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How to pay yourself effectively

on Wed, 02/06/2013 - 11:53

"Entrepreneurship and Small Business" series, #5 (#4 How to manage your business; #3 Things to consider when you start your business; #2 What you should do before you quit your full time; #1 What needs to be prepared before you start your business; #6 The advantage of a business account; #7 Business budget made easy; #8 Last minute tax saving for corporations; #9 The federal disaster to small businesses and working class)

When you start running your own business, everything comes down to you. No matter how many people are working for you, at the end, you will be the one deciding what to do and where to go with your business, until one day, you have a board, and you need to consider what is good for investors and shareholders (that's going to be totally different talk and issue).

As much as we would like to have those worries, we have to build our business in a cost effective way FIRST. Other than what I had discussed here earlier on How to manage your business; you now needs to think of creative ways to keep hard earned money in your own pockets.

1. don't take all in salary, take dividends and bonus (An article from tax expert Jamie Golombek. Please discuss that with an accountant - CA or CGA destinations are always good, doesn't mean they are good though, but they charge a lot for sure)

- RRSP room is created only with salary
- Individual Retirement Plan
- Individual Pension Plan
- explore other ways to create retirement funds

2. Keep extra earnings in your company, funnel only what you need to your personal level

3. set up Health Spending Accounts for all your medical expenses, pays from the company as an expense, goes into personal level as tax-free benefit

4. set up group RRSP for yourself and your employees, pay from company, goes into personal level

Contact us for more info on how to keep money in your own hands and minimize tax due.

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