?
Choose the questions that fit.
AN ILLUSTRATIVE SITUATION
You don’t need the surplus for several years.
An owner has business reserves and wants to compare investing inside the company with withdrawing money and saving personally. Neither location is automatically better.
WHAT TO COMPARE
Compare personal taxes on withdrawal, available RRSP or TFSA room, investment taxes, fees, risk and access to the money. Corporate passive income can affect the federal small-business limit under applicable rules. Your accountant should model the whole picture, alongside a suitably licensed investment professional.
Illustration only. Your circumstances and contract terms matter. [1]
What would you like to discuss?
Choose the questions that fit.
AN ILLUSTRATIVE SITUATION
You want retirement income without relying on a quick sale.
An owner hopes to reduce work in a few years, but the sale date and price are uncertain. A retirement plan needs to work through that uncertainty.
WHAT TO COMPARE
Map household spending against personal savings, pensions, company assets and possible sale proceeds. Compare staged withdrawals and a later sale. If an IPP or RCA is raised, first ask whether the added funding commitments, fees and administration solve a need simpler options don’t.
Illustration only. Your circumstances and contract terms matter. [1]
What would you like to discuss?
Choose the questions that fit.
Compare what each option does.
Open an option to see where it may help and what to weigh.
01Keep a corporate reserve+
Useful for near-term bills, slow periods and opportunities. The tradeoff is leaving less available for other goals. Set the reserve from cash-flow needs rather than a round number. [1]
02Withdraw and save personally+
Can support personal goals and available registered plans. The tradeoffs include withdrawal taxes and contribution limits. Compare what reaches you after tax, not just the amount leaving the company. [1]
03Invest inside the company+
May suit money the business will not need soon. Compare liquidity, risk, fees and corporate investment tax with personal alternatives. A corporate investment account is not a personal tax-free account. [1]
04Consider an IPP or RCA+
These are specialist retirement arrangements, not a default next step. An IPP is a defined-benefit registered pension plan; an RCA is a distinct employer-sponsored arrangement. Eligibility, funding, pension adjustments, refundable tax where applicable and ongoing costs need actuarial and accounting review. [1]
A little more clarity.
Does paying myself dividends create RRSP room?+
Dividends do not count as earned income for creating RRSP room. Salary generally does. Existing room and pension adjustments also matter. Have your accountant compare the full compensation picture. [1]
Should corporate life insurance be my first investment choice?+
Start by identifying an insurance need. Corporate insurance can help with a death-related funding or estate need, but it is a different commitment from accessible savings. Compare reserves, personal savings and investment alternatives before deciding. See the corporate insurance resource for ownership and cash-access tradeoffs. [1]
Who can help put the pieces together?+
I can help clarify your priorities, review insurance needs and identify what needs closer review. Your accountant handles tax projections; investment recommendations need the appropriate licence. Where an IPP or RCA may fit, I can introduce an actuarial firm alongside your accountant. [1]
A RELATED QUESTION
Has corporate insurance been suggested for your surplus?
Tell me what you want the money to do and when you may need it. We can identify the choices worth comparing and the projections to ask your accountant for. You don’t need to send financial statements to start.
I help people make clearer decisions today, before life forces harder ones later.