Entrepreneurs often fall into a “DIY trap” that starts as a means of survival. In the early days, business owners find themselves doing many things outside their area of expertise because if they don’t do them, they won’t get done.
As time goes on, the bookkeeping and accounting professionals become necessary, but they are often treated as “historians”, diligently reporting to the CRA what has occurred in the past.
But with success comes new challenges, and as far as life challenges go, taxation is a pretty good one to have.
“Taxation is only a problem because you’ve worked hard to earn an income and build wealth,” says Dave Lee, Scotia Wealth Management Senior Wealth Advisor, “but things can be a little more complicated for business owners.”
One unique challenge that many business owners face is that their income doesn’t follow a smooth path. They may pay themselves minimally for years to ensure the company can survive lean years, or their industry may swing between good times and bad times.
Unique challenges are where Dave’s colleague, Jennifer Poon shines. Jennifer is a highly accomplished tax professional and the Director of Advanced Planning at ScotiaMcLeod. She and her team, all Chartered Professional Accountants, are an integral part of Dave’s Total Wealth Planning team of experts.
“Every client is different, so I draw from a diverse range of solutions to help Dave’s clients create a taxation plan,” Jennifer says. “Looking backwards and filing tax returns is only part of the picture. The real benefit comes from looking forward, taking the time to offer creative solutions to future tax issues.”
“We’re not in competition with accountants in public practice. In fact, we work closely with our clients’ outside professionals, including accountants and lawyers, to achieve the best possible result overall.”
Tax solutions for small businesses
For individuals, tax planning starts with optimizing your RRSP, TFSA and taxable investment accounts and can also include income splitting and asset protection strategies. For business owners, Jennifer says there are a lot more options to consider.
“Corporate taxes can be quite complicated, and they often change when there’s a change in government. That means your tax plan should continue to adjust over time.”
For business owners, advanced planning is crucial. The most effective strategies often need to be in place for years to garner their full benefit. If owners get an offer to sell their business, inadequate preparation may prove costly.
“It’s really best if you put these plans in place from day one. In the early years many small businesses are in survival mode, and think tax planning is something they can defer. But it’s really important to get set up early!”
“Building wealth is not just about making money; it’s also about learning how to keep your money,” Dave adds. “When you’re already at the highest tax bracket, any additional income gives more than 50 cents of each dollar to the government. But we have strategies to mitigate those challenges.”
Call 604.535.4743 to book an appointment with Dave Lee in White Rock, or email dave.lee@scotiawealth.com to discuss investments, life insurance, retirement planning, estate planning, generating income and minimizing your taxes. Follow him on Facebook, Twitter and LinkedIn for more financial insights.
ScotiaMcLeod, a division of Scotia Capital Inc.