Financial Planning

A financial plan looks at where you are today and where you want to go. It determines your short, medium and long term financial goals and how you can reach them.

Why do you need a Financial Plan?

  • Worry less about money and gain control.
  • Organize your finances.
  • Prioritize your goals.
  • Focus on the big picture.
  • Save money to reach your goals.

What does a Financial Plan include?

There are 2 main sides your financial plan should address: Accumulation and Protection

Accumulation:

  • Cash Management – Savings and Debt
  • Tax Planning
  • Investments

Protection:

  • Insurance Planning
  • Health Insurance
  • Estate Planning

What’s the Financial Planning Process?

  • Establish and define the financial planner-client relationship.
  • Gather information about current financial situation and goals including lifestyle goals.
  • Analyze and evaluate current financial status.
  • Develop and present strategies and solutions to achieve goals.
  • Implement recommendations.
  • Monitor and review recommendations. Adjust if necessary.

Next steps…

  • Talk to us about helping you get your finances in order so you can achieve your lifestyle and financial goals.
  • Feel confident in knowing you have a plan to get to your goals.

Financial Planning for Business Owners

Financial Planning for business owners is often two-sided: personal financial planning and planning for the business.

Business owners have access to a lot of financial tools that employees don’t have access to; this is a great advantage, however it can be overwhelming too. A financial plan can relieve this.

A financial plan looks at where you are today and where you want to go. It determines your short, medium and long term financial goals and how you can reach them. For you, personally and for your business.

Why do you need a Financial Plan?

  • Worry less about money and gain control.
  • Organize your finances.
  • Prioritize your goals.
  • Focus on the big picture.
  • Save money to reach your goals.

For a business owner, personal and business finances are connected. Therefore both sides should be addressed: Personal and Business.

What does a Financial Plan for a Business include?

There are 2 main sides your business financial plan should address: Growth and Preservation

Growth:

  • Cash Management- Managing Cash & Debt
  • Tax Planning- Finding tax efficiencies
  • Retaining & Attracting Key Talent

Preservation:

  • Investment- either back into the business or outside of the business
  • Insurance Planning/Risk Management
  • Succession/Exit Planning

What does a Personal Financial Plan include?

There are 2 main sides your financial plan should address: Accumulation and Protection

Accumulation:

  • Cash Management – Savings and Debt
  • Tax Planning
  • Investments

Protection:

  • Insurance Planning
  • Health Insurance
  • Estate Planning

What’s the Financial Planning Process?

  • Establish and define the financial planner-client relationship.
  • Gather information about current financial situation and goals including lifestyle goals.
  • Analyze and evaluate current financial status.
  • Develop and present strategies and solutions to achieve goals.
  • Implement recommendations.
  • Monitor and review recommendations. Adjust if necessary.

Next steps…

  • Talk to us about helping you get your finances in order so you can achieve your lifestyle and financial goals.
  • Feel confident in knowing you have a plan to get to your goals.

Do you really need life insurance?

 

 

You most likely do, but the more important question is, ‘What kind?’ Whether you’re a young professional starting out, a devoted parent or a successful CEO, securing a life insurance policy is probably one of the most important decisions you will have to make in your adult life. Most people would agree that having financial safety nets in place is a good way to make sure that your loved ones will be taken care of when you pass away. Insurance can also help support your financial obligations and even take care of your estate liabilities. The tricky part, however, is figuring out what kind of life insurance best suits your goals and needs. This quick guide will help you decide what life insurance policy is best for you, depending on who needs to benefit from it and how long you’ll need it.

Permanent or Term?

Life insurance can be classified into two principal types: permanent or term. Both have different strengths and weaknesses, depending on what you aim to achieve with your life insurance policy.

Term life insurance provides death benefits for a limited amount of time, usually for a fixed number of years. Let’s say you get a 30-year term. This means you’ll only pay for each year of those 30 years. If you die before the 30-year period, then your beneficiaries shall receive the death benefits they are entitled to. After the period, the insurance shall expire. You will no longer need to pay premiums, and your beneficiaries will no longer be entitled to any benefits.

Term life insurance is right for you if you are:

  • The family breadwinner. Death benefits will replace your income for the years that you will have been working, in order to support your family’s needs.
  • A stay-at-home parent. You can set your insurance policy term to cover the years that your child will need financial support, especially for things that you would normally provide as a stay-at-home parent, such as childcare services.
  • A divorced parent. Insurance can cover the cost of child support, and the term can be set depending on how long you need to make support payments.
  • A mortgagor. If you are a homeowner with a mortgage, you can set up your term insurance to cover the years that you have to make payments. This way, your family won’t have to worry about losing their home.
  • A debtor with a co-signed debt. If you have credit card debt or student loans, a term life insurance policy can cover your debt payments. The term can be set to run for the duration of the payments.
  • A business owner. If you’re a business owner, you may need either a term or permanent life insurance, depending on your needs. If you’re primarily concerned with paying off business debts, then a term life insurance may be your best option.

Unlike term life insurance, a permanent life insurance does not expire. This means that your beneficiaries can receive death benefits no matter when you die. Aside from death benefits, a permanent life insurance policy can also double as a savings plan. A certain portion of your premiums can build cash value, which you may “withdraw” or borrow for future needs. You can do well with a permanent life insurance policy if you:

  • …Have a special needs child. As a special needs child will most likely need support for health care and other expenses even as they enter adulthood. Your permanent life insurance can provide them with death benefits any time within their lifetime.
  • …Want to leave something for your loved ones. Regardless of your net worth, permanent life insurance will make sure that your beneficiaries receive what they are entitled to. If you have a high net worth, permanent life insurance can take care of estate taxes. Otherwise, they will still get even a small inheritance through death benefits.
  • …Want to make sure that your funeral expenses are covered. Final expense insurance can provide coverage for funeral expenses for smaller premiums.
  • …Have maximized your retirement plans. As permanent life insurance may also come with a savings component, this can also be used to help you out during retirement.
  • …Own a business. As mentioned earlier, business owners may need either permanent or term, depending on their needs.

 

A permanent insurance policy can help pay off estate taxes, so that the successors can inherit the business worry-free. Different people have different financial needs, so there is no one-sized-fits-all approach to choosing the right insurance policy for you. Talk to us now, and find out how a permanent or term life insurance can best give you security and peace of mind.

Why do you need Employee Benefits

Business owners are increasingly recognizing the key importance of implementing employee benefit plans in their organization and this is an area that has grown considerably in recent decades. Employee benefits comprise all of the additional things that you offer to your employees on top of their regular salary, which could include pension contributions, health cover / insurance policies, training and education programs etc. Employees are more and more interested in the total benefits package that a potential employer can offer them, rather than just being focused on a binary salary figure and recognizing and understanding this cultural shift in the modern working world is crucial to maintain your ability to recruit and retain the right talent for your business.

Many employees value the benefits that their employer offers, considering them an integral part of their take home pay, none more so than health cover. This benefit can provide financial and emotional security to your employees and their families, without the need for them to complete any health requirements to be on the plan. They are likely to benefit from a preferable level of cover and the plan may even provide them with insurance products such as long-term disability cover, which can be harder to gain outside of a group plan. What’s more, group plans often offer out-of-country emergency healthcare for employees which has the potential to save them money on personal travel insurance products.

Not only do these benefits provide a sense of security to your employees, they can also help them to feel valued as part of your organization, which may in turn foster higher morale and increased motivation within their roles. It is therefore worthwhile for business owners to encourage their teams to recognize the fact that the benefits package that you offer should be considered as an integral part of their take home pay, alongside their actual salary.

Running a successful business, keeping employees happy and attracting new talent can be difficult. For a busy business owner, a big part of your value proposition are the individuals that work at your company.

Employee Benefits are non-cash compensation paid to an employee.

Why employee benefits make smart business sense:

  • Save money and time
  • Increase the wellness and productivity of your employees
  • Be competitive and attract new employees and key talent
  • Provide a solid framework for the future
  • Form a part of your business’ value proposition
  • Increase employee engagement

There are a number of employee benefits and perks that can be valued more than pay raises:

  • Health Benefits (ex. medical, dental, life disability insurance)
  • Retirement/Pension Plan
  • Vacation/Paid Time Off
  • Performance Bonus
  • Paid Sick Days
  • Flexible Schedule (ex. work form home)
  • Office Perks (ex. Casual dress, free lunch)
  • Employee Development Programs (ex. Professional development, on-the-job training)
  • Tuition Reimbursement
  • Employee Discounts
  • Gym Membership or Wellness Program
  • Stock, Stock Options and/or Equity
  • Paid Parental Leave (ex. Maternity leave, adoption assistance)
  • Childcare Assistance (ex. On-site Childcare, Financial Assistance)
  • Commuter Assistance (ex. Company shuttle, commuter checks)
  • Diversity Program

Next to salary, health benefits coverage is the most important tool in attracting and retaining key staff. 59% of employees would rather keep benefits coverage than receive a $10,000 raise. (2011 Sanofi-Aventis Healthcare survey)

Talk to us about helping put together an employees benefit package that makes smart business sense.

Talk to us, we can help.

Contact Us

 

Getting the best from a financial advisor

Working with a professional to help you to make sense of your finances can be a wise move, but for this relationship to work effectively it is important that you understand what to expect from your financial advisor.

What can your financial advisor help you with?

  • Defining your financial goals and creating a step by step plan or strategy to achieve them.
  • Planning for the future, including for retirement, future education or housing needs.
  • Choosing the mix of investments and assets that suit your goals, lifestyle, time horizon and appetite for risk.
  • Building a solid estate for your family to inherit in the future.
  • Choosing the most tax-efficient methods of saving and investing.

What should your financial advisor inform you of?

  • The range of services that they offer and how much and by which method you will compensate them.
  • Your mutual responsibilities and obligations towards each other.
  • What the planning process will look like and the documents that they will provide you with.

What will your financial advisor need from you or need to ask you about?

  • What your financial goals are.
  • What your personal circumstances – such as your marital status, any dependents, your job, earnings and tax situation.
  • Any investments or assets that you currently have – such as registered accounts, workplace pensions, property etc.
  • Your appetite for risk and investment preferences.
  • Information on your income and also your outgoings, including debts such as mortgages, loans or credit cards.
  • Whether or not you have a will, and its contents.
  • Your estate and inheritance planning situation.

If you’re looking to achieve your financial goals, talk to us. We can help.

Contact Us

 

new-tax-rules-for-small-business-owners

New Tax Rules Small Business Owners – Problems & Possible Solutions

New Tax Rules Small Business Owners – Problems & Possible Solutions – PowerPoint Presentation

 Summary of the Rules

  • Tax Rate 10% to 9%
  • Limited Access To Small Business Tax Rate
  • Tax on Split Income

………………………….

Small Business Tax Rate Reduction

  • Reduction from 10% to 9% Effective January 1, 2019

Small Business Tax Rate Reduction Problem

  • Problem: Lower corporate tax rates results in more capital trapped inside the corporation

Possible Solution for Small Business Tax Rate Reduction

  • Life insurance- Life insurance proceeds credit the capital dividend account on death allowing for the tax-efficient distribution of funds from the corporation to the estate

………………………….

Limited Access to Small Business Tax Rate

Passive Investment Income greater than $50,000 / year reduces the Small Business Limit for Small Business Tax Rate The business limit would be reduced to zero at $150,000 of investment income. Effective January 1, 2019.

Understanding the Adjusted Aggregate Investment Income (AAII)

Passive Income Tax Treatment Table
Passive-Income-Tax-Treatment-Table

Check what makes up your Adjusted Aggregate Investment Income.

………………………….

Limited Access to Small Business Tax Rate Problem

  • For companies with passive income over $50,000, the small business limit will be reduced and, thus, increase the total amount of tax you have to pay

Possible Solutions of Limited Access to Small Business Tax Rate Problem

  1. Corporate Owned Insurance – Insured Retirement Program, Estate bond, Corporate held Critical Illness Insurance with Return of Premium
  2. Individual Pension Plan (IPP) – The corporation contributes to the IPP and income earned in the IPP doesn’t belong to the corporation. This should only be considered when the AAII is over $50,000.
    Pay enough salary/dividends to maximize RRSP and TFSA Contributions – A salary of $145,722 will allow the max 2018 RRSP contribution is $26,230
  3. Deferred Capital Gains – Capital gains are 50% taxable and are only 50% included in the AAII.

Tax on Split Income

Income meeting the definition of TOSI is removed from the individual’s net income and taxed separately at the top marginal tax bracket in his or her province of residence. In addition to paying tax at the top tax rate, the individual may claim only the dividend tax credit, tax credit for mental or physical impairment and foreign tax deduction

Possible Solution – Tax on Split Income

Exceptions to the TOSI rules: The rules provide that an individual is deemed to be ‘Actively Engaged’ if the individual works in the business at least an average of 20 hours per week during the taxation year or meets this requirement in any five prior years.

………………………….

Next Steps before Jan 1, 2019 Deadline

  1. Review your current situation Are you affected?
  2. Meet with your Financial Team: Financial Advisor Accountant Lawyer
  3. Identify Possible Solutions & Implement
  4. Review Solutions

 

Legal Disclaimer

This presentation is not intended to provide legal, accounting or other advice in individual circumstances. Seek professional assistance before acting upon information included in this publication.

Questions?

For more information, please contact us.
chris@atlanticwealth.ca
(902) 429-4001

EFAPs-to-improve-access-to-mental-health-services

Promote EFAPs to improve access to mental health services

A lot of work is being done to reduce the stigma around mental health in Canada, but it’s no secret that provincial mental health services and support can be hard to come by.

For that reason, advisors have an opportunity value to their clients by including EFAP in benefits discussions with employers.

According to waitimes.novascotia.ca, a provincial website designed to help Nova Scotians navigate the healthcare system, people can wait upwards of 383 days in certain communities in Nova Scotia for mental health services. Generally speaking, the situation looks shockingly similar across the country.

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Important-Tax-Changes

Important Tax Changes

The need to curb “abuses” of the Canadian tax system by owners of private corporations has been a predominant theme since the last Federal election.  The initial attempt at “consultation” by the Department of Finance elicited a high degree of frustration and anger from business owners and tax planning professionals across the country.  Much of the frustration and anger can be traced to a combination of poor communication, badly written legislation, and questionable timing for both the release and implementation of the pending legislation.  Over the course of the 75 days, consultation period over 21,000 written submissions and several petition websites were drafted.  Few, if any, in support of the rushed overhaul to the Canadian tax system.

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