A corporation can be a fantastic financial planning tool. It gives flexibility on how to pay yourself, saves taxes, and helps to accumulate significant wealth. So, when is the right time to make the move and get incorporated?
Accountants will often give you two fallback answers, these are: only when you have money left over in the corporation and only when you’re making over $200k per year.
The problem is this advice is very generic and if you don’t do the due diligence you might be missing out on numerous benefits and leaving money on the table.
Each situation is different and requires a deep dive into how incorporating will specifically benefit you. The best way to find out is to sit down, identify your goals and see if a corporate structure will help you get there, regardless of your current income or savings.
If you plan to grow your business, as most people do, then incorporating often pays off for the following reasons:
- flexibility on how much personal income you can take
- thousands of dollars you can save on tax
- clever strategies you can use within the corporation to grow your wealth
- use of the capital dividend account to access tax-free capital
A financial advisor can help review your goals and find out if a corporation will help you reach them faster. To book a call, visit our Contact Page and we’ll run you through our process.