Investing in a business account or pay out then invest in reg accounts?

  • Last Updated:
  • Mar 20th, 2022 7:16 pm
Deal Addict
Jan 2, 2021
1381 posts

Investing in a business account or pay out then invest in reg accounts?

Apologies if this has been asked before. I was wondering if anyone has any opinion on what’s the best approach to investing with money from a business account?

I am currently pulling out ~120k a year from the biz for living expenses, paying down existing debts and taxes. I have a good 200k+ more coming into the account per year. Currently I have a Wealthsimple business invest account in which I dump the rest and let it accumulate, but settings are very limited and I can only select a balanced portfolio.

I’m just wondering what’s the best approach the extra money here. Is there any benefit in paying myself out then purchase RRSPs? Can’t I already optimize the payments to myself, hence deferring income to years that are more beneficial to myself (eg. A maternity leave year or when I return to a corporate job)? In terms of TFSAs, I’m guessing I should at least max that out?

In what circumstances would it make sense to pay the money out and invest in non-reg accounts?

Anything I’m not seeing here?
Thanks for the insights!
3 replies
Deal Fanatic
Nov 9, 2013
5098 posts
Edmonton, AB
The way I see it is that your decision should be based on your anticipated income in retirement.

If it’s likely to be lower then present, then go the RRSP route. If it’s likely to be the same, or higher, then keep it in the biz.

You’ll have to pay taxes on any cap gains in the business, so be mindful of activity. But if you buy and hold it’s a great way to defer taxes for a looooooooong time.
Buy quality. Keep calm and go long
Deal Fanatic
User avatar
May 11, 2014
5840 posts
Rankin Inlet, NU
Not enough details here. How are you paying yourself out would be an inportant factor. If it is dividends vs income, this changes how you would do it. Also, how is your business set up? Will it be sold later, collapsed, broken up to your heirs? Investing it within your corporation affects your succession and estate planning.

I would discuss this with a financial planner and an accountant, especially as you are talking larger nunbers here.
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