Small business owners in Canada juggle sales, payroll, marketing, and operations. Personal finances often get pushed to the bottom of the list.
Financial planning for small business owners in Canada is about organizing both sides - business and personal - so they support each other instead of competing.
Quick answer: Small business owners in Canada should separate business and personal accounts, pay themselves intentionally through salary or dividends, build a dedicated business emergency fund, protect income and the company with the right insurance, and plan for retirement and succession outside the business itself.
1. Separate business and personal finances
Open separate business accounts and keep expenses clearly divided. This makes budgeting, taxes, and planning much easier.
2. Pay yourself intentionally
Decide how to pay yourself: salary, dividends, or a mix if you use a corporation. Each option affects your taxes, RRSP room, and CPP contributions.
Mode Money Managers™ works with your accountant to design a pay-yourself strategy that supports both your lifestyle and long-term goals.
3. Build a business emergency fund
Just like households, businesses need reserves. A business emergency fund helps cover slow months, repairs, or unexpected bills without resorting to high-interest debt.
4. Protect your income and your company
Business owners need robust protection:
- Disability insurance to replace income
- Critical illness insurance for a lump sum if you become seriously ill
- Life insurance to protect your family and cover business obligations
Mode Money Managers™ can structure coverage around your unique risks as an owner.
5. Plan for retirement outside the business
Many owners expect to sell the business and live off the proceeds. It’s wiser to build investments outside the company as well.
Use TFSAs, RRSPs, and potentially corporate investing to diversify your retirement plan away from a single asset: your business.
6. Think about succession early
If you plan to sell or pass the business to family or partners, early planning can dramatically improve outcomes. Consider buy-sell agreements funded with insurance and clear documentation of roles and ownership.
Mode Money Managers™ helps small business owners align business decisions, tax planning, and personal wealth so everything moves in the same direction.
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