Salary or dividends? How should you pay yourself?

Name: CU Financial Management
Telephone: 1-888-884-3207
Price range: $

As a business owner, you have the flexibility to decide how you want to pay yourself. To make the best decision, it’s important to understand each option. This infographic looks at the key benefits of paying yourself a salary or paying yourself dividends so that you can make a decision that works best for you and your business.

Salary or dividends? Deciding how to pay yourself from your corporation

Salary benefits

Increases your personal RRSP room
Taxes are withheld allowing you to easily manage your expected personal tax bill
Contributions are made to CPP and EI allowing you to benefit from the programs in the future
Provides proof of a steady income which is typically needed when you apply for personal credit such as a mortgage
Helps your business qualify for government programs that require ongoing salaries

Dividends benefits

Reduces your business and personal expenses as no CPP or EI contributions are needed
Less administration — easy to set up and creates the ability for you to take cash as needed and declare a dividend for the amount at year-end
Avoids or reduces business costs related to employer health tax in certain provinces