external-link
Skip to content
  • Français
    • Getting startedLearn about the stock market, investment types, and how to get started.
    • Working with an advisorA financial advisor can help you choose investments and manage your portfolio.
    • Making a planHaving a plan can make it easier to make the right investing decisions for you.
    • Tracking your progressLearn how to track your investing progress and see how you're doing.
    • Understanding riskHaving a plan can make it easier to make the right investing decisions for you.
    • Rules and regulationsRegulators protect investors in Canada by setting and enforcing securities rules.
    • Psychology of InvestingMake better financial decisions by learning about behavioural insights.
    • Community outreachOSC in the Community takes the OSC's mandate from Bay Street to Main Street.
    • AnnuitiesAnnuities are an investment that can generate a steady income in retirement.
    • BondsBonds are an investment that generate interest after a fixed period of time.
    • Crypto assetsCrypto assets are digital investments with different opportunities and risks.
    • ESG investingESG investing allows you to choose investments that align with your priorities.
    • ETFs (exchange-traded funds)These funds hold a collection of investments and are traded on a stock exchange.
    • GICs (Guaranteed investment certificates)GICs guarantee a specific rate of return over a short period of time.
    • Mutual funds & segregated fundsMutual funds pool multiple investments into a fund owned by many investors.
    • Pension & savings plansDifferent kinds of workplace pension plans provide retirement income.
    • Real estateBuying a home is a way to invest your money and diversify your portfolio.
    • StocksStocks give you equity in a company, and are traded on a stock exchange.
    • More complex investmentsComplex investments have potential for high reward, but also higher risk.
    • RDSPsPeople with disabilities can save with a Registered Disability Savings Plan
    • RESPsSave for your child's education with a Registered Education Savings Plan.
    • RRIFsYou open a Registered Retirement Income Fund with funds from your RRSP.
    • RRSPsA Registered Retirement Savings Plan grows your savings tax free until you retire.
    • TFSAsA Tax-Free Savings Account helps you save for any goal, tax free.
    • Bank accountsChequing and savings accounts can help you manage your short-term needs.
    • BudgetingA budget can help you manage your spending, saving, and plan for the unexpected.
    • Life eventsLearn about how your financial needs may change at different stages of life.
    • Managing debtDebt shouldn't get in the way of your saving and investing. Learn how to manage it.
    • Personal insurancePersonal insurance coverage can help protect you and your loved ones.
    • RetirementPlanning for retirement helps you determine how much to save and where.
    • Running a small businessImprove your financial knowledge for your business and your personal life.
    • Saving moneyKeep your financial goals on track by saving some money each month.
    • Understanding taxLearn more about how tax filing and tax deductions work.
    • Wills and estate planningPreparing a will and estate plan ensure your final wishes are taken care of.
    • Types of fraudLearn how to spot frauds and scams and what they look like.
    • Making a complaintKnow your options for making a complaint.
    • Reporting fraudIf you suspect you've been a victim of fraud, report it immediately.
    • Checking registrationAlways check the registration of anyone trying to give advice or sell investments.
    • Investor warnings and alerts
    • CalculatorsPractice calculating compound interest, savings, debt consolidation, and more.
    • Quizzes and toolsCheck your knowledge of scams, behavioural biases, and other financial tools.
    • WorksheetsTry our downloadable tools to help you plan and budget.
    • VideosOur videos show you the basics of investment types, frauds to watch for, and more.
    • Interactive investing charts
    • Research & reportsDelve into our research on Canadians' needs and habits in finances and investing.
    • Investing introductionVisit our multi-lingual site for information for those new to investing or new to Canada, or both.
    • Investor NewsStay informed about the latest investor initiatives, educational resources, topical issues, key dates, and investor warnings/alerts from the Ontario Securities Commission’s Investor Office.
    • Investing questionsOur Investing questions site offers clear, unbiased answers to your questions on investing, from a trusted source.
    • Investing fundamentalsThis site brings you on a visual journey of key investing concepts. No matter your age, income or goals, these eight fundamentals can help you make smarter investing decisions.
    • Investor officeVisit the Investor Office website to learn more about how we lead investor-focussed education and outreach, research, and policy initiatives at the Ontario Securities Commission.
    • Investment reportingThis site guides you through the steps to learn how your investments are doing. Then you'll know when to make changes in order to meet your goals.
    • Interviews

GetSmarterAboutMoney.ca

Français
When autocomplete results are available use up and down arrows to review and enter to go to the desired page. Touch device users, explore by touch or with swipe gestures.

Home / Managing your money / Running a small business / Investing in an RRSP and TFSA as a business owner

Investing in an RRSP and TFSA as a business owner

2 min read

Share

  • Share to Twitter
  • Share to Facebook
  • Share to LinkedIn
  • Share to Reddit
  • Share via Email

On this page you’ll find

  • Retirement savings for a small business owner
  • Investing in a Registered Retirement Savings Plan (RRSP)
  • Investing in a Tax-Free Savings Account (TFSA)
  • Getting money out of your business

Retirement savings for a small business owner

It’s a big job focusing on the daily tasks of running a small business. While you’re addressing your immediate business priorities you might be postponing thinking about your financial future, including your retirement. It’s a good idea to make time to select the best registered accountAccount An agreement you make with a financial institution to handle your money. You can set…+ read full definition to keep your investments in. Registered Retirement Savings Plans (RRSPRRSP See Registered Retirement Savings Plan.+ read full definition) and Tax-FreeTax-free Money that you do not pay tax on.+ read full definition Savings Accounts (TFSATFSA See Tax-Free Savings Account.+ read full definition) are often used to help achieve personal retirement goals.

Investing in a Registered Retirement Savings Plan (RRSP)

RRSP contributions are taxTax A fee the government charges on income, property, and sales. The money goes to finance…+ read full definition deductible and investments grow tax-free. If you are currently in a higher income tax bracketTax bracket The rate at which you pay tax, based on your income level.+ read full definition, an RRSP may be a good option for you. Keep in mind, you must pay tax on your withdrawals, however, most Canadians are in a lower tax bracket when they retire.

If you pay yourself a salary from your business, the amount is considered “earned income” and is eligible for calculating your RRSP contribution roomContribution room The amount you can put into a savings plan like a Registered Retirement Savings Plan…+ read full definition. In contrast, if you receive a dividendDividend Part of a company’s profits that it pays to shareholders in proportion to the total…+ read full definition from your business, the amount is ineligible towards your RRSP contributionContribution Money that you put into a savings or investment plan.+ read full definition room.

Investing in a Tax-Free Savings Account (TFSA)

You might want to consider starting a TFSA if you are currently in a lower income taxIncome tax A charge you pay based on your total income from all sources. The Canadian government…+ read full definition bracket. TFSA withdrawals are tax-free as contributions are made with after-taxAfter-tax The money you have left after you pay taxes on money that you made working…+ read full definition dollars. These accounts also offer you more flexibility because you can withdraw money at any time.

You can choose to investInvest To use money for the purpose of making more money by making an investment. Often…+ read full definition in both an RRSP and a TFSA at the same time. Consider your personal finances and tax situation, or seek support from a financial advisor, when allocating money to either an RRSP or TFSA.

Getting money out of your business

If you pay yourself a salary, you may need to remit CPP contributions, EI amounts, health premiums and income tax deductions.

If you pay yourself dividends, you don’t remit CPP or EI. You will also be taxed at a lower rate than if you paid yourself a salary. You can also declare your dividends at a time when it gives you the best tax incentives for your business.

There is also the option to use a combination of salary and dividends to meet your financial needs.

Key Point

RRSPs and TFSAs can help you save outside your business. These plans offer tax advantages and can help you with retirement, emergencies, and long-termTerm The period of time that a contract covers. Also, the period of time that an…+ read full definition financial goals

Last updated September 18, 2023

Articles in this section

Articles read
Investing as a small business owner 3 min read
Small business cash flow 2 min read
Business & personal finances 2 min read
Small business & taxes 3 min read
Investing in an RRSP and TFSA as a business owner 2 min read

Post navigation

Back To:
Previous: Small business & taxes
3 min read
Up Next:
Next: Saving money

Sign up for Investor News

Stay informed about the latest investor initiatives, educational resources and investor warnings and alerts.

Past issues
  • September 19, 2023
  • August 1, 2023
  • June 20, 2023

Connect with us

Facebook Twitter YouTube Instagram
  • About Us
  • Contact Us
  • Investor News
  • Media
  • Glossary
  • OSC in the community
  • OSC Website
  • Terms of use
  • Privacy Policy
  • Accessibility policy

Brought to you by the OSC Investor Office

This website is provided for informational purposes only and is not a source of official OSC policy or a substitute for legal or financial advice. We recommend that you consult with a qualified professional advisor before acting on any information appearing on this website. For details, please see our full Terms of Use and Privacy policy

© Ontario Securities Commission 2023

Go back to top