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A corporate account is a catch-all term for a bank account that businesses use to hold their money. Corporate accounts are often referred to as business accounts. They can be used for investing, saving or every day banking. A corporate account is something that every business owner should open so that while they’re working, their money is working too.
Think about it. You pay corporate income tax on the money your small business earns when you withdraw it. What if you don’t need to withdraw it? Are you just going to leave that money stagnating in a corporate bank account that earns 0.01% interest? You don’t have to once you open a business investing or savings account.
Pros of corporate accounts
What are the pros? Business investment and saving accounts are great for enterprises that are making more money than they immediately know what to do with, or any business that has cash reserves. Opening a business investment account allows your enterprise to do with its money what any smart person would want to do with his or her extra money: invest it. This means it will be free to grow instead of stagnating earning virtually nothing in a bank account.
These accounts are especially good for businesses that are prone to good years and bad years. Why take profit at a time you’re earning plenty when you can wait for a slow year when you’ll be charged a lower income tax rate?
Is there anything to be careful about?
Yes. There are thousands of things to be careful about if you own a business—taxes are a big one. Anyone who’s ever been in business or knows what ultimately landed notorious gangster Al Capone in jail knows all about the importance of business taxes. Paying them is certainly necessary, but deferring them whenever legally possible is what every businessperson should probably aspire to do. We can help.
As soon as you incorporate your business you will be faced with major decisions that will ultimately affect your current lifestyle as well as your retirement. If your business is taking in more revenue than you need to pull out for a salary, you’ll have to decide how much to allocate to your RRSP and how much to invest or save through a business account. How much should you pay yourself to keep in the best tax bracket in order to maximize your TFSA room? Should you use investment dividends as a source of income?
If any or all of these questions make your head hurt the tiniest bit, you’re actually a perfect candidate for one of our business accounts. Wealthsimple employs a team of experts who have spent far too much time thinking about every possible permutation of situations faced by small businesses and are ready to offer unlimited, complimentary human advice to create the absolute best, tax-advantaged plan for you and your growing business. Just as with all Wealthsimple accounts, advice is free for everyone, regardless of account balance.
Check out Wealthsimple’s two different business accounts. If you just love the sound of both and just can’t decide which is preferable, why choose? Open two.
OPERATING ACCOUNT / PAYROLL ACCOUNT / INVESTMENT ACCOUNT
/ SAVINGS ACCOUNT / TAX ACCOUNT / HIGH INTEREST ACCOUNT
$1,000.00 FOR ALL