One of the common questions we’re asked by business owners and accountants on behalf of business owners is what do surplus cash. The 90-day GIC is not the best option.
The problems with the GIC is that funds are locked-in, pays an extremely low interest and to add more insult interest is taxable.
The best option is to open a Working Capital Account (WCA). Its what successful people like Ted Rogers, Walt Disney, J.C. Penney and Ray Kroc (McDonald’s) did!
- The WCA provides guaranteed liquidity which means you have access to your funds anytime need it.
- Lower taxed corporate deposits mean you get full maximum value from your business.
- Deposits are very flexible in later years which means you’re in control of your cash flow and how you deploy it, without having to wait 90 days.
- Provides safe growth at returns, better than GICs, without risk of an economic tsunami, which means more abundance with peace of mind.
- All growth is tax-sheltered which means no tax on growth (the government is contributing free money to you).
- No loss in fund growth when accessed which means you are not sacrificing any opportunities while you deploy your money on other great opportunities. A GIC does not do this.
- Provides instant cash without further asset commitments or guarantees meaning you’re in control, not the bank.
- Preferred rates of interest when borrowing mean you don’t have to complete form after form and release your financials to be qualified by the bank.
- Privacy of funds used which means you’re in control not the bank or the government.
- Interest may be tax deductible as per normal conditions. This means your money goes even farther!
- Taxable gains (if any) could be used to owner’s advantage. This means you may be able to offset any losses you may have elsewhere.
- Flexibility of repayments including totally open loan which means you’re in control, not the bank telling you what to do.
- No legal fees meaning no rules and red tape to drag on your returns and access.
- Protects your business against the loss of a key person. This means your business will have the funds to help it weather the storm to continue to serve your clients.
- Provides funds to repay business loans that will ensure your business has the liquidity to continue to be successful for many generations to come.
- Provides funds to buy out other owners when they pass unexpectedly, which means your partners spouse and their lawyer will never become your new partners.
- Provides funds to create a legacy when you pass unexpectedly, which ensures you will leave a lasting legacy.
To learn more and how to start a Working Capital Account, click here to book a call.
