As you can see, incorporation generated an additional $70,000 in cash flow because of the lower tax rate. That money can grow inside the corporation. In the future, you will be able to choose from a variety of tax-effective ways to access those savings. For example, by putting the right corporate structure in place now, you may, at age 65, have an opportunity to pay dividends to a spouse, even if he or she had no direct involvement in your professional practice.
1. Unique retirement planning opportunities
Incorporating allows you to create an Individual Pension Plan (IPP). Tax deductible contributions to an IPP increase as you age. Once you are 40 years of age or older, the maximum contributions to an IPP will exceed the annual limits on RRSPs. That means you can invest more money in a tax-deductible, tax- deferred and creditor-proof plan than you could using RRSPs alone. To take advantage of the IPP, you must be an employee and therefore your practice must be incorporated. Click here to find out more about IPP.
2. Greater security
You can hold a wide range of personal and professional insurance policies in your professional corporation, paid for using pre-tax dollars. In addition to risk protection, permanent life insurance can play an important role in your overall estate and retirement plan. An IG Wealth Consultant can engage one of our insurance experts to help you choose the best and most affordable combination of corporate and personal coverage for your needs.
Let us show you how
Speak to an IG Consultant to learn more about the advantages of incorporation. We can help you set up and manage your new corporation and provide an objective assessment of how to enhance your overall financial well-being.