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Go beyond the RRSP: Maximizing tax deductions

Go beyond the RRSP: Maximizing tax deductions

Blog
Sep 7, 2021
Blog
Sep 7, 2021

Go beyond the RRSP: Maximizing tax deductions

Have you ever used, or have thought about using the registered retirement savings plan that’s available to us in Canada? If yes, I assume that you want to use it because it offers a great tax benefit, and helps you grow your long-term savings for your future retirement, right? That’s usually the case for most people. As our team of financial planners in Vancouver would tell you, the RRSP is something of interest to most people because of the above reasons.

First, let’s have a quick refresher about some key points of the RRSP, and why it has been a long-time staple in the financial planning of so many Canadians.

The RRSP contribution reduces your taxable income.

This means that if someone earns $100,000 a year, and they contribute $10,000 into their RRSP, they only need to pay taxes on $90,000 worth of income. This could mean a reduction of around $3500-$4500 of taxes paid.

The money grows tax deferred.

Deferred means not yet, so while the money is sitting inside the RRSP (being invested, hopefully, and not just in a savings account), you won’t be taxed on it every year like you would your normal income. It only becomes taxable once you decide to make the withdrawal. Which brings us to our next point.

When making a withdrawal from an RRSP you’ll have to pay full income tax.

Ideally, you would make withdrawals from your RRSP once you’re retired. The idea is that in retirement, people would generally have lower income. So even though you’re making withdrawals from your RRSP, it will be balanced out by the fact that you’re not making as much working income. There are 2 ways that you can temporarily withdrawal some money from your RRSP: The homebuyer's plan and the lifelong learning plan, but pay attention to the fine print: you'll need to pay it back at some point.

If you and your partner have different incomes, use spousal RRSP.

There are many single income families, or families where the partner make very different incomes. If this is the case, the higher income partner can contribute to the lower income spouse's RRSP. The deduction will go to the higher income spouse, but the savings will be under the lower income spouse's name. Essentially, you could get some income splitting happening.

As you can see, the biggest benefit here is that your RRSP contributions lowers your taxable income, which means you will pay less taxes. For some people it might even give them a tax refund! But here’s a secret that a lot of people don’t know, which we are excited to share with you today: there is another way to get that same tax refund, without the downside of the withdrawals being fully taxable!

In Canada, when you borrow money (that is, take on a loan), you will need to pay interest. If you invest in certain assets with that loan, the interest that you pay on the loan would actually qualify you for tax deduction as well. If you’re not sure about this, ask your accountant about line 22100 – carrying charges and interest expenses, and they’ll tell you all about it.

We can use this to our advantage. Let’s assume that you borrowed $200,000 and the bank charged you an interest of 5%.This means that in one year, you’ll be paying 5% interest, or $10,000. At the end of the year, you would have $10,000 of interest expenses, which will lower your taxable income by $10,000. You’ve achieved the same income deduction as if you contributed $10,000 into your RRSP. Not to mention, if you had invested the loan into something, making 10% hypothetically, you’d end up with $20,000! This is what we mean when we say you can go beyond the RRSP: not only do you get a tax deduction, you also get amazing potential for growth!

Talk to us to learn more about the RRSP and find out how you can supercharge your own financial plan!

The contents of this post are from informational purposes only and should not be considered financial advice.

Featured Fire Client of the month: Christine Monaghan!

Featured Fire Client of the month: Christine Monaghan!

Blog
Aug 25, 2021
Blog
Aug 25, 2021

Featured Fire Client of the month: Christine Monaghan!

This month, we'd like to introduce you to Christine Monaghan, who is your human potential champion! Having worked with her ourselves, we know that she's able to motivate and influence you to the next level. Get rid of your old fears, hesitations, and doubts, with Christine's practical coaching style where she provides very realistic and straight-forward solutions to your desire to achieve more. Take a look at what she has to say!

Tell us a few personal interests and hobbies

I have wide range of interest and hobbies, to name a few, I love growing heirloom garlics, practicing yoga, baking homemade spelt bread, learning the crypto market, having dinner parties with friends and family, and writing.

When and why did you choose this industry over others?

My business evolved. I started out in sales, then raising money for world-class sporting and cultural events, then co-producing world-class events (think 80,0000 attendees over 3-days). I was always naturally good at connecting the right people to create collaborations. Eventually, I started my consulting business with my signature 1-Page Revenue-Generation Plan to influence others to focus on delivering what they are really good at plus enjoy. I was fascinated with personal growth and mindset from my teen years and this has been the constant.

How do you view your relationship with your clients?

I see it as collaborative - built on what I refer to as the 3C’s – Commitments, Conversations, Choices. When we are mindful of and align with others who endorse this approach, the possibilities are unlimited. I am a big proponent of ‘lead as you would like to follow’.

What's the most fulfilling part of the job?

Witnessing individuals and companies adopt a RESET approach and create a solutions vs problem based culture. When this is established, they individually and collectively flourish.

What would you suggest people do to develop a clear roadmap?

The first task is to figure out the ‘how do you know what you don’t know’ , then get clear on the goals, then reverse engineer the process with accountability measures. Leaving judgement at the door is essential to motivate, inspire and encourage others forward. We all have our own path to navigate.

Who should be reaching out to you?

My ideal client is an individual or organization who has already succeeded and now wants to quantum leap their life/business. This client is growth oriented, understands the value of accountability and rewards and want to work on vs in their life by slowing down to move ahead. They understand working harder/longer doesn’t not mean success.  

Connect with Christine at her website here!

Fire client of the month: Hayson!

Fire client of the month: Hayson!

Blog
Jul 2, 2021
Blog
Jul 2, 2021

Fire client of the month: Hayson!

Hello again friends. This month, we'd like to introduce you to Hayson, who is an accountant at Truspect accounting. He's a very experienced accountant with expert knowledge on small and medium sized businesses. According to Hayson, "accounting is the language of business", and we think there is no better translator then our friend Hayson. See for yourself what he has to say in the interview, and you can even watch him speak to you in the video!

Tell us a bit about yourself.

My name is Hayson Chan, CPA

What are some personal interests and hobbies"

I love traveling and taking photos. I could be watching documentaries and reading books all day and I enjoy outdoor activities such as hiking and camping as well

When and why did you choose this industry over others?

A lot of people think accounting is boring, but I see that as a language and toolkit for businesses. Once we see the story behind the business, we could be the key team player of your business.

How do you view your relationship with your clients?

I don’t see clients just as client, instead, we are part of the same team and to achieve the same goals, we have to work together. Some of our clients become friends and will invite us over for dinner. We are building a community which we can all do business and have some fun together.

What's the most fulfilling part of the job? 

Results! Taxes saving is a big one and also if the client has listen to our advises and their business prosper

How does an accountant and a financial planner working together help the client?

Working together! Many accountants are very conservative and they always say no to other services providers. It doesn’t matter which industry you are working, it is important to be open minded and learn as much before you jump to the conclusion. A good financial advisor can add a lot of value in terms of financial planning and that is part of your job. It’s just like when people need to see a dentist, you don’t go to the physio. So, I always tell people that I have save you some taxes, now, make sure your money is working as hard as you, go talk to a financial advisor

Who should be reaching out to you?

We focus on small & medium size business owners. We can serve people who wants to start a business and don’t know how, all the way up to pre-IPO planning and we got amazing team members who are happy to help.

My phone (604)618-8280; email: info@truspect.ca

See Hayson talking right to you in the video!

We were chosen as one of the top financial advisors in Vancouver!

We were chosen as one of the top financial advisors in Vancouver!

Blog
Jun 8, 2021
Blog
Jun 8, 2021

We were chosen as one of the top financial advisors in Vancouver!

A local website has recently reached out to us, to let us know that in their search for the top financial advisors in Vancouver, we were one of the 5 selected! Being noticed like this was such a pleasant surprise, and incredibly rewarding. We've been hard at work building our company and to have something like this happen is the kind of affirmation we love to see!

Read more about it here

Monthly feature - Our giveback fund

Monthly feature - Our giveback fund

Blog
4 minutes
Jun 2, 2021
Blog
4 minutes
Jun 2, 2021

Monthly feature - Our giveback fund

This month, we would like to feature and share with you the more fun and personal side of Prometheus and team members. As some of you may know, community and philanthropy is a big part of what we do, and we want to share our experience in giving back and hopefully can inspire you to join us as well!

What did PPAG do this year in terms of giving back?

Earlier this year, we decided to embark on a charitable initiative that allows us to continue to give back to the community perpetually.  We put together our very own Donor Advised Fund: The Prometheus Corporate Giveback Fund with Vancouver Foundation

 

What is a Donor Advised Fund?

A Donor Advised Fund (DAF) is a fund set up with a public foundation, such as Vancouver Foundation, and allows individual donors, like our clients; or a company, like PPAG, to establish a charitable endowment fund. By donating money to the fund, you receive a charitable donation tax receipt, and then distribute the growth of the fund in the form of grant over time. Grants can be made to any registered Canadian charity chosen by PPAG.

 

Who are your target beneficiaries?

We put a huge value on education, as it opens doors and creates opportunities. We also like to help younger generations. Our fund intends to provide youth and young adults with limited financial resources the opportunity to seek higher education in the form of bursaries and scholarships.

 

How much can you distribute?

PPAG Giveback Fund can distribute around 4% annually. The distribution rate is determined by Vancouver Foundation to ensure the fund can continue to issue increased grants perpetually. The more support we get to build our fund means more grants for those who need it and we can distribute more on an annual basis!

 

How long will the giveback fund last?

The purpose of setting up the fund is to allow us to continue to grow our charitable impact without stopping. Since we are preserving capital and mainly distributing the growth of the fund, the gift will grow and be given every year for ever! We’ve created something which will continue to make an impact long after even our team has passed on. 

 

How can I help?

I am glad you asked! You can support by clicking on this link: Prometheus Corporate Giveback Fund with Vancouver Foundation and make your donation to help us grow the fund and give the gift of education and create a brighter future for the youth in our community!

 

Some final thoughts:

‍We're a local company, with a desire to improve our community. Everyone on our team lives in this beautiful city, so we believe it's so important for us to give back and make it a better place. Making a difference is an incredibly fulfilling experience for everyone involved, and we want you to find that same fulfillment for yourself too.


What we've been up to in the community

What we've been up to in the community

Blog
May 20, 2021
Blog
May 20, 2021

What we've been up to in the community

Today, we want to share with you the more fun and personal side of Prometheus and team members. As some of you may know, community and philanthropy is a big part of what we do, so we want to share that with you!

Last year, before COVID-19 took over the world, we attended and sponsored the Kidney Gala, an event hosted by the kidney foundation. The event was an amazing success, and one of our clients actually took the stage and shared her and her family's struggle with kidney health, and why she chose to financially support the kidney foundation. We're so happy that we were able to help her realize her goals.

We also raised money for the Leukemia and Lymphoma Society of Canada last year to the tune of $53,000! They are an incredible organization and have helped so many people who have themselves, or have family, that has been affected by blood cancers. You should really check out their site to see the fantastic research they've done, and how far medical science has come over just the last decade.

Around Christmas time, our team got together to make sandwiches, in order to go downtown to hand them out to those who were feeling hungry. We made nearly 300 sandwiches and managed to give all of them out in under an hour! Everyone loves a good sandwich it seems.

And finally, this year, our team is supporting the CMHA, Canadian Mental Health Association. This is an important issue for all of us, because as you can imagine, in the last year, people suffered greatly not just physically, but mentally as well. We all did a great job in coming together to ensure the physical safety for those around us, but unfortunately, many people felt isolated and distanced from others, as a result. We want to help an association like the CMHA raise money and do some good for those around us. So far, we've raised nearly $15,000! We'd love for you to take a look at how CMHA helps others, and support them as well.

We're a local company, with everyone on our team living in this beautiful city, and we think it's so important for us to give back and make our community a better place. It will always be an important value to all of us, and we want you to find that same fulfillment for yourself too.

Featured client of the month: Cynthia Liang!

Featured client of the month: Cynthia Liang!

Blog
Apr 30, 2021
Blog
Apr 30, 2021

Featured client of the month: Cynthia Liang!

Friends, starting this month, we are going to feature a "Fire Client" every month. These fire clients are people who are close to us, and who do really great work professionally, and for the community. We'd love for you to get to know our first fire client, Cynthia! Together with Cynthia, who is a mortgage specialist with TD, we have worked to help many clients secure their new home. We have built up a great relationship of trust, which is due to her excellent work ethic, depth of knowledge, and her genuine desire to help those around her. These are the qualities that make a fire client, and she's a great person to help you finance that new home you're looking for.

See for yourself what Cynthia says below in our virtual interview!

  • Tell us a bit about yourself and what you do.

      Hi everyone, my name is Cynthia Liang and I am a Mobile Mortgage Specialist at TD Canada Trust. I help
    new and existing homeowners obtain their residential financing or refinancing needs.  


  • What are some personal interests and hobbies?

      When I'm not working hard to get my clients approved for loans, I'm investing in real estate, securities,
    and spending time with my two cats (Kumo & Masi). I also enjoy trying new sports (fencing, anyone?),
    and indulging in a good book.  
     
      
  • When and why did you choose the mortgage industry over others?

      I dipped my toes into the banking industry while studying Economics and Commerce at the University of
    British Columbia. What started as a curiosity in banking and finance in 2015 turned unexpectedly to a
    long-term career, and most of that is because of the meaningful relationships I had built with both my
    clients and business partners.

      
  • How do you view your relationship with your clients? What's the most fulfilling part of the job?

      For me, the feeling of helping clients with the largest purchase of their life is incredibly rewarding.
    During the process, clients become family which is evident when they return months or years later to
    upgrade, buy an investment property, or refer family or friends. I speak three languages fluently;
    Cantonese, Mandarin, and English, which makes my clients feel comfortable and well informed.   


  • How does a mortgage broker and a financial planner working together help the client?

      When your Financial Planner and your Mortgage Specialist work in tandem, it provides you with a
    holistic well-rounded team-based approach to your financial strategy. That's why I love working with the
    team at Prometheus!
      

  • Who should be reaching out to you?

      If you are looking to buy a home, I'd love the opportunity to help. If you're a Real Estate Agent,
    Developer, Commercial lender, or have general questions about home lending, I
    encourage you to reach out so we can discuss how we can work together to add value to people's
    lives. 


You can reach Cynthia by email at cynthiaxiaoyun.liang@td.com, or call/text at 778 891 0306. Don't be shy, she's very friendly!

3 corporate investment pitfalls to avoid

3 corporate investment pitfalls to avoid

Video
Apr 19, 2021
Video
Apr 19, 2021

3 corporate investment pitfalls to avoid

When people earn money within their corporation, it's super exciting. When they save up enough money to start investing with their corporation, it's even better! At this stage, it's important to look out for a few things if you choose to invest within your corporate account. Listen to what Mary says to avoid some common pitfalls.

RRSP vs TFSA, which one?

RRSP vs TFSA, which one?

Video
Apr 19, 2021
Video
Apr 19, 2021

RRSP vs TFSA, which one?

Corporate wealth transfer strategy

Corporate wealth transfer strategy

Video
Apr 19, 2021
Video
Apr 19, 2021

Corporate wealth transfer strategy

Value of a Financial Advisor

Value of a Financial Advisor

Video
Mar 25, 2021
Video
Mar 25, 2021

Value of a Financial Advisor

How to sell your investments without paying taxes

How to sell your investments without paying taxes

Video
Mar 25, 2021
Video
Mar 25, 2021

How to sell your investments without paying taxes

3 reasons for individual vs mortgage insurance

3 reasons for individual vs mortgage insurance

Video
Mar 25, 2021
Video
Mar 25, 2021

3 reasons for individual vs mortgage insurance

Plan your legacy by design

Plan your legacy by design

Video
Mar 25, 2021
Video
Mar 25, 2021

Plan your legacy by design

Are you fully covered through work?

Are you fully covered through work?

Video
Mar 25, 2021
Video
Mar 25, 2021

Are you fully covered through work?

How to be a Voluntary Philanthropist

How to be a Voluntary Philanthropist

Video
Mar 25, 2021
Video
Mar 25, 2021

How to be a Voluntary Philanthropist

Philosophy behind budget allocation

Philosophy behind budget allocation

Video
Mar 25, 2021
Video
Mar 25, 2021

Philosophy behind budget allocation

Fire thoughts - Stock market: Gambling or investing?

Fire thoughts - Stock market: Gambling or investing?

Blog
Feb 8, 2021
Blog
Feb 8, 2021

Fire thoughts - Stock market: Gambling or investing?

Gambling versus Investing

The morning of January 8 th , 2021 marked a historical day in the stock market. For many of us, it

will be ingrained in our memories as “David versus Goliath” on Wall Street. A group of retail

investors formed a popular alliance on the Reddit forum Wallstreetbets (WSB) with the aim of

taking down the mighty Wall Street hedge fund managers. The showdown took place on the

stock exchange, with most of the initial action centered around a company named Game Stop

(GME).

Game Stop is a video game retailer with an aging business model and hedge funds were

massively shorting the stock — wagering that the retail chain was headed for bankruptcy. If the

hedge fund bets paid off, they stood to earn a fortune. However, Reddit users suddenly entered

the fray and went to war against the hedge funds.

The retail investors formed a group to throw their hard-earned money into GME in a bid to

inflate the stock price as high as possible — to the moon! — hoping the hedge fund companies

would lose a ton of money by having to unwind their short. Some traders even bet on GME by

digging into their emergency funds, taking out loans and risking their family’s hard-earned

retirement funds.

This created a frenzy in the stock market and as the news poured out, more and more retail

investors joined the alliance and inflated the price to as high as $481.99 per share. It was a

“short squeeze” of truly epic proportions. Those early speculators who got into GME and then

jumped out again made a killing — unfortunately, many of the late players to the game wound

up losing a big chunk of change in what ended up being an extremely risky proposition.

After the dust finally settled after two weeks of stock market frenzy, no one could have

predicted that ordinary posters on a public message board would have helped create such an

upheaval. However, there is one thing that all investment experts can agree on: This was not

“investing” in any way, shape, or form. It was gambling, pure and simple. For those that made a

profit on GME and other highly shorted stocks, congratulations, your bets paid off!

Sadly, for many others, their ill-advised speculation ended only in misery, and a hard lesson has

been learned. Investing – whether it’s in stocks, investment funds, ETFs, or anything else –

should only be done in a strategic matter. All investors need to understand their personal risk

tolerance, time horizon, and objective. And people should only ever invest within their financial

means and capabilities.

At Prometheus Private Advisory Group, we stand ready to offer our help with our knowledge

and experience. Would you like to learn more about how to invest wisely and profitably? We

warmly welcome you to book a complimentary consultation with one of our advisors to discover

what type of investment strategy is suitable for you!

Why Giving to Charities Should be Part of Your Financial Plan

Why Giving to Charities Should be Part of Your Financial Plan

Blog
Dec 7, 2020
Blog
Dec 7, 2020

Why Giving to Charities Should be Part of Your Financial Plan

We're coming up to the end of the year, and this is a time where we start thinking about other people in our community, and how we can give back to them. It might be corny but it’s true: nothing feels as good as helping others. Of course, if you can also benefit from giving back to those in need, that’s a win for everyone. At Prometheus Private Advisory Group, we believe that’s exactly what makes charitable donations so powerful: both the donor and the recipient reap significant rewards.


Most importantly, giving money to charities is a valuable, generous and high-impact way to allocate extra funds. You can choose an organization you believe in and see the direct impact of your support. But when you donate, you also save big on taxes and can even leave behind a legacy to make sure your gift keeps on giving after you’re gone. Here, we’re sharing everything you need to know about charitable giving, including:



Giving to Charity: A Valuable Part of Any Financial Plan

The benefits of giving to charity are many and obvious: your money goes towards supporting people and causes who need it most, it teaches your children the value of giving, and it straight up makes you feel good. For those reasons alone, everyone can benefit from making charitable giving a part of their lives.


But from a financial planning perspective (which, of course, is what we’re all about), charitable giving makes smart financial sense. When you donate to a registered charity in Canada, you receive a tax receipt for your donation. You can then submit your receipt(s) with your annual tax return and receive up to 53% of your donation as a tax credit. The rate is 29% at the federal level and up to 24% at the provincial level, depending on where you live. 


Since the more you donate, the more you get back, it can be valuable to hold onto your receipts and claim them all in the same year. In any given year, you can claim donations made by December 31st of the current tax year, as well as any unclaimed donations made by you or your spouse for the last five years.


How to Claim Charitable Tax Credits

To make a charitable tax claim, you’ll first need to determine that all your donations are eligible for credits. Remember, you can only claim donations made to registered charities and other qualified donees. If you’re unsure, the government website has a handy list of eligible charities in Canada. Once you’re sure that your donations qualify, you can calculate the amount you’re entitled to claim.


At the federal rate, donations up to $200 get you 15% credit. For additional amounts over $200, you’ll receive 29%. Each province also has its own charitable tax rate, ranging from 4% to 24%. Be sure to check the provincial charitable donation tax credit rates and use the tax credit calculator to get a better idea of how much you’ll receive.


How to Set Up Legacy Giving

So now that you’re up to speed on how charitable giving can help you save on taxes, let’s talk about how to make sure your money goes to good use — for now and for the future. Your donations can make a big difference, both during your lifetime and after you’re gone. Legacy giving can ensure this happens.


Also called planned giving, you can plan ahead to leave a portion of your wealth to a charity or organization of your choosing. This means you’ll be able to support causes that matter to you, even after you’re no longer able to make regular donations. Planned giving can also give you the opportunity to make donations that you wouldn’t be able to afford while you’re alive. You can even discuss your legacy donation with your chosen charity to decide how the funds will be used. It’s a powerful way to guarantee the causes you want to support have the funding they need for many years to come.


You might be wondering if there’s any benefits of legacy giving to the family you’re leaving behind. In a word, yes! The money that you give to a charity in your will does not take away from the money you leave to your children. Instead, Canada’s tax regulations allow donations to come from the amount you’d typically pay in taxes to the CRA. If you haven’t already included legacy giving in your will, talk to one of our financial advisors in Vancouver to learn more.


Charities to Support in Vancouver

I think we can all agree that giving to charity is a good thing for everyone involved. Whether you’re donating to cancer research or supporting organizations that seek to end homelessness, charitable donations make our world a better place for all of us. But deciding to donate is only one part of the equation. There are so many worthy causes out there, so choosing where to donate can be a challenge.


Choosing a charity to support is a very personal decision. It comes down to deciding what causes matter to you most — whether it’s animal rights, children’s health or equality for BIPOC people — and then researching charities in that sector. We can’t tell you where to give your hard-earned money, but we can guarantee that you’ll feel great about supporting a cause that’s close to your heart.


The best part about charitable giving is that you really can’t go wrong. Just be sure to stick to registered charities and organizations so you can claim your tax credits. If you’re not sure where to start, check out this helpful list of Vancouver charities to support. And if you still have questions about donating to charity in Canada, contact Prometheus Private Advisory Group to talk to an expert today.

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s

Blog
Nov 16, 2020
Blog
Nov 16, 2020

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s

5 Pieces of Financial Wisdom We Wish We Knew in Our 40s



A few months ago, we shared the biggest things we wish we knew about finances when we were in our 30s. But if you’re approaching 40, you might be wondering what financial tips you’ve been missing out on. It’s crazy to think about it but in your 40s, you’re about half way (or more) to retirement! If you haven’t already, now is the time to start making smart financial decisions for your future.


At Prometheus Private Advisory Group, we believe it’s never too late to think about financial planning. While it’s always better to start as soon as possible, you can still set yourself up for financial longevity at any age. If you’re not sure where to start, keep reading. Here, Vancouver’s financial advisors are sharing all their financial secrets for your 40s and beyond.


1. Don’t Be Afraid to Use Your Credit Cards


… as long as you pay them off! When used wisely, your credit cards can be a valuable part of your financial plan. From cashback and travel rewards to dining and retail credits, there are so many ways to make your credit cards work for you. It can make some people nervous to throw everything on their credit card, especially if you’ve struggled with debt in the past. But there’s nothing wrong with using your credit card for all of your purchases, as long as you pay it off each month before you’re charged interest. In your 40s, you know by now how much you can afford. When it comes to using your credit cards, it’s all about only spending within your means.


2. Increase Your Retirement Contributions


In a perfect world, you already have a retirement plan by the time you reach your 40s. After all, retirement isn’t all that far away so it’s a good idea to be prepared for life after work. Assuming you have a retirement savings plan, consider upping your contributions or reevaluating your account. Are you getting the most out of your retirement savings? Are you earning more than you were in your 30s? Now is the time to maximize your savings potential so you can enjoy your retirement to the fullest.


3. Buy Life Insurance


If you haven’t already thought about life insurance, your 40s are the perfect time to finally lock down a policy. The earlier you get life insurance, the better. Why? Monthly premiums are lower the younger you are because you’re less likely to have pre-existing health conditions. So while it’s never too late to get life insurance, it’s best to do it now. Life insurance is a valuable way to secure your family’s financial stability after you’re gone and will give you peace of mind knowing your loved ones will be taken care of.


4. Do a Monthly (Financial) Cleanse


No, we don’t mean you should stock up on green juice or bone broth. We’re talking about taking stock of your monthly expenses and cleansing yourself of the non-essentials. Are you really using that annual subscription for online yoga? Do you really need Netflix and Crave and Amazon Prime? If you use all of those things, great! You don’t need to get rid of things that are actually important to you. But all of those seemingly little expenses can add up to big costs, often without your realizing because they tend to be automatic charges. It’s worth taking the time to do a self-audit so you know what you’re really spending each month.


5. Get Paid What You’re Worth


By the time you’re in your 40s, you’re probably well into your career (but if you’re still figuring things out or switching gears, that’s totally cool too!). You’ve been working hard for the better part of two decades and you’ve earned your place in the working world. If you’ve been at the same company for a while or don’t feel like you’re making as much as you should be, stand up for yourself and ask for a raise. Not only will getting paid what you’re worth make you a better employee, it will also allow you to level up your retirement savings. Win win.


Not sure how to ask for a raise? Start by doing market research to find out what others in your position (and with your experience level) are making and consider hiring a career coach to develop negotiating strategies. Then talk to your boss and make your case. If they value your contributions to the company, the raise conversation should never be off the table.



Managing your finances is a big task, but it doesn’t have to be complicated. If you’re having a hard time with financial planning in your 40s, or just need a little extra advice, the financial experts at Prometheus Private Advisory Group are always here to help. Contact us for a consultation today.


What Kind of Life Insurance Should I Buy?

What Kind of Life Insurance Should I Buy?

Blog
Oct 19, 2020
Blog
Oct 19, 2020

What Kind of Life Insurance Should I Buy?

What Kind of Life Insurance Should I Buy?



Thinking about buying life insurance? Good on you — you’re a big step ahead of a lot of people! Unfortunately, people love to pretend that they’re invincible and don’t need to worry about what will happen once they pass on. In reality, no one is too good for life insurance and every single one of us can benefit from planning ahead. After all, you never know what can happen and when. So while there’s nothing wrong with hoping for the best, it’s always best to be prepared for the worst. 


As insurance advisors in Vancouver, we’re experts in all things life insurance: why it matters, how it can help you and your family, and how to pick the best policy for your needs. Not sure where (or when) to start? Here, Prometheus Private Advisory Group is sharing everything you need to know about life insurance in Canada.


What is Life Insurance Anyway?


Okay, we’re going to go ahead and state the obvious: life insurance can be pretty dull. It’s one of those not-so-fun parts of adulting that most of us would rather ignore for the rest of our lives. We get it: when you sign up for a life insurance policy, you have to fill out a lot of paperwork, estimate and calculate your living and dying expenses, and dive deep into your medical history. Not exactly anyone’s idea of a good time. But even though life insurance can be tedious, time-consuming and expensive, it is 100%, totally and completely worth it.


Why? Because a life insurance policy is the official contract that guarantees your dependents (or anyone who relies on you for financial support) is taken care of once you’re gone. In exchange for a monthly premium, you get peace of mind that your loved ones don’t have to stress about money in the event of your death, and can enjoy their current lifestyle for many years to come.


Here’s how it works: you open a policy with an insurance company for a specific amount of money that will be paid out when you die. You pay said company a monthly fee for as long as the policy is in place. Upon your death, the lump sum is given to your surviving family or chosen beneficiaries. Your loved ones are free to use the money for whatever purpose they choose, whether that’s for living expenses, tuition, debt repayments, your funeral costs or anything else.


Do I Really Need Life Insurance?


Again, we’re going to be straight up with you: life insurance policies can cost a pretty penny and you personally will never see that money again. It can be a little annoying to send that cash out into the ether when you could use it for way more fun things, like vacations or a new car. If you’re feeling that way, it’s natural! You’re certainly not the first to ask yourself, “Why should I buy life insurance?”


In a word, yes. At least, if you have a spouse, children or any other dependents, you probably want to get yourself some life insurance. Because even though no one likes to think about their own death, isn’t it worse to imagine your family struggling financially because you’re no longer around to take care of them? For that reason alone, we believe life insurance is worth the investment.


But now we’re getting to the fun part. No, really, insurance can be exciting! (Hey, we see that eye roll…) Being the insurance connoisseurs we are, we can help you use life insurance as an investment vehicle to achieve your financial goals. Our team has your back with personalized solutions and strategies that will set your family up for long-term financial stability.


What Kind of Life Insurance Should I Buy?


There are two main types of life insurance in Canada: term life insurance and permanent life insurance. With term insurance, you pay an annual premium for a set number of years (usually 10, 20 or 30 years) or up until you reach a certain age. If you die during that term, the insurance company pays out the lump sum to your beneficiaries. If you don’t die, nothing happens. The insurance company keeps the money and you’ll need to renew your policy to re-up on coverage.


Permanent life insurance works a little differently. Instead of only covering you for a fixed term, you’re covered for life. As long as you keep paying your monthly premiums, you can rest assured that a payout is coming to your family at some point in the future, whenever you pass away. In addition to lifelong coverage, permanent life insurance has the added benefit of allowing you to accumulate cash value, which you can use as collateral on a loan or receive as a payout of your own if you cancel the policy. Permanent life insurance is also valuable for estate planning purposes, allowing you to leave tax-free money to beneficiaries or charities.


The type of life insurance you choose will depend on your personal goals and financial situation. Keep in mind that term insurance premiums are much less expensive than permanent insurance premiums, but term insurance has fewer perks. When in doubt, talk to an insurance advisor in Vancouver to discuss your options.


When Should I Buy Life Insurance?


As for when to buy life insurance, the answer is now. It’s never too early (or too late) to get started, but the longer you wait to buy life insurance, the more expensive your premiums will be. That’s because insurance companies consider your entire health history. Since you’re more likely to develop chronic health conditions as you age, premiums are lower for younger, healthier folks.


We know talking about life insurance can be a little overwhelming, but don’t worry. The insurance advisors at Prometheus Private Advisory Group are experts in making insurance accessible, affordable and yes, even fun. Contact us today to get started.


What is Estate Planning?

What is Estate Planning?

Blog
Sep 14, 2020
Blog
Sep 14, 2020

What is Estate Planning?

No one likes to think about their own mortality, but when it comes to planning for the future, it’s naive to ignore the inevitable. We’re all going to pass on eventually — and unfortunately, there’s really no way to know when. Wouldn’t you rather take steps now to plan for your family’s financial future once you’re gone? That’s what estate planning is all about and Prometheus Private Advisory Group is here to show you how to do it.

As financial planners in Vancouver, we’re experts in helping people plan for their future — including their eventual passing. We know it’s hard to imagine your untimely (or even elderly) death, but the sooner you start planning for the worst, the better off your family will be.

Here, you’ll learn:

  1. The definition of estate planning
  2. Why estate planning matters
  3. The estate planning checklist

Estate Planning 101

When you think about what happens to your estate once you pass away, the first thing that comes to mind is probably your will. While a will is absolutely a key part of the estate planning process, it’s not the only thing that matters. That said, if you don’t have a will already, that’s a great place to start!

Estate planning refers to the process of preparing and arranging for the management and distribution of your property and assets in the event of your death or incapacitation. In simpler terms, it’s your plan for how your stuff will be doled out to your family, friends or other recipients after you die. Your detailed instructions will officially be written out in your will but estate planning involves many other aspects, such as setting up trusts, naming an executor and beneficiaries, making charitable donations, making funeral arrangements, and more.

A Guide to Estate Planning

We know that estate planning can get overwhelming. Aside from the absurdity of pondering your own demise, you’ll need to do a deep dive into your own finances and make big decisions about what will happen to your assets. Here’s a simple guide to estate planning in Canada to help you get started.


Prepare to Write a Will

First thing first, you’ll want to write a will that details out your wishes: who you want in charge of your estate and where you want your money and other assets to go. Be sure to include instructions for the following:

  1. Distribute your assets: Create an up-to-date, detailed list of your assets and who will get what. If there are any specific items that you want a certain person to receive, this is where you’ll state it.
  2. Name beneficiaries: Make a list of the people who will inherit your assets. Have secondary options in case your beneficiaries predecease you.
  3. Designate guardians for any minors: If you have children or other dependents who are minors, make arrangements for who will take care of them. Always be sure that your preferred guardians are up for the task and review your choice as your child gets older.
  4. Name an executor: Your executor will be the one who carries out your wishes when you die. Choose someone who is capable of handling the responsibility and also has the time for it. Settling an estate is no simple task, so it’s important that your executor knows what they’re getting into.
  5. Talk to a lawyer or notary public: For peace of mind, you may wish to get a lawyer or notary public to look over your will. While getting your will notarized or signed by a lawyer is not required, it can help to speed up the probate process so it’s something to consider.


Name your Power of Attorney:

The person you choose to act under your power of attorney document is responsible for making decisions on your behalf. In Canada, a general power of attorney manages your property and finances while you are still mentally able to do so yourself and a continuing (or enduring) power of attorney manages your financial assets if you become mentally incapacitated.


Buy Life Insurance:

Life insurance is a critical part of any estate plan. It protects your family financially and ensures they can continue their current lifestyle once you pass. Life insurance can also help pay for taxes and other liabilities that may come up after death. Make sure to keep up-to-date beneficiaries for your life insurance. As insurance experts in Vancouver, we can help you out.


Plan (and Prepay) for your Funeral:

Funerals can be very expensive. Planning ahead, and potentially even prepaying, for your funeral can take this stressful expense off your family’s shoulders.


Give Gifts or Charitable Donations:

Also called planned giving or legacy giving, charitable donations are a fantastic way to distribute your wealth after you’re gone. You can plan ahead to leave a portion of your money to causes that matter to you, which can give you an opportunity to donate funds that you wouldn’t be able to afford while you’re alive. Giving to charity also helps you save on taxes. Learn all about legacy giving here.


Set Up Trust Funds:

Trusts can be a valuable way to provide income for your family members. There are two main types of trust funds in Canada: testamentary trusts and inter vivos trusts. The first is created and begins after you die whereas the latter is set up while you’re still alive. The type you choose depends on your wishes for your wealth.


Why Estate Planning is Important

You might be wondering why you should worry about estate planning in the first place. Once you’re gone, you won’t be around to see what happens to your wealth anyway. But if you don’t have a plan for your estate, it can be extremely stressful for the people you leave behind to wade through your assets, debts, taxes and so on.

Creating an estate plan is about a lot more than just dictating who gets what. It gives you peace of mind that your wealth will be divided according to your wishes, and allows your friends and family to focus on what’s really important: grieving the loss of a beloved family member.

At Prometheus Private Advisory Group, we believe the key to estate planning is to start as soon as possible. That way, if the worst happens, you can rest in peace that your family is financially secure. Ready to start planning your estate? Contact us to talk to one of Vancouver’s estate planning experts today.

8 Questions to Ask for Financial Stability During the Coronavirus Crisis

8 Questions to Ask for Financial Stability During the Coronavirus Crisis

Blog
Jul 30, 2020
Blog
Jul 30, 2020

8 Questions to Ask for Financial Stability During the Coronavirus Crisis

It’s been over a month since the country — and the entire world — went into lockdown in response to the COVID-19 crisis. Canadians’ lives have changed dramatically over the last few weeks, with new regulations emerging daily, and it understandably has people concerned about their future. One of the biggest questions on everyone’s minds comes down to finances: am I financially stable enough to weather the storm? What supports are available to me during the coronavirus crisis? Don’t worry. Prometheus Private Advisory Group is here to answer all your financial questions and to support you through these difficult times.


While the situation we’re in is serious, it doesn’t have to be all doom and gloom. Armed with the right information, guidance and financial strategies, you’ll come through this just fine. Remember, this is about more than insurance — it’s about overall financial planning and setting yourself up for the long run. If you’ve taken a financial hit due to COVID-19, these are the big questions to ask to make sure your finances will carry you through to brighter days.


1. Do I Have a Financial and Budget Plan?

Over three million Canadians have applied for COVID-19 job benefits since mid-March when the crisis took a serious turn. If you’ve lost your job or had a change in income due to the current situation, it’s time to act fast to create a plan for your financial longevity. This starts with understanding what government sources of income are available to help you get through the next few months, from wage subsidies to tax breaks to so much more.

Fortunately, the government has ramped up its efforts to support Canadians across the board. It doesn’t matter if you qualify for regular employment insurance benefits or not, whether you’re self-employed or work for someone else, or what your current financial situation is. If your job and income has been affected by coronavirus, you will have help.


2. What Can I Do with My Current Investment Portfolio?

If you’ve been watching your portfolio since all this madness started, you might be on the verge of panicking. Don’t. In situations like this, things are bound to take a dip, but rest assured that there will be a rebound. There are also a few ways to make up for losses. For non-registered portfolios, you can trigger a “sell and buy” transaction to realize capital loss and help you reduce your upcoming tax payables. We also recommend buying into assets that have been hit particularly hard so you can capture the rebound. Also, for those who are in the position to invest, you can do dollar cost averaging (which is basically a fixed monthly purchase plan) to buy the current dip over time, reducing your risk and also capturing upside potential.


3. Do I Have Emergency Funds Set Up?

If so, great! You’re already a step ahead. Relax, review your funds and see what’s available. If you have investments, you could consider getting a line of credit against the asset. This way, you don’t have to sell at the current low point but you can still have access to cash.

Don't forget there are also many payment deferral programs available to increase immediate cash flow. This includes mortgage deferrals, car lease payment deferrals, insurance premium deferrals, as well as bill credits for BC hydro, to name a few. So if you’re feeling strapped, there are options available to you to help you get through this.


4. Do You Have a Line of Credit?

Speaking of lines of credit, this may be the time to look into tapping into it to pay for immediate expenses. As Vancouver’s insurance advisors, we can help review your budget and determine how long the line of credit will last. We’ll also help you come up with a game plan for how to pay it back later. For those who own a home, you can also look into tapping into your home equity line of credit as an available source of income.


5. Is Your Insurance Annual Premium Payment Coming Due?

Under normal circumstances, many of our clients prefer to pay for their insurance annually. Given the current situation and how you’ve been affected, that might not be the best option. If you currently pay annually and your premium is coming due, we can help you change to monthly payments to reduce your immediate cash outflow.


6. Does Your Insurance Policy Come with Built-in Cash Value?

All insurance plans are a little bit different and the details for how cash value accumulates varies depending on your policy. But if there’s built-in cash value, this could be the right time to utilize that money. Ask us how to tap into it.


7. Does Your Insurance Plan Pay You If/When You are Hospitalized Due to Accidents or Illness?

Fortunately, this includes hospitalization due to COVID-19, so if you’ve had the virus and required medical attention, you could be covered. If not, this may be the time to consider adding on this option. It’s a cost effective solution and can provide peace of mind until life returns to normal.


8. Do You Have a Proper Disability Plan?

If you become seriously injured or ill, it can take a long time to recover and return to work. Your disability plan will provide you with monthly income so you can focus on what matters: your recovery. Let your disability plan take care of the rest.


We’re all adjusting to a new normal and there are enough stressful things happening in the world right now. Your finances don’t have to be one of them. Want to talk to Vancouver’s insurance advisors about your options? Connect with Prometheus Private Advisory Group today.

5 Pieces of Financial Wisdom We Wish We Knew in Our 30s

5 Pieces of Financial Wisdom We Wish We Knew in Our 30s

Blog
Jul 30, 2020
Blog
Jul 30, 2020

5 Pieces of Financial Wisdom We Wish We Knew in Our 30s

Your 30s are some of the biggest years of your life. For many, this is the decade when you’ll land that big promotion, get married, buy your first home or maybe have your first (or second) child. But along with these exciting milestones comes a steep uptick in financial responsibility. If you haven’t planned ahead for significant life changes, you might reach your 30s and wonder, “What do I do now?”

At Prometheus Private Advisory Group, we believe that when it comes to finances, it’s always best to plan ahead and prepare for the worst. That way, even if the economy takes a turn for the worse or your circumstances change, you’ll be set up for long-term financial stability. Fortunately, as Vancouver’s financial advisors, we have the expertise to help you take control of your finances. (Unfortunately for us, we’ve also got real world experience in what not to do, too.)

Don’t wait until it’s too late to get smart about your finances. Here are 5 things we wish we knew about financial planning before our 30s.

1. Don’t Live Beyond Your Means

So you finally landed your dream job or got that raise you’ve been waiting for. Time to pop the bubbly and buy yourself something fancy, right? We get it. It’s easy to get a little loose with your cash when you suddenly have more money coming in, but living above your means (or even just slightly below) won’t help you achieve the kind of financial stability you want — in fact, it could put you in serious trouble.

By all means, toast your raise and celebrate your promotion, but hold off on buying that new car or moving to a more expensive neighbourhood. Those things can wait. For now, live below your means as much as makes sense for you and bank (or invest) the rest.


2. The Earlier You Invest, The More You’ll Earn Over Time

Sounds like a no brainer, right? That’s because it is. The sooner you start investing your money, the more time it has to grow. Think of it this way: a seed doesn’t become a tree overnight — it needs time, care and resources to grow and flourish. (We’re talking about the money tree here, in case you missed it.)

Really, it comes down to compounding interest, which reinvests your asset’s earnings to exponentially increase your overall gains over time. We know investing can be intimidating when you’re first starting out, but we’re here to help you make smart decisions with your money.


3. It’s Never too Early to Plan for Retirement

In your 20s and 30s, retirement can feel like it’s a hundred years away. Out of sight, out of mind, no problem. Well, if you think retirement is a problem for Future You, that’s exactly what it’s going to become. It’s going to sneak up on you, one of these days, so wouldn’t you rather be prepared for it? We would too.

Even if you have a pension to support you in your retirement, it’s important to make smart choices now to set yourself up for your later years. There are tons of options for retirement planning, from reducing your expenses to investing to maxing out your Canada Pension Plan contributions. If you’re self-employed or a healthcare professional, you could also consider incorporating your business to save on taxes, which will give you extra money to invest and use towards your retirement.


4. Life Insurance is for Everyone — at Every Age

Life insurance is another one of those important things that everyone loves to forget about. But the longer you wait to get life insurance, the more expensive it will be. Premiums are largely based on your age and health (among other things), and it’s more likely for health conditions to develop as you get older. Life insurance also protects your family financially if anything happens to you, so it’s best to plan ahead.

At Prometheus, we believe insurance is the key to securing your long-term financial health. We use insurance as a tool for financial planning and investing to make sure you and your family are taken care of, no matter what. So if you’re wondering when you should get life insurance, the answer is yesterday. Call us. We’re here to help you out.


5. Get Professional Help with Financial Planning

Let’s face it, managing your finances can be overwhelming. That’s why many people prefer to just go about their daily lives and not pay much attention to what’s happening in their bank accounts. This laissez faire attitude can be extremely dangerous to your financial future. If thinking about finances makes you want to stick your head in the sand, it might be time to talk to a financial planner.

A financial planner can answer any questions you have about your finances, help you develop a long-term plan, guide you through your financial decisions and give you peace of mind that you’re making smart choices. Not only that: people who work with a financial planner accumulate about three times more assets than those without an advisor. There are some things you can fake in life but financial planning isn’t one of them.


The best financial advice we can give you is to start planning for your future now. Ready to learn more about your option? Talk to one of Vancouver’s insurance and financial experts today.


Do you have the disability tax credit? No? You’re not alone.

Do you have the disability tax credit? No? You’re not alone.

Blog
Jul 30, 2020
Blog
Jul 30, 2020

Do you have the disability tax credit? No? You’re not alone.

Have you heard about the disability tax credit or DTC? If you’re like most Canadians, you probably haven’t. However, it’s a fantastic tax benefit for those living with disabilities, and it can help you with potentially thousands of dollars a year each year if you or a family member qualify.

However, there is a glaring issue. By the CRA’s own estimates, only about half the people who could qualify for the DTC actually have it. There are some reasons for this, which we’ll get to but here’s the process for applying for the disability tax credit:

  • Find the disability tax credit application form
  • Go to a medical practitioner and have them fill out, and sign off on the form
  • Fill out personal information and submit
  • Wait for approval
  • Claim the amount on your tax forms

Okay, that might seem pretty simple, but there are a few challenges you could encounter. Based on our experience, let’s take a look at some of the problems that can crop up:

  • Difficulties are apparent in the very first step. We’ve talked to a lot of people with disabilities and we’d estimate maybe 20% have actually heard about the disability tax credit. Less have applied for it and even less have been approved for it. Even though the DTC is a great benefit, people just aren’t getting the information. Now that you have it, start by downloading the form on the Canadian government’s DTC page.
  • You have to work with a medical professional to fill out their portion of the form. Doctors and other medical professionals are great at taking care of our physical and mental health. However, their realm of expertise is not in financial planning or tax advice. Usually, that’s a good thing. You definitely want your doctor focusing on their speciality, but when it comes to the form, it poses a challenge. We’ve heard from our clients that they want to apply for the DTC but when they bring the form to their medical practitioner, the doctor doesn’t know exactly what to write, or how to fill out the form. Simply put, the medical practitioner’s role in this case is to certify that their patient is indeed experiencing a disability, which results in a decreased quality of life. Unfortunately, there are some “fuzzy” guidelines in terms of what “really” qualifies for a disability, according to the federal government; as a result, there’s a certain art to filling out the form to best describe your symptoms accurately in a way that presents you or your family member correctly. That’s something we can help with.
  • Challenges from the CRA Simply applying for the DTC is only the beginning. After several months, you’ll get a reply back telling you whether the application has been declined or approved. If approved, it may only be for a certain number of years, and if declined, you can choose to appeal, which is an entire process all over again. On top of that, they expect you to adhere strictly to the guidelines of what sort of impairments can qualify for the DTC.
  • Receiving the appropriate amount of tax credits, or money back, can be difficult. This can sometimes be a challenge because even though you or your family member may qualify for the DTC, you still have to actually claim the amount on your taxes. Additionally, there are other benefits you can claim if you qualify for the DTC. In addition to that (yeah, a lot of additions), you’ll have to go through more paperwork if you want to claim amounts from previous years where you’ve qualified for the DTC. You’ll need to do some careful calculations to make sure you’re getting what you deserve. Here’s where a financial professional like Prometheus Private Advisory Group or your accountant can help you calculate how much you should receive back.
  • What should you do with the money? There are different options for what to do with the money that you claim back from your taxes thanks to the disability tax credit. The most important thing is to have a plan. For example, if this is for your child, you may want to start a disability savings plan for them. Or, you may want to use it to pay for additional therapies now. Regardless of what you choose, have a plan in place so you can make the best use of the money. Talk to your financial planner and work with them to find the best solution for you and your family’s situation in a holistic way by taking into account all factors of your finances.


As you can see, although seemingly easy at first glance, there are things along the way that can potentially make the process complicated. There are resources, however, to guide you. Start by visiting the CRA’s webpage on the disability tax credit to learn some basic info. Next, talk to professionals who can help you with your overall finances. At Prometheus, we can help you with your financial process. You deserve to have these tax benefits. Remember, they were created just for people in your situation, so take advantage of it!  

5 Key Advantages of Incorporating Your Business

5 Key Advantages of Incorporating Your Business

Blog
Jul 20, 2020
Blog
Jul 20, 2020

5 Key Advantages of Incorporating Your Business

*Updated for 2020

If you’re self-employed, incorporating your business can seem like a daunting task full of hoops to jump through and endless paperwork to file. And all for what? Your business is running totally fine without being incorporated, so you might be wondering, “Why should I incorporate?” Well, as Vancouver financial advisors, it’s our job to make sure you get the most out of your money and your business. In reality, there are many benefits of incorporating your business — from tax savings to reduced liability to small business deductions — and we’re here to show you how.

Prometheus Private Advisory Group is breaking down the benefits of incorporating a business in Canada. Here, you’ll learn:

  • What it means to incorporate
  • Why you should consider incorporating your business
  • How incorporation can save you money in the long run

Ready? Read on!


What is Incorporation?

Incorporation is a form of business ownership that creates a distinct legal entity that is separate from its owners (known as shareholders). Unlike sole proprietorships or partnerships where the owners are 100% liable for any debts, incorporated businesses offer shareholders limited liability, insulating them from being held responsible for debts.


At Prometheus Private Advisory Group, we work with many medical professionals in the Vancouver area. If that’s you, it’s important to note that limited liability does not apply to medical liability, so incorporated medical professionals can still be held personally responsible for any malpractice.


Should You Incorporate Your Business?

Choosing to incorporate your business is a big decision that should be based on a number of factors. First of all, if you’re just starting out and still building up your revenue, it may not be worth it to incorporate. While corporate tax rates are lower than personal tax rates, your business needs to be earning enough money to reap the benefits.


In other words, it only really makes sense to incorporate if your business makes more money than you need to live comfortably. For example, if your business earns $75,000 a year and you only need $50,000 of that, you’ll receive a significant tax break on the $25,000 that remains in the business.


Taxes aren’t the only thing to consider when deciding whether to incorporate. You’ll also need to be prepared for the increase in responsibility that incorporation brings, including more paperwork, double the tax returns, and registration costs. We’re not trying to dissuade you from incorporating your business at all — we just want you to have all the facts so you can make the best decision! On that note, let’s dive into the reasons to incorporate your business in Canada.


Benefits of Incorporating a Business in Canada

1. You Get a Better Tax Rate

Tax savings is one of the main reasons businesses incorporate, especially for medical professionals. We’ve covered this a little bit already, but tax rates for corporations in Canada are significantly lower than personal tax rates, so it can save you big money if you incorporate. That is, as long as your business is making enough of a profit (revenue minus costs). Like we described earlier, any surplus money that’s left in the business is charged at a lower tax rate than your personal income tax, that money then becomes your “retained earnings” and sits comfortably in your corporate account. Take for example, in BC, the small business tax rate (net income below $500,000) is just 11%


Be aware, though, that if you decide to eventually pull those funds out of the business account and into your personal pocket, you will be charged at the personal rate, since you are effectively paying yourself. But if you simply use it towards business-related purchases, you’re in the clear.


2. You May Qualify for Small Business Deductions

Incorporating your business means you may be eligible for the federal small business deduction (SBD). This tax benefit for small businesses reduces the income tax your corporation would otherwise have to pay, dropping your small business tax rate down from 27% to just 11% if you’re in British Columbia! (Note: Each province has their own business tax rate which is added on to the federal business tax rate). To qualify, your business must be a Canadian-Controlled Private Corporation (CCPC) and earn a maximum of $500,000 annually.


3. You Benefit from Limited Liability

This is one of the biggest benefits of incorporating your business (but remember, this doesn’t extend to medical liability). As a sole proprietor or partnership, you as the business owner assume total liability. This means your house, car and all other personal assets can be seized to cover any debts your business incurs. When you incorporate, however, you become a shareholder in your business and a shareholder’s liability is limited to the percentage of the company you own. Shareholders cannot be held responsible for losses and debts, so incorporating provides you with a safeguard.


4. Corporations Have Staying Power

As a sole proprietorship, if you decide to leave your business, it basically ends with you. A corporation, on the other hand, lives on … well, forever (or until someone decides to dissolve it). This makes it much easier to sell your business because you’re selling an independent entity together with its assets and liabilities, and most importantly, you will be rewarded for your life’s hard work in building up this business. If you sell an unincorporated business, you are personally selling the property and assets associated with that business, which can be a much more complicated process.


5. Increased Credibility, Increased Access to Capital

Just like having MD or PhD after your name gives you credibility and an air of sophistication, so do Inc., Ltd. and Corp. Studies show that incorporated businesses with fancy letters after their names are perceived as more stable than unincorporated businesses. This means that incorporating could earn you more business — from customers and investors alike. Likewise, incorporated businesses have more access to capital because banks and investors are more likely to get involved with incorporated businesses.


So there you have it. Are you thinking about incorporating your business? Still have questions about the process of incorporating in Canada or if incorporation is right for you? Call Prometheus Private Advisory Group to talk to a financial advisor in Vancouver today.

Tips for Financial Planning During a Pandemic

Tips for Financial Planning During a Pandemic

Blog
Jul 17, 2020
Blog
Jul 17, 2020

Tips for Financial Planning During a Pandemic

Well, we’re officially approaching month three of the COVID-19 pandemic. That’s three months of job losses, reduced income and countless changes to life as we know it. Maybe you’ve been laid off and are getting by with government support. Maybe your business revenue has dropped significantly and you’re struggling to stay afloat. You’re probably wondering how to manage your finances so you can weather the storm and bounce back when we reach a “new normal.”


No matter how you’ve been affected by the current health crisis, the importance of financial planning is clearer than ever. As Vancouver’s financial planners, the team at Prometheus Private Advisory Group is here to help you navigate these uncertain times. The key to financial planning during a crisis is to act as soon as possible to plan ahead for your future. If you’re not sure where to start, here’s a guide to managing your finances during a pandemic.


1. Create a Budget


First, you need to know what you’re working with. Start by assessing your current financial situation — including income, assets and available savings — and then work backwards to see what you can reasonably afford each month. Since we’re in a state of crisis, this may mean tapping into lines of credit or savings accounts, but be careful not to overextend yourself. You don’t want to rob Future You to pay Present You, if you can avoid it.


We don’t know how long the pandemic will last, or how long it will take for businesses to bounce back. Be cautious and create a sustainable budget that will carry you through at least six months. If it looks like things are going to take longer to rebound, reassess your budget as needed.


2. Start Small and Make Cutbacks


Once you have your budget in place, it’s time to figure out where your money is going. Calculate your fixed expenses — such as rent or mortgage payments, and cable or phone bills — to see what’s essential and what you can give up. Obviously, you’ll have bills that need to be paid, so those have to stay (bummer, right?). There are also certain comforts that you should absolutely hang on to. You’re human, after all, and you deserve your little pleasures … within reason. But chances are there are ways you can trim down your expenses to make sure you’re staying within budget.


3. Defer Your Mortgage or Credit Card Payments


Speaking of fixed expenses, there’s good news. Canada’s big banks (and many private lenders) are allowing credit card and mortgage payment deferrals to help people manage cash flow during COVID-19. This can really help to free up space in your monthly budget. A word of caution, though: this doesn’t mean those payments are cancelled. It simply pushes them off to a later date so you can focus your current finances on more urgent things.


4. Set a Long-Term Plan for the Future


Once you’ve established a short-term plan to get you through our present reality, it’s important to think ahead to the future. What if something like this happens again — will you be prepared? Because let’s face it, there will be a next time so you might as well start planning now. Making smart decisions with your money today can give you peace of mind should any unexpected situations come up down the line.


If you’ve got extra cash, this is the time to consider investing so you can build up your assets. If you have life insurance (which you should), find out if there’s built-in cash value. If you don’t have life insurance, get some! Life insurance can be a valuable financial planning tool to set yourself and your family up for long-term financial health. Ask us how.


5. Tap into Your Line of Credit


Lines of credit can be extremely helpful during uncertain times when your bank account isn’t feeling as flush as usual. You can use the funds to pay for immediate expenses or unexpected costs. Your Vancouver financial advisor can help you assess your financial situation and create a solid plan for how to pay the money back when life returns to (some kind of) normal. Homeowners, you could also consider tapping into your home equity line of credit. It’s a flexible way to access cash if and when you need it.


Unfortunately, there’s no playbook for financial planning during a pandemic. But we hope these tips will help you make smart decisions with your money so you can come out strong on the other side. As we always say at Prometheus Private Advisory Group, the key to financial stability is to start now. The sooner you start managing your finances wisely, the better off you’ll be — no matter what life throws at you.