For many business owners, your company isn’t just your career—it’s your baby. But as you think about the future, it’s important to create a financial plan that lasts beyond your business. Building a “pension-like” investment through your corporation has the potential to set you up for retirement with a steady income stream, whether through salary or dividends.
Here’s how you can make it happen while maximizing the benefits of your business structure:
Create a “pension-like” investment plan
Your business can do more than provide income now—it can secure your retirement too. By creating an investment account within your corporation, you’re setting up a future income stream that stays intact even if you sell the business. This could allow you to draw a salary or dividends in retirement, ensuring financial stability while your savings keep working for you.
Use corporate investment accounts to maximize tax efficiency
One of the perks of investing through your corporation is paying taxes at the corporate rate, which is generally lower than your personal rate. By triggering tax on your investments within the corporation, you keep more of your money growing in the account. This strategy can offer significant savings over time while keeping your funds in a tax-efficient environment.
Keep your money in your corporation
Investing in your corporation lets you defer personal taxes until you decide to pay yourself. Essentially, you’re using after-corporate-tax dollars for investments, and personal tax is only triggered when funds are withdrawn. This deferral allows your money to grow longer, giving you flexibility and greater control over your financial future.
Enjoy access to a full range of investment options
A corporate investment account doesn’t limit you to basic investment tools—you still have access to a broad spectrum of choices. As the business owner, you’re in the driver’s seat. You decide on the level of risk, timeline, and financial objectives, creating a strategy that aligns with both your business and personal goals.
As of June 2024, capital gains realized within a corporation now have an inclusion rate of 66%, increased from 50%. This means 2/3 of your capital gain is taxable at the corporate rate, so careful planning is essential. While this change might seem daunting, with a smart investment strategy, you can still grow your savings efficiently. Be sure to consult with your financial professional to create a strategy that works best for you and your business.
To summarize the above, saving through your business isn’t just about wealth—it’s about creating financial freedom for the life you want after work. By leveraging the benefits of corporate investment accounts and staying mindful of tax strategies, you can turn your business into a powerful tool for your future.
Curious about how to make your business work harder for you? We can start a conversation and explore how to create a plan that works for your goals—today and tomorrow. Check out my website Julie Shipley-Strickland – Wellington-Altus Private Wealth and don’t forget that I’m always putting up important financial tidbits and updates via my Wealth With Julie Instagram.
