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HOW TO PAY YOURSELF
FROM PREC?
SALARY VS DIVIDEND
BY LAKSHAY GANDHI CPA, CGA
647-987-4025
SUPPORT@ACCOUNTINGOPS.CA
OWNER
MANAGED
BUSINESS
• FLEXIBILITY TO RECEIVE
SALARY OR DIVIDEND OR
A COMBINATION
• LETS FIND OUT WHICH
OPTION IS BETTER WITH
AN EXAMPLE!
COMBINED
THINGS
TO
CONSIDE
R -
SALARY
Salary is an expense to your corporation- Issue T4
Salary must be reasonable
Payroll tax expenses – higher (CPP and EI)
Monthly/Quarterly compliance for payroll tax remittance
Owner pays personal taxes based on salary received
Eligible for RRSP contributions, help in qualifying for
financing, and deduct childcare expense
THINGS
TO
CONSIDE
R -
DIVIDEND
Not an expense on income statement – issue cheque and T5
Dividend is subject to taxes within the corporation
Not subject to reasonability test
No EI, and CPP withholding requirements. Owner looses CPP
benefits for retirement
RRSP Contributions limit = $0
Owner will need to include dividend in personal income
DIVIDEND
SALARY
WHICH ONE IS BETTER?
• MORE OR LESS THE SAME UNDER BOTH. ONLY DIFFERENCE IS CPP
• DIVIDEND ALLOWS YOU GET MORE AFTER TAX MONEY – REINVEST REINVEST
REINVEST!!
• SALARY ALLOWS TO GET MORE FUNDING!
THANKS FOR LISTENING
• 647-987-4025
• SUPPORT@ACCOUNTINGOPS.CA

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Week 24 - How to pay yourself from your business - Salary vs Dividend.pptx

  • 1. HOW TO PAY YOURSELF FROM PREC? SALARY VS DIVIDEND BY LAKSHAY GANDHI CPA, CGA 647-987-4025 SUPPORT@ACCOUNTINGOPS.CA
  • 2. OWNER MANAGED BUSINESS • FLEXIBILITY TO RECEIVE SALARY OR DIVIDEND OR A COMBINATION • LETS FIND OUT WHICH OPTION IS BETTER WITH AN EXAMPLE!
  • 4. THINGS TO CONSIDE R - SALARY Salary is an expense to your corporation- Issue T4 Salary must be reasonable Payroll tax expenses – higher (CPP and EI) Monthly/Quarterly compliance for payroll tax remittance Owner pays personal taxes based on salary received Eligible for RRSP contributions, help in qualifying for financing, and deduct childcare expense
  • 5. THINGS TO CONSIDE R - DIVIDEND Not an expense on income statement – issue cheque and T5 Dividend is subject to taxes within the corporation Not subject to reasonability test No EI, and CPP withholding requirements. Owner looses CPP benefits for retirement RRSP Contributions limit = $0 Owner will need to include dividend in personal income
  • 8. WHICH ONE IS BETTER? • MORE OR LESS THE SAME UNDER BOTH. ONLY DIFFERENCE IS CPP • DIVIDEND ALLOWS YOU GET MORE AFTER TAX MONEY – REINVEST REINVEST REINVEST!! • SALARY ALLOWS TO GET MORE FUNDING!
  • 9. THANKS FOR LISTENING • 647-987-4025 • SUPPORT@ACCOUNTINGOPS.CA