Financial advisor for business owners

Financial planning for owners of incorporated businesses. Kaetyn St. Hilaire, CFA, connects the business to your personal plan: how you pay yourself, retained earnings, an individual pension plan and the sale that funds your retirement, for owners in Calgary and across Canada. For the structure itself, see corporate planning.

How you pay yourself decides what the business builds for you outside it: RRSP room, CPP, an IPP or retained capital.

Salary is deductible to the corporation and creates RRSP room at 18% of earned income. A salary of about $188,000 creates the full 2026 limit of $33,810 the following year. It also brings CPP contributions on both the employer and employee side.

Dividends are paid from after-tax corporate income and are not deductible. They create no RRSP room and no CPP, but they leave more capital inside the corporation and let you choose the year you take income.

Once the corporation's adjusted aggregate investment income passes $50,000 in a year, its $500,000 small business limit shrinks by $5 for every $1 over, and is gone at $150,000. How retained earnings are invested matters as much as how much is retained.

Dividends to a spouse or adult children who are not actively engaged in the business are generally taxed at the top rate under the tax on split income rules. The exceptions, for actively engaged family, excluded shares in non-service businesses and a spouse once the owner is 65, need to be documented.

An IPP is a defined benefit pension registered for the owner of a corporation. It turns salary into a larger, deductible retirement contribution.

For owners in their late forties and beyond who pay themselves a T4 salary, an IPP typically allows substantially larger deductible contributions than an RRSP. The corporation funds it, deducts it and may be able to fund past years of service.

An IPP needs actuarial valuations, annual filings and ongoing contributions, and its assets are locked in. It also moves capital out of the passive income calculation, which can protect the small business rate.

An IPP takes the place of the RRSP for the years it covers, and the pension adjustment it creates leaves little RRSP room. The comparison turns on your age, your salary history and how long you will keep drawing a salary.

For owners with retained earnings, properly structured permanent life insurance owned by the corporation can grow on a tax-deferred basis outside the passive income rules. On death, much of the benefit can be paid out tax-free through the capital dividend account.

Buyers often prefer assets; sellers usually prefer shares, because a share sale can use the lifetime capital gains exemption. The difference in after-tax proceeds can run to hundreds of thousands of dollars.

The exemption, $1.25 million since June 2024, applies to shares of a qualified small business corporation: at least 90% of assets used in an active business at the sale, more than 50% throughout the 24 months before it, and shares held for 24 months. Surplus investments may need to move to a holding company first.

Purifying the balance sheet, reviewing who owns shares and planning where the proceeds will be invested all take time. Problems fixed early are cheap; on short notice some cannot be fixed at all.

Sale proceeds, a holding company, RRSPs, an IPP, CPP and OAS each have their own tax treatment. Drawing them in the right order, rather than spending the sale cash first, can keep you in lower brackets for longer.

Kaetyn is a Calgary-based financial advisor who works with high earners and medical professionals, particularly physicians and dentists navigating the financial complexities that come with high-income careers. He focuses on actionable strategies: the salary-dividend mix inside a professional corporation, RRSP and TFSA contributions, and a long-term investment plan.

A complimentary, no-obligation conversation about your business, your corporation and your goals, and a clear explanation of how we can help.