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Salary or Dividends - which is better? We look at the difference between paying yourself a salary or paying yourself dividends.
We discuss the main advantages and disadvantages of each and look at some common scenarios for when a business owner may choose one method over the other.
Questions answered in this video include:
► What's the difference between paying yourself a salary vs paying dividends?
► Why would a salary be better than dividends?
► When are dividends better than salary?
► How to pay yourself a salary
► How to pay yourself dividends
► Will I pay less taxes using salary or dividends?
► How to compare taxes owing from salary and dividends
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🎥 CONTENTS OF THIS VIDEO
00:00 - Intro
00:31 - Paying Yourself a Salary
00:55 - How Paying Yourself a Salary Works
01:17 - Why Choose Salary
01:26 - Salary Builds RRSP Contribution Room
01:49 - Salary Helps Avoid Surprise Tax Bills
02:34 - You Contribute to CPP with Salary
03:18 - Salary Helps Qualify for a Mortgage
03:38 - Salary Can Help Qualify for Subsidies and Tax Credits
04:15 - How to Pay Yourself a Salary
05:04 - Paying Yourself Dividends
05:13 - How Dividends Work
05:44 - Why Choose Dividends
05:50 - Dividends Remove CPP Costs
06:31 - Paying Dividends is Simple
06:57 - Dividends Reduce Chances of CRA Penalties
07:30 - Dividends Can Decrease Employer Health Tax Costs
08:07 - How to Pay Yourself Dividends
09:17 - Salary vs Dividends - How They're Taxed
10:11 - Salary vs Dividends - Which Creates Less Tax?
10:50 - Salary vs Dividends - Tax Comparisons
11:14 - Salary vs Dividends - Tax Comparison Example 1
12:26 - Salary vs Dividends - Tax Comparison Example 2
13:46 - Salary vs Dividends - Summary of Factors to Consider
14:14 - Final Thoughts🥣😆
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🔗 MENTIONED IN THIS VIDEO
► Salary vs Dividends Blog Article
www.avalonaccounting.ca/blog/...
► How to Run Payroll in Canada: a Step-by-step Guide
www.avalonaccounting.ca/blog/...
► How Employer Health Tax Works
www.avalonaccounting.ca/blog/...
► Corporate Share Structure Considerations for Canadian Businesses
www.avalonaccounting.ca/blog/...
► Tax on Split Income (TOSI) Tax Changes 2018
www.avalonaccounting.ca/blog/...
► Wealthsimple Tax Calculator
www.wealthsimple.com/en-ca/to...
► Corporate Tax Rates in Canada
www.avalonaccounting.ca/blog/...
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🅰️ AVALON ACCOUNTING
Avalon is a virtual accounting firm located in Canada. We aim to be THE online accounting department for small businesses in Canada.
We provide online bookkeeping, accounting services and expert financial advice for small businesses.
We are on a mission to educate small business owners through our KZbin channel, blog and free resources. Check out our links below to dive in.
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► Blog: www.avalonaccounting.ca/blog
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