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Investing in your small business success

Investing in your small business success. Agenda. Protecting your business Banking outside the box Investing in the future. Protecting your business. The problems you face. Day-to-day managing Long-term viability Liability protection Managing risk. Your challenges.

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Investing in your small business success

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  1. Investing in your small business success

  2. Agenda • Protecting your business • Banking outside the box • Investing in the future

  3. Protecting your business

  4. The problems you face • Day-to-day managing • Long-term viability • Liability protection • Managing risk

  5. Your challenges Investment and retirement planning Succession planning Loss of owner/key person Attracting/retaining employees Income taxes and tax liabilities Creditor and Liability Protection Business investment income taxes Innovative banking solutions

  6. Plan a successful succession Protect your interests Anticipate future needs Valuation Tax Liabilities Capital Gains Exemption Estate Freeze Buy/Sell Funding Life Insurance Your business – your legacy

  7. Sole Owner Sufficient funds to carry on Succession planning protects your heirs Your expectations can be met Can your business survive without you?

  8. Multiple owners Death or disability stresses the partnership Who steps in to act for the deceased? Chances for a good outcome are poor Can your business survive without you?

  9. Buy/sell agreements Buy-out options Proper funding Business as usual Orderly dissolution plan Life insured investments Life insurance Death Disability Retirement Disagreement Advance planning averts catastrophe

  10. How much is it worth? • Adjusted balance-sheet or asset book value • Asset replacement value • Comparison

  11. Pulling the trigger on tax Change of use Transfer Emigration Death Asset exchange Assets pay debts Transfer to trust • Tax is triggered by • Sale of the business • A ‘deemed disposition’ • Capital gains tax

  12. Succession strategies you can use • Use your $500,000 lifetime capital gains exemption* • Consider an estate freeze* • Life insurance or life-insured investments *Applies to incorporated companies only

  13. Shareholders’ agreement Changes in ownership create financial obligations Life insurance death benefits funds: buy-out tax implications Buy/Sell Funding

  14. Corporate owned policy* Lower aggregate premiums Easier cost allocation Ensure that premiums are paid Buy/Sell Funding *Concerns about creditor protection, tax consequences and effects of provincial family legislation must be addressed to determine the best approach for your circumstances

  15. Individually owned policy* Paid for with after-tax dollars Expensive Confusing Buy/Sell Funding *Concerns about creditor protection, tax consequences and effects of provincial family legislation must be addressed to determine the best approach for your circumstances

  16. Collateral insurance coverage • Tax deductible business expense • Tailored to fit your needs

  17. What impact will the loss of a key person have on your business? • Business is disrupted • Sales decline • Employees’ security is threatened • Creditors become alarmed • Deliverables in doubt

  18. Attract and retain good employees • Financial compensation • Business environment • Life and living benefits insurance

  19. Protect your personal assets Investments with insurance benefits Growth from investment Personally guaranteed debts Wages and vacation pay to employees Source deductions owed to Canada Revenue GST and PST Health and safety violations Environmental damage Creditor Protection Strategy

  20. Strategies for protecting personal assets • Incorporation • Spouse’s name • Business liability insurance • Invest in products that offer creditor protection • Hold life insurance contracts personally • Professional tax and legal advice • Establish a plan while the business is healthy

  21. Banking outside the box

  22. Banking outside the box Manulife Bank • Highest return on investments • Unique alternatives to borrowing • Innovative products • Simply financing needs

  23. Innovation, flexibility, outstanding rates Manulife Bank • Business Advantage Account • GICs • Custom investment loans • Flexible, low cost financing • Access Line of Credit Plus • Manulife one Account

  24. Investing in the future

  25. Working toward retirement • Retained earnings • Business investment income • Individual Pension Plan • Segregated Funds • Life insurance

  26. Guaranteed Investment Certificates Bank Guaranteed Interest Contracts Insurance company Designate beneficiary Creditor protection Probate fees and settlement delays avoided GICs and GICs. What’s in a name?

  27. GICs. Security for your portfolio. • Solid foundation for your portfolio • Positive rate of return • Peace of mind • Broad range of investment choices

  28. Segregated Funds • Investment with insurance guarantees • Creditor protection • Protects your beneficiaries • Tax advantages • Benefits for long-term investing

  29. You’ve got leverage • Borrow money to earn money • Interest is tax-deductible • Benefit from compounding • Good potential, higher risk

  30. Business investment income taxes Option: Invest surplus in GICs and CSBs • CSBs and GICs taxed at top corporate rate Option: Use surplus to buy life insurance • Tax-deferred growth of the surplus • Tax-free death benefit

  31. Loss of owner/key person Retirement Tax liabilities Succession planning Creditor protection Capital Growth Life-insured investments Life insurance Buy/Sell funding Leveraged investing Pension plan/IPP Collateral insurance Small Business Solutions Recap

  32. Loss of owner/key person Retirement Tax liabilities Succession planning Creditor protection Capital Growth Life-insured investments Life insurance Buy/Sell funding Leveraged investing Pension plan/IPP Collateral insurance Small Business Solutions Recap

  33. Loss of owner/key person Retirement Tax liabilities Succession planning Creditor protection Capital Growth Life-insured Investments Life insurance Buy/Sell funding Leveraged investing Pension plan/IPP Collateral insurance Small Business Solutions Recap

  34. Loss of owner/key person Retirement Tax liabilities Succession planning Creditor protection Capital Growth Life-insured Investments Life insurance Buy/Sell funding Leveraged investing Pension plan/IPP Collateral insurance Small Business Solutions Recap

  35. Loss of owner/key person Retirement Tax liabilities Succession planning Creditor protection Capital Growth Life-Insured Investments Life Insurance Buy/Sell funding Leveraged investing Pension plan/IPP Collateral insurance Small Business Solutions Recap

  36. Loss of owner/key person Retirement Tax liabilities Succession planning Creditor protection Capital Growth Life-Insured Investments Life Insurance Buy/Sell funding Leveraged investing Pension plan/IPP Collateral insurance Small Business Solutions Recap

  37. Solutions for Small Business • Investing • Banking • Insurance

  38. Manulife Investments • Solutions for today • Solutions for tomorrow

  39. Thank you

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