Skip Header Navigation


» Business Solutions
Resource Center
  Business Tips
  Starting a Business
  Getting Ready
  Assemble Your Support Team
  Create the Plan
  Working With RBC
  Managing Your Money
  Growing Your Business
  Growing your Business
  Expanding a Business
  Business Succession
  Women Entrepreneurs
  Industry Expertise
» Business Accounts
» Borrowing & Credit
» Cash Management
» Investments
» Merchant Services
» Payroll Services
» Online Banking
» Branch & ATM Locator
» Commercial Financial Services
» Contact Us
» Search
Starting a Business

Paying Yourself


At the end of the day, you want to be rewarded for the effort you put into your business. How you pay yourself will depend on the business structure that you have chosen.

Getting paid in a sole proprietorship or partnership has very different impacts on your personal taxes and income than getting paid through a corporation that you have set up to run your business.

Getting paid in a sole proprietorship or partnership

  • As the net income of your business (or your share of the net income of a partnership) is considered your personal income, you will take money from the business by way of a "draw".
  • The net income of a sole proprietorship or partnership (and, therefore, your "draw") is taxed at personal tax rates.
  • Owners do not normally earn salaries, bonuses or dividends from an unincorporated business.
  • "Source deductions" such as income tax, Canada Pension Plan (CPP) and Employment Insurance are not withheld from draws.
  • You and your partners make your own CPP payments and quarterly tax payments.
  • Net losses of the business are deductible against other sources of income, such as employment, rental and investment income.

Getting paid in a corporation

  • A business owner (shareholder) can receive regular salaries and bonuses, like other employees.
  • Source deductions such as CPP and tax must be withheld from salary and bonus payments.
  • Business owners may also receive dividends, which represent a share of the company's after-tax profits.
  • The net earnings (profits) of an incorporated company are taxed at combined federal-provincial corporate tax rates. Manufacturers and companies with net income of $300,000 or less pay lower rates.
  • Businesses often use employee bonuses to reduce profit so they can qualify for certain incentives, such as the small business tax rate or federal research and development tax credits. Your accountant can help you set up the payment policies and systems that work best for your business and your personal needs.

Your accountant can help you set up the payment policies and systems that work best for your business and your personal needs.

Banking That's Right for You

Our small business advisors are experienced in helping businesses at every stage of development. Come in and talk with us.

Call now Call now -
1 800 769-2520
Visit your Local Branch Visit your
Local Branch
Apply Online for Loans & Credit Apply Online

Jump To
Business Plans
Choosing the Right Structure
Registering Your Business
Paying Yourself
Financing Basics
How Much Will You Need?

Take Action
  Call 1-800-769-2520
  Visit Your Local Branch
  Send Us an Email
  Apply Online

  Account Selector
  Loan Calculator

11/16/2011 13:04:46