If you are a business owner, one of your most important tasks is learning how to scale your company while reducing your costs. While cost analysis can relate to your products, services, and general overhead operation, there are plenty of other methods that you can reduce costs and enjoy the benefits that come with investment.
One of the best cost-cutting, life-boosting decisions may surprise you.
Corporate Strategy Cost-Cutting Tip: Life Insurance
Ensuring that you and your family are covered financially when the unthinkable happen is one of the top reasons for investing in life insurance. Should you be injured or pass away unexpectedly, your life insurance can help keep your family financially secure as they navigate the future.
You likely have a personal life insurance policy. However, as a business owner you may be paying out both ends with both your personal policy as well as the corporate taxes you pay.
Why not take advantage of the benefits your corporation enjoys with dividends?
It’s true -by changing policy ownership from you to the corporation, you can place the ownership, beneficiary rights, and premium payments into the corporation’s hands rather than your own.
The benefit? As your corporation makes revenue and pays taxes, it can simultaneously cover the premium on life insurance -and keep you from having to pay the personal tax.
Take Advantage Of A Capital Dividend Account (CDA)
Sound too good to be true?
It’s not -and the key lies in the corporation’s Capital Dividend Account (CDA).
With your corporate CDA, proceeds and benefits flow into the corporation -creating a CDA -which allows those dividend benefits to be used tax free. One of the best ways to use that money? Covering your life insurance premiums.
By moving your life insurance from a personal policy to a corporate policy, you can enjoy the benefits that come from knowing you and your family are covered with a powerful policy while still taking advantage of tax-free benefits.
As always, work closely with your accountant to discuss the specifics related to your situation. However, with a bit of research and creativity, you can find ways to cut costs while still making the best of top-tier benefits!
Want to hear more great lessons on life, happiness, and true wealth? Check out the Picture of Wealth podcast -hosted by Dustin Serviss. Discover the tips, tricks, and insights that unlock a life well spent. Listen today where you listen to podcasts.
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