PAY LESS TAXES BY INVESTING IN A PENSION PLAN
Every seasoned business owner understands that there are tax implications to just about every financial decision they make. This includes the money that you reinvest into your business, and what you decide to spend on your family’s lifestyle and basic needs. Because every business is different, every financial situation is unique, and every industry requires tailored financial solutions—it’s important to understand the implications for YOUR finances.
COMMON TAX QUESTIONS
If you’ve got questions about your specific tax situation, and what an ideal and optimized tax payment should be for your particular finances—you’re not alone. At WiseInvest, this is one of the most common tax questions we receive from business owners.
This all boils down to one issue: How can I reduce my tax payments? Spend less? Spend more? Pay yourself more? Pay yourself less? This is an extremely delicate situation, and one that can lead to legal implications if not done carefully. Tax evasion is not pretty and can come with some hefty financial and legal ramifications.
WAYS TO LEGALLY LOWER YOUR TAX PAYMENT
If you’re an existing business, the first thing a tax and finance professional is going to do is work to identify eligible expenses that can be paid out of the corporate pocket that will immediately reduce your tax burden.
If you’re just starting out, then understanding that you should immediately contact a professional BEFORE structuring your corporation is monumental. This will allow WiseInvest to help you build an extraordinary foundation for your business’ future success.
PENSION PLANS
WiseInvest will be releasing many of these tax tips, however we wanted to stay with an area that many people are familiar with: Pension Plans. Pension plans are an excellent tool that allows your corporation to invest in your future on your behalf. Paying into a pension plan via your corporation also helps lower your corporation’s taxes. While many people choose to invest in RRSPs, rethinking that strategy and pivoting towards pension plan investment is actually more beneficial in many cases.
This often overlooked technique works on several levels. Firstly, you’re investing into your retirement. Everyone wants the comfort and peace of mind of knowing that their golden years are going to be comfortable. Secondly, in certain cases it will reduce your overall yearly tax spend for both your corporation, and persona (All contributions, advisory fees, and management fees are tax deductible for corporation). Third, you can add family members to the plan if they work for the business, which is an excellent way for everyone to benefit and transferring estate. Fourth, Pension laws are far more generous than RRSP laws which let you invest more for your retirement than RRSP.
The Pension Plan strategy is an example where paying from the corporate pocket, rather than the personal pocket, works out in your favor.
Stay Tuned for more tax tips! We’re passionate about taxes!
