Taking the Funds out of the Corporation
If you wish to take the funds out of the corporation, you have 3 main options: declare salaries, declare dividends, or enter expenses.
In this article:
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Declare a Salary for the Client or Spouse
Under the Salary column for the Client or Spouse, click on the blue value to open the pop-up window. Enter the salary for the person and copy it down to the applicable age. You may also choose to index the salary at a specific percentage.
The salary will be displayed on the personal Planning page for the Client or Spouse. Here is the Client's Planning page (Jane). Note that the salary is not editable on the personal Planning page (visible in black font, not clickable). The salary can only be edited on the corporate Planning page, where the value is in blue font.
If there isn't enough Active Operating Income to cover the Salary, funds will be withdrawn from the Corporate Cash Balance or Financial Assets.
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Enter an Expense for the corporation (deductible or non-deductible)
There are 2 columns for expenses, All Expenses, and Non-Deductible Expenses. All expenses are a total of the deductible and non-deductible expenses. Non-deductible expenses are the corporate expenses that are not deductible for tax purposes, such as 50% of meal and entertainment costs, club dues, certain conferences and convention fees, etc.
Click the value under the expense column to open the pop-up window to enter expenses. Here we have entered $20,000 for All Expenses, and $5,000 for Non-Deductible Expenses. The Net Operating Income and Taxable Operating Income are automatically calculated.
Note that entering a value for Non-Deductible Expenses will automatically update the All Expenses value to at least this amount. Changing the All Expenses amount to a value less than the Non-Deductible Expenses amount will update that value as well. You may need to adjust the All Expenses amount if you edit the Non-Deductible Expense amount in the future. For example, if you originally have $20,000 for All Expenses and then adjust the Non-Deductible Expenses from $5,000 to $10,000, the All Expenses value will not change. Snap will assume that the total expense remains at $20,000. You will need to increase the total expense value to $25,000 manually in this case.
All Expenses will reduce the Net Operating Income amount accordingly and Non-Deductible Expenses will affect the Taxable Operating Income amount.
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Declare a Dividend for the Client/Spouse/Other (eligible or non-eligible dividends or capital dividends)
Under the Scenario Setup --> Corporation, ensure you have specified the correct ownership percentages for Client, Spouse, and Other. As long as the party has some ownership of the corporation, you will be able to specify dividends to be paid out to this person. If a spouse or other party has 0% ownership of the corporation, there will be no column on the Corporate Planning page to enter dividends for this person.
Please click here for the steps involved in setting up dividends provided by the Corporation.
Eligible, non-eligible and capital dividends can all be entered manually on the Corporate Planning page. Capital dividends can also be paid automatically once the Capital Dividend Account (CDA) reaches a specified threshold entered on the Scenario Setup --> Corporation page.