The Tax Chick Podcast Money Moves: How to Pay Yourself as a Business Owner
Oct 23, 2025
Aravind Sithamparapillai, a financial planner at Ironwood Wealth Management Group, dives into the crucial question for incorporated business owners: should you pay yourself a salary or dividends? Discover the importance of tax integration and how it can shape your compensation strategy. Aravind breaks down the benefits of CPP, insurance implications, and how your business lifecycle influences your financial decisions. The conversation also highlights the role of dividends in managing corporate tax accounts and stresses the need for annual planning with your financial team.
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CPP Is The Real Driver
- The salary vs dividend debate often boils down to CPP and its tax mechanics rather than a simple tax-rate difference.
- Accounting for CPP credits and deductions can make salary less costly than many business owners expect.
Review Compensation Annually
- Meet annually with your accountant and financial planner to set salary/dividend strategy for that year.
- Revisit the plan each year because the right mix can change with business and life stages.
Prioritize Salary Early
- Pay salary early in a business to build CPP contributions and RRSP room for tax-efficient retirement savings.
- Use RRSPs to compound investments tax-deferred rather than holding all passive assets inside the corporation.