Investing in your small business success

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Investing in your small business success
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Agenda

• Protecting your business
• Banking outside the box
• Investing in the future

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Protecting your business
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The problems you face

• Day-to-day managing
• Long-term viability
• Liability protection
• Managing risk

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Your challenges
Investment and retirement planning Succession
planning Loss of owner/key person Attracting/retai
ning employees Income taxes and tax
liabilities Creditor and Liability
Protection Business investment income
taxes Innovative banking solutions
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Your business your legacy

• Plan a successful succession
• Protect your interests
• Anticipate future needs

• Valuation
• Tax Liabilities
• Capital Gains Exemption
• Estate Freeze
• Buy/Sell Funding
• Life Insurance

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Can your business survive without you?

• Sole Owner
• Sufficient funds to carry on
• Succession planning protects your heirs
• Your expectations can be met

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Can your business survive without you?

• Multiple owners
• Death or disability stresses the partnership
• Who steps in to act for the deceased?
• Chances for a good outcome are poor

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Advance planning averts catastrophe

• Death
• Disability
• Retirement
• Disagreement

• Buy/sell agreements
• Buy-out options
• Proper funding
• Business as usual
• Orderly dissolution plan
• Life insured investments
• Life insurance

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How much is it worth?

• Adjusted balance-sheet or asset book value
• Asset replacement value
• Comparison

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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

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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
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Buy/Sell Funding

• Shareholders agreement
• Changes in ownership create financial obligations
• Life insurance death benefits funds
• buy-out
• tax implications

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Buy/Sell Funding

• Corporate owned policy
• Lower aggregate premiums
• Easier cost allocation
• Ensure that premiums are paid

Concerns about creditor protection, tax
consequences and effects of provincial family
legislation must be addressed to determine the
best approach for your circumstances
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Buy/Sell Funding

• Individually owned policy
• Paid for with after-tax dollars
• Expensive
• Confusing

Concerns about creditor protection, tax
consequences and effects of provincial family
legislation must be addressed to determine the
best approach for your circumstances
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Collateral insurance coverage

• Tax deductible business expense
• Tailored to fit your needs

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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

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Attract and retain good employees

• Financial compensation
• Business environment
• Life and living benefits insurance

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Creditor Protection Strategy

• 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

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Strategies for protecting personal assets

• Incorporation
• Spouses 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

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Banking outside the box
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Banking outside the box
Manulife Bank

• Highest return on investments
• Unique alternatives to borrowing
• Innovative products
• Simply financing needs

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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

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Investing in the future
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Working toward retirement

• Retained earnings
• Business investment income
• Individual Pension Plan
• Segregated Funds
• Life insurance

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GICs and GICs. Whats in a name?

• Guaranteed Investment Certificates
• Bank

• Guaranteed Interest Contracts
• Insurance company
• Designate beneficiary
• Creditor protection
• Probate fees and settlement delays avoided

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GICs. Security for your portfolio.

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

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Segregated Funds

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

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Youve got leverage

• Borrow money to earn money
• Interest is tax-deductible
• Benefit from compounding
• Good potential, higher risk

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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

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Small Business Solutions Recap

• 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

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Small Business Solutions Recap

• 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

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Small Business Solutions Recap

• 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

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Small Business Solutions Recap

• 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

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Small Business Solutions Recap

• 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

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Small Business Solutions Recap

• 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

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Solutions for Small Business

• Investing
• Banking
• Insurance

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Manulife Investments

• Solutions for today
• Solutions for tomorrow

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Thank you