Lesson 8 Personal Finances

Question 1

Payment considerations

Answer 1

Business performance changes
Business growth needs cash
Reasonable compensation

Question 2

Sole Proprietor ( Payment Method )

Answer 2

Owner’s Draw

Question 3

Sole Proprietor ( SP profits )

Answer 3

Taxable in the year earned

Question 4

Sole Proprietor ( Tax references )

Answer 4

Receipts
Mileage
Consider accounting software

Question 5

Partnership ( Payment Method )

Answer 5

Owner’s Draw
Guaranteed Payments

Question 6

Partnership ( Filing Tax )

Answer 6

Does not file annual tax returns - each partner does

Question 7

Partnership ( Profits )

Answer 7

Taxable after splitting it amongst partners

Question 8

Personal investments

Answer 8

Pay off debt
Use RRSP’s / TFSA
Real estate
Emergency fund
Life insurance
Will (Testament)
Use accountant
Read news / Adjust

Question 9

Personal Insurance

Answer 9

Extended health
Disability insurance
Life insurance
Critical illness insurance

Question 10

The Power of Compounding Interest (8% Interest)

Answer 10

1) Age 25-34: Invested $1,000 per year (10yrs.)
Total investment = $10,000
@65yrs old = $157,435
2) Age 35-44: Invested $1,000 per year (30yrs)
Total investment = $30,000
@65yrs old = $122,346