Year-end planning (beyond filing taxes)
Preparing for the year-end as a business owner, is most often interpreted as: organizing your bookkeeping, and lining up someone to do your taxes. But as the business grows, the bookkeeping is happening year-round, and the same accountant does your taxes, those parts can be on auto-pilot. Leaving room for actual planning.
RRSPs as a business owner?
RRSPs have been a well-known tax savings tool for quite some time. For younger investors, they can often be a second thought, though; as there are now three accounts to consider:
the FHSA (First Home Savings Account), created in 2023
the TFSA (Tax Free Savings Account), created in 2009
the RRSP (Registered Retirement Savings Plan) (around since 1957!)
Having all these options provides opportunities for choosing the best fit for each specific person… but, can also create some overwhelm, and need for professional advice.
Staying Flexible - so underrated!
One of the most underrated approaches when it comes to investing, is staying flexible.
If you know a thing or two about investing, money that needs to be accessed within 1-2 years should often times sit in cash, to prevent a possible loss when you need the funds.
However, experienced investors that have a strong emergency plan (cash, access to low-interest debt, and critical illness / disability insurance), as well as more than one source of income, can remain flexible in their approach - allowing more dollars to grow.
Should I wait to “RRIF” my RRSP?
"RIFF-ing" your RRSP, as we often call it, involves turning your RRSP investment account into a steady income. Once you start the process, you are required to take the annual minimums each year; so, choosing the best timing is important.
Conventional financial planning often calls for waiting until the funds are needed. However, this recommendation does vary based on whether you have a fully funded pension at work, a spouse, and how leaving an inheritance ranks on your list of priorities.