How entrepreneurs can balance business and personal finances

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Where to park excess income is one challenge that owners can face in coordinating their business and personal financial planning.For Dave Giles, his professional life became personal in 2019, when his wife, a chiropractor, opened her own practice in Burlington, Ont. He had spent the previous 10 years at Giles Financial Solutions Inc., part of Sun Life Financial, advising entrepreneurial clients on setting up their overall finances. Now he had to apply those lessons in his own household.

It’s almost always more beneficial to leave income or excess earnings within the holdco, says Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth. “We issued a report on that called ‘Just Leave It.’” Leaving money inside the corporation or holding company can also allow the lower-taxed proceeds to be used to fund individual pension plans or retirement compensation arrangements.

For businesses that are co-owned, another priority is key person insurance. It’s designed to fund the buyout of a partner or co-owner’s spouse or surviving beneficiary should they die. That financial security does come with costs.

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