Download a pdf version of "5 Common Investment Mistakes of  Business Owners and  Incorporated Professionals"Download a pdf version of "5 Common Investment Mistakes of  Business Owners and  Incorporated Professionals".

Mistake # 1 — Investing in RRSPs, IPPs, and Other Registered Accounts

Business owners pay too much tax to get money out of their corporation to fund RRSPs, IPPs, TFSAs, and even RESPs.  Most business owners would be better using their corporation, holding company, or a family trust to invest and potentially split income with other family members.

Mistake #2 — Paying Tax on Investment Income

Most investment portfolios have taxable distributions.   Taxable distributions are not necessary.  Over 20 years, unnecessary taxes on your investment income can will your anticipated retirement income by an estimated 18%.   Request my white paper “Using a Corporation to Fund Your Retirement Tax-Efficiently” for more information. 

A well-constructed portfolio, using the right investment platform, can provide 100% tax deferral on any investment returns not immediately required by the business owner. 

Mistake #3 — Losing Out on the $800,000 Lifetime Capital Gains Exemption

Many Business Owners plan to sell their business to fund part of their retirement.  Failing to ensure your business qualifies for the Lifetime Capital Gains exemption could cost you or your estate over $100,000 in taxes.

The rules for qualification are complex, and business owners must seek advice from a tax professional.  An unexpected health or other life event could result in an unplanned sale of a company.  It is a good idea to ensure the sale of your company will always be eligible for the lifetime capital gains exemption. 

Mistake #4 — Paying Massive Estate Taxes on Corporate Investments

Your holding company or trust is often the best place to hold investments such as:  real estate, mutual funds, or active businesses.

Unfortunately, without carefully planning, a corporation might pay significant taxes on investments when you die.  It is important to understand your tax liabilities ahead of time and take steps to address them. 

Mistake #5 —Not Having a Great Team

The right team of financial professionals can help you avoid Mistakes 1-4.  Otherwise, you are just paying too much tax.