Hi Robert, you had mentioned that leaving money in the business vs paying out bonuses at the end of the year could be a good tax strategy. Could I ask if that money could just be left in a high yield savings account or do we need to "show" that it was reinvested into the business? Not sure if my question is clear?
I had a similar question, and was in addition wondering if it makes a difference what kind of business structure you have? E.g. does this work as a sole proprietorship?
JeffCJ, yes, it 100% only works if the business is paying tax as a corporation. A sole proprietorship will not work as you are paying tax on the income of the business (not on how much you take out) in a proprietorship. A corporation has a reduced rate of tax on business income, and there is a supplementary tax on withdrawing the funds from the corporation. If you leave it in the corporation, you won't have to pay the supplementary tax.
