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What should you do with extra money in your corporation?

Start with money left after bills, taxes and planned costs. This is your corporate surplus. Then look at when you need it, where to invest it and any plans to sell the business.

For Canadian-controlled private corporations. These planning questions do not calculate a business limit or investment return. The separate cash scenario states its own assumptions.

Before you use this check

Is the bank balance the amount I can invest or pay myself?

It is only a starting point. First allow for tax, payroll, bills, planned spending, debt payments, and a working cash buffer. Current books and a cash forecast help separate available money from amounts already committed.

How does passive income reduce the small-business limit?

For an otherwise full $500,000 federal limit, relevant associated-group AAII above $50,000 reduces the limit by $5 for each extra $1. At $75,000, that is a $125,000 reduction before other adjustments. A smaller limit affects current tax only if the lost portion would otherwise be used. Read CRA's passive-income rules.

See the decision in context

What happens if the surplus stays invested?

Follow the corporate-surplus decision through retirement and an estate estimate.

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