pramble: terribly rambly post. hope you don't lose too many brain cells on it, cause I'm just highlighting (again) the differences between our two situations, but you certainly know more about how to handle my situation than I do. I guess for conversation purposes its best that we just focus on the whole retained earnings in CC funds issue.... now to it.
I definitely won't deny that I'm uninitiated to the corporate world. I've only been a business owner for 6 months now so I'm very much trying to figure out what all the possibilities are. I won't deny that there's a pile more research I can do. It's why I'm engaging conversation with folks such as yourself. And my comments about getting creative aren't meant to be cocky but to challenge others to think to some extremes. Specifically in my line of work I find most people often revert back to the established ways of doing something because it works for more situations. My situation is definitely not like most people, nor is it like most business owners (as you acknowledge too). If that sounds egotistical, I don't know what else to say on that front.
I'm curious as to why you'd say there's no advantage to dividends when the dividend tax credit exists. (
http://www.taxtips.ca/dtc/enhanceddtc/amt.htm#non-eligible-dividends) seems to indicate that $36,160 can be received in dividends from a small business with no tax owing (provided you live in ON). After that floor, I understood that there's a bit of an optimization required to balance the remuneration to achieve the most efficient taxation. Either way we're talking about more than enough cash for my lifestyle (which is why I left a $100k/a profession to go into business for myself). The rest is retained earnings that I can use to diversify my business and secure those dividends (and *eep* salary if needed) into the future. the 40-60k that i was mentioning previously was from some hastily jotted down notes I took when discussing a structure with my accountant. I'll have to get a better understanding from him as to where those numbers came from.
so on the front of retained earnings (which is where you started this thread), have you found any better interim use for retained earnings other than Corporate class funds while you're accumulating for the next business venture? the capital gains hit at the end is simply unavoidable (and its a preferable situation to be in rather than having a capital loss with which you can offset the gain I assume?).
my previous post was not about the company holding the real estate for rental purposes but being the mortgage financier. the logic for both situations follows, in that the employee must pay a market equivalent rate, and yes the corporation would have a capital gain on passive investment.
Totally understand why you'd drop the PHSP if you have employees. I basically have no health concerns; no ongoing medications even. PHSP was essentially half of the financial benefit for me to go on my own; the ability to provide an efficient at-cost option for anything our great healthcare system doesnt cover already, while avoiding the added cost of "insurance" during a time in my life when i'm already an exceptionally low risk.
again, sorry for how my comments had come across.
I guess the grand purpose of my posting is that I'm curious as to your thoughts about the options that are available to someone like me. you can see that I retain a very high amount of earnings (in fact i will have personally gone a year on my own savings before needing to withdraw any of the corporate earnings). I can comfortably get by on the combined basic personal amount (or a bit more if paid by dividend). I guess what I'm saying is, getting back to your original comment about retained earnings, is there anything more efficient than corporate class until you can get into another business? I mean aside from having a minority stake in another corporation that you are able to continually buy more and more stake in at will, that actually generates an active income for your corporation. the trouble I get into is that I can barely keep myself employed full time at this time (and that's fine by me). I can't justify taking on a salaried employee, because my payment standards are terrible. growing my existing core business is difficult in that regard, and the retained earnings should be doing something aside from eroding due to inflation. CCETFs (
https://www.purposeinvest.com/) are really the only "sure bet", in that my personal investments are tied up in ETFs as well. trying to get away from the capital gains is a good problem to have, and if you can't avoid the capital gains then you just need to smile because at least you made money right? no way to roll those CCETFs into a different active investment right?
