Setting up Salary, Expenses, and Savings for the Corporation

First, add the corporation to your projections following the steps in this article: Adding a corporation.

New contributions to the assets in the corporation work a bit differently than for the personal assets.

Any surplus is automatically added to the corporate Net Worth. This means that in order to control the amount invested you need to manipulate the surplus cash at the end of the year. The surplus or shortfall amount is based on the values added to the corporation each year (Active Business Income, Other Investment Income and Other Income) minus the values withdrawn from the corporation each year (SalariesExpenses, Taxes, Dividends paid out). 

Setting up savings to the Capital Assets when:

  1. Corporate Income, Salaries, and Expense Details are known
  2. Corporate Income, Salaries, and Expense Details are unknown (Savings per year are known)
1

Corporate Income, Salaries, and Expense Details are known

If you know the corporation's Business Income and Deductible and Non-Deductible Expenses, as well as the details for Salaries being paid out, you can enter these values and Snap will contribute any remaining surplus (after taxes are paid) to the available Capital Assets each year. If no Capital Assets have been entered, or if there are contribution overrides on these accounts, the surplus will be contributed to the Cash Balance.    

On the Corporate Planning page, enter the business income, the salary of the owner/client (if any), and all expenses (including non-deductible expenses). Non-deductible expenses are part of the All Expenses amount, not added to it. Make sure that these expenses are reflected properly in your projections. Click the blue dollar value under the applicable column to open the pop-up data entry window. 

The Capital Assets Value has automatic contributions made to it and will grow every year by any cash surplus and the growth of the account based on the asset allocation and rate of return of the portfolio. Click Scenario Setup --> Assets and/or Scenario Setup --> Portfolio to make adjustments to the Capital Assets and Portfolio settings.  

If you enter a specific value in the Contribution column, this is called an override and the cell will be highlighted yellow. If the Contribution is less than the available surplus cash as shown here, there will be a net positive cash flow that will be saved to the Cash Balance. To avoid the Cash Balance building up, clear the overrides on the Contribution column.

If you declared a salary for the owner/client, you'll see this salary on the personal Planning page.

Note: A corporation can simultaneously declare a salary and a dividend.

2

Corporate Income, Salaries, and Expense Details are unknown (Savings per year are known)

Alternatively, if you only know the annual savings made to the Corporate Assets, you can omit entries for Active Business Income, Expenses, Salary, etc., and enter the expected annual contributions to the corporation under the Other Income column. 

  • Any amount added in this column will go directly towards the Cash Flow that year. For example, if your client knows that they invest $50k each year in the corporation, you could simply leave all columns blank except Other Income. In this example, you can see that the actual contribution to the Investment account is slightly less than the $50k Other Income amount each year. This is due to the taxes that are paid each year on the investment income.

If you wish to adjust for this, you have a few options. First, you could increase the amount going into Other Income to more closely approximate the $50k contribution per year once the taxes are paid.

Second, you could add another account that will solely be used to pay the taxes. Here a Bank Account has been added to the projections to cover the taxes and it is fully depleted by the final year of contributions.

Please click here to review all your options to take the funds out of the corporation.

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