As many small-business owners quickly find out, having your own company, sole proprietorship or partnership doesn’t always generate the tax writeoffs and deferrals they hoped for.
Granted if the business is incorporated, the door does swing open. Because of low small-business tax rates across the country, they may even choose not to set up a personal registered retirement savings plan (RRSP) at all.
They could leave the money in a separate investment account with the company instead.
For those who operate without the benefits of incorporation, however, the money their business earns is looked at as personal income of the owner and taxed as such. When it comes to saving for retirement, the RRSP is their best -perhaps only -friend.
Yet small-business people across Canada continue to ignore the benefits of RRSPs. They either under-contribute or do not contribute at all, says Mark Shoniker, a managing director at BMO Financial Group.