Investing in your small business success

Agenda  Protecting your business  Banking outside the box  Investing in the future

Protecting your business

The problems you face  Day-to-day managing  Long-term viability  Liability protection  Managing risk

Your challenges Investment and retirement planning Succession planning Loss of owner/key person Attracting/retaining employees Income taxes and tax liabilities Creditor and Liability Protection Business investment income taxes Innovative banking solutions

Your business – your legacy  Plan a successful succession  Protect your interests  Anticipate future needs Valuation Tax Liabilities Capital Gains Exemption Estate Freeze Buy/Sell Funding Life Insurance

Can your business survive without you? Sole Owner  Sufficient funds to carry on  Succession planning protects your heirs  Your expectations can be met

Can your business survive without you? Multiple owners  Death or disability stresses the partnership  Who steps in to act for the deceased?  Chances for a good outcome are poor

Advance planning averts catastrophe  Buy/sell agreements  Buy-out options  Proper funding  Business as usual  Orderly dissolution plan  Life insured investments  Life insurance Death Disability Retirement Disagreement

How much is it worth?  Adjusted balance-sheet or asset book value  Asset replacement value  Comparison

Pulling the trigger on tax  Tax is triggered by  Sale of the business  A ‘deemed disposition’  Capital gains tax Change of use Transfer Emigration Death Asset exchange Assets pay debts Transfer to trust

Succession strategies you can use  Use your $500,000 lifetime capital gains exemption*  Consider an estate freeze*  Life insurance or life-insured investments *Applies to incorporated companies only

Buy/Sell Funding  Shareholders’ agreement  Changes in ownership create financial obligations  Life insurance death benefits funds:  buy-out  tax implications

Buy/Sell Funding Corporate owned policy *  Lower aggregate premiums  Easier cost allocation  Ensure that premiums are paid *Concerns about creditor protection, tax consequences and effects of provincial family legislation must be addressed to determine the best approach for your circumstances

Buy/Sell Funding Individually owned policy *  Paid for with after-tax dollars  Expensive  Confusing *Concerns about creditor protection, tax consequences and effects of provincial family legislation must be addressed to determine the best approach for your circumstances

Collateral insurance coverage  Tax deductible business expense  Tailored to fit your needs

What impact will the loss of a key person have on your business?  Business is disrupted  Sales decline  Employees’ security is threatened  Creditors become alarmed  Deliverables in doubt

Attract and retain good employees  Financial compensation  Business environment  Life and living benefits insurance

Creditor Protection Strategy  Protect your personal assets  Investments with insurance benefits  Growth from investment Personally guaranteed debts Wages and vacation pay to employees Source deductions owed to Canada Revenue GST and PST Health and safety violations Environmental damage

Strategies for protecting personal assets  Incorporation  Spouse’s name  Business liability insurance  Invest in products that offer creditor protection  Hold life insurance contracts personally  Professional tax and legal advice  Establish a plan while the business is healthy

Banking outside the box

 Highest return on investments  Unique alternatives to borrowing  Innovative products  Simply financing needs Manulife Bank

Innovation, flexibility, outstanding rates  Business Advantage Account  GICs  Custom investment loans  Flexible, low cost financing  Access Line of Credit Plus  Manulife one Account Manulife Bank

Investing in the future

Working toward retirement  Retained earnings  Business investment income  Individual Pension Plan  Segregated Funds  Life insurance

GICs and GICs. What’s in a name? Guaranteed Investment Certificates  Bank Guaranteed Interest Contracts  Insurance company  Designate beneficiary  Creditor protection  Probate fees and settlement delays avoided

GICs. Security for your portfolio.  Solid foundation for your portfolio  Positive rate of return  Peace of mind  Broad range of investment choices

Segregated Funds  Investment with insurance guarantees  Creditor protection  Protects your beneficiaries  Tax advantages  Benefits for long-term investing

You’ve got leverage  Borrow money to earn money  Interest is tax-deductible  Benefit from compounding  Good potential, higher risk

Business investment income taxes Option: Invest surplus in GICs and CSBs  CSBs and GICs taxed at top corporate rate Option: Use surplus to buy life insurance  Tax-deferred growth of the surplus  Tax-free death benefit

Small Business Solutions Recap  Loss of owner/key person  Retirement  Tax liabilities  Succession planning  Creditor protection  Capital Growth  Life-insured investments  Life insurance  Buy/Sell funding  Leveraged investing  Pension plan/IPP  Collateral insurance

Small Business Solutions Recap  Loss of owner/key person  Retirement  Tax liabilities  Succession planning  Creditor protection  Capital Growth  Life-insured investments  Life insurance  Buy/Sell funding  Leveraged investing  Pension plan/IPP  Collateral insurance

Small Business Solutions Recap  Loss of owner/key person  Retirement  Tax liabilities  Succession planning  Creditor protection  Capital Growth  Life-insured Investments  Life insurance  Buy/Sell funding  Leveraged investing  Pension plan/IPP  Collateral insurance

Small Business Solutions Recap  Loss of owner/key person  Retirement  Tax liabilities  Succession planning  Creditor protection  Capital Growth  Life-insured Investments  Life insurance  Buy/Sell funding  Leveraged investing  Pension plan/IPP  Collateral insurance

Small Business Solutions Recap  Loss of owner/key person  Retirement  Tax liabilities  Succession planning  Creditor protection  Capital Growth  Life-Insured Investments  Life Insurance  Buy/Sell funding  Leveraged investing  Pension plan/IPP  Collateral insurance

Small Business Solutions Recap  Loss of owner/key person  Retirement  Tax liabilities  Succession planning  Creditor protection  Capital Growth  Life-Insured Investments  Life Insurance  Buy/Sell funding  Leveraged investing  Pension plan/IPP  Collateral insurance

Solutions for Small Business  Investing  Banking  Insurance

Manulife Investments  Solutions for today  Solutions for tomorrow

Thank you