Most Canadian business owners are concerned with being able to retire, as well as managing cash flow in profitable and challenging times, finds a BMO Wealth Institute survey.
They’re also worried about paying themselves fairly, paying too much tax, handling the business if a key employee quits or leaves, taking care of family members if incapacitated and managing business succession planning.
On top of this, 75% of entrepreneurs said they are focused on making improvements in their operations and 56% are seeking to grow their businesses aggressively.
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BMO outlines several considerations for business owners:
1) Income options: Being paid by salary, dividends or a bonus can have different ramifications for the entrepreneurs and the business. Varying provincial tax rate advantages and tax-deferral options should be considered.
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2) Minimizing taxes: Combining both personal and business taxes is beneficial to entrepreneurs. Leaving personal funds in an incorporated business can help to minimize taxes and reduce reliance on lines of credit.
3) Insurance needs: Finding a suitable insurance plan for the entrepreneur, her family and her business requires specific knowledge.
4) Minimizing risks: Using ownership structures, such as holding companies or family trusts, can help reduce the risk of owning a business.
5) Income splitting: Allotting assets or income to a spouse or other family members can be implemented to reduce the family’s overall tax bill.
6) Tax-advantaged savings plans: Look at Individual Pension Plans, Pooled Registered Pension Plans, TFSA, insurance retirement plans and group RRSPs.
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7) Investment management: Examine liquidity, risk and short- or medium-term cash needs.
8) Credit management: Ensure that personal and business credit needs are met so funds are always accessible.
9) Succession planning: 69% of entrepreneurs do not have a formal written succession plan, so make sure your client isn’t one of them.