Investments and Incorporation with Coal Harbour Law
In our most recent sit down with Nathan Lidder from Coal Harbour Law our discussion surrounded the needs of Business Owners.
In this video we discuss everything a business owner needs to know about incorporation. We also discussed how business owners can utilize Life Insurance to protect their business and further their investments.
What is Incorporation?
Incorporating a company is creating a new stand alone legal entity that helps business owners shield themselves from personal liability. The process of incorporating a company starts by meeting with a lawyer to discuss your current and future goals. This helps determine the share structure as well as if it should be a provincially or federally incorporated company.
What does the Maintenance of Incorporations entail?
One of the things you have to do right away when you set up an incorporation is creating a minute book, which keeps all of the corporation’s important documents. The minute book must be kept somewhere where it is available to the public from 9am-5pm, and must be kept up to date.
What are the Financial Benefits of Incorporation?
Being incorporated allows you to control how much you pay yourself. Another advantage is that you are taxed at a corporate rate, which is usually much lower than personal rates of income tax.
What is a Capital Dividends Account?
It’s a notional account, created when a business owner passes away and it allows funds or assets to flow to their beneficiaries in a tax-free way. This concept is important to us because when Life Insurance creates a capital dividend account (CDA).
How to Leverage your Life Insurance for Investing?
Business owners can hold insurance within their companies, and those policies can hold a tremendous amount of cash. Usually a business owner’s retained earnings at the end of the year are wrapped inside the policy. This benefits them by gaining a dividend from the insurance company every year, and because these policies are so secure they can be used as collateral for a loan which can be used for additional investments.
What is Key Person Insurance?
Key person insurance, or key man insurance, pays out a lumpsum if something happens to a person vital to the business. This helps with bills, as well as buying out shareholders if need be.
Contact Us
At Safe Pacific Financial, we specialize in helping Canadian business owners, incorporated professionals, and investors structure life insurance for maximum wealth protection, tax savings, and business growth.
If you would like to discuss whole life insurance or investments, we’re happy to chat and see if we can be a good fit to work with you. Fill out our contact form and we will get back to you within 24 hours on business days.
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