investing through corporation

The Enlightened Entrepreneur: Investing Through Your Corporation

“In life, it’s not how much money you make, it’s how much money you keep.” – Robert Kiyosaki

While there’s no doubt that one of the more attractive benefits of incorporating your business lies in reduced tax rates, the benefits don’t stop there!

If you choose to keep more profits within your corporation, rather than pay yourself a higher salary, you can invest these profits and, in turn, grow your savings and net worth.

How to Invest Profits from Your Corporation

Any funds held within your corporation that are not used to cover operating expenses can be invested through a holding company. You can then use those funds to invest in stocks, bonds, mutual funds, ETFs, or a number of other securities that might be suitable for you.

Lowering Taxes when Investing through Your Corporation

While the income and gains on any investments made through your corporation are taxable, there are some strategies you can use to keep taxes on these investments at a minimum, including:

  • Investing in growth-oriented securities: Taxes on capital gains are much lower than taxes on income earned, such as interest or dividends.
  • Leveraging the small business tax rate: If you’re a small business owner, you can take advantage of the small business tax rate, which allows you to earn up to $50,000 of passive investment income at the preferential rate of 12.2% vs. 20.5% (which is the corporate tax rate).

Corporate Investment Account vs. RRSPs and TFSAs

Many investors are familiar with RRSPs and TFSAs as tax-deferred or tax-sheltered vehicles. Although these are great programs to help Canadians save for retirement, as well as other goals, they are limited in the amount an individual can invest and withdraw. Therefore, these alone are typically not sufficient to meet the goals of many entrepreneurs and business owners.

By using a strategy where you complement your investments in your registered accounts, such as RRSPs and TFSAs, with a corporate investment account, you will be able to increase your return potential and gain more flexibility on withdrawals.

Still unclear about how, why, or if you should invest through a corporate holding company? The process isn’t easy and can have complicated tax implications, which is why we recommend consulting with your Financial Advisor before embarking on this strategy.

If you would like to talk it over with someone, my team and I are more than happy to discuss this with you. You can reach me at

There are a number of other benefits to incorporating your business that I will touch on in future blog posts. Stay tuned for Part Four of the series on how to minimize the taxes on the sale of your business so you can fund your dream retirement and achieve your goals.

This blog series is based on my recently posted white paper, The Enlightened Entrepreneur: Achieving Your Financial Goals through Your Corporation. If you would like a comprehensive guide to why and when you should incorporate your business, as well as how to take full advantage of an incorporated business, click here to receive a free copy of the full white paper.

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Matthew Lekushoff, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member - Canadian Investor Protection Fund.

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