which one of the following is not necessary in order for a corporation to pay a cash dividend? This is a topic that many people are looking for. star-trek-voyager.net is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, star-trek-voyager.net would like to introduce to you Should I Pay Myself Salary or Dividends from my Corporation?. Following along are instructions in the video below:
“My name is alan madden. I m. A chartered accountant and a tax expert in in the mississauga oakville in toronto regions of ontario. Canada.
The topic of today s video is should i pay myself salary or dividends from my corporation as a business owner that s a very common question that i have encountered in practice and can make a big difference in your bottom line. So it s important that you watch this video to answer that question we re going to look at the advantages and disadvantages of both salary and dividends salary. The biggest advantage of salary is that salary is considered earned income for rrsp purposes. What that means is that salary increases your rrsp room.
So if you like to contribute to your rsps for saving for your retirement. Then salary may be the way to go for you the second advantage of salary is that it s a type of provable income for financing purposes..
So if you are planning on borrowing a line of credit or purchasing a new home and applying for a mortgage with salary you have provable income such as paychecks and pay stubs that you can provide to your banker. And that would help them qualify you for the loan. The third advantage of salary is that it s subject to canada pension plan premiums so. If you d like to contribute to cpp because you are saving for retirement and will therefore.
Enjoy the 900 a month. Currently that s provided at the highest level for retirees in canada. Then salary is the way to go for you what are the disadvantages of salary that may cause you not to take this method of pay from your corporation. One of the biggest disadvantages of salary is that it s administrative ly cumbersome and difficult you may in fact have to hire an accountant to manage your payroll with salary you re required to determine the amount of source sections cpp.
I and income tax to be deducted from your paycheck. As well you must remit on the 15th of every month..
Those source seductions. So it can be cumbersome and you may not have the time to do it or you may not want to spend the amount of money to pay an accountant to look after your payroll for you let s go to the advantages and disadvantages of dividends. So you can contrast that you the biggest advantage of dividends is that it is a lower tax rate than. Salary and in.
Fact the first 40000. Of dividends can be received completely tax. Free that s right you can receive 40000. Of dividends without paying any tax whatsoever.
Personally you can t do that with salary. The second major advantage of dividends is that it s not subject to canada pension plan premiums..
So. If you don t want to pay cpp. Because you re not concerned about the 900 a month that you re going to receive upon retirement then dividends may be the way to go for you cpp is very costly. The contributions to cpp that is it s in fact nine point nine percent of your salary to a maximum of about four thousand dollars.
Now that can add up to a lot of money. The other major advantage of dividends is that it s simple you don t have the burden that you do with payroll and you simply cut a check to yourself and write dividend on the memo field. Now your articles of incorporation must also allow for dividends on the share capital that you own so it s important that you consult with a lawyer and a chartered accountant such as myself to see if your corporation is eligible to pay dividends to you now that you know the advantages of dividends and salary. You should consult with your accountant to determine what one fits your circumstances.
So there s no right or wrong answer. If you re applying for a loan..
Maybe you want to go with salary. If you are concerned with paying a least amount of tax and don t want to contribute to the canada pension plan. Then dividends may be the way to go for you if you found this video. Useful i encourage you to visit my website.
Which is shown at the bottom of this video htp. Http madden. Ca comm where you ll receive a bunch of tax saving strategies in addition. Please access my free report 20 tax secrets on how to beat the taxman.
Which is shown at the end of the end of this video so go ahead visit my website get your free report and save yourself a ton in taxes thanks for watching you ” ..
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