I've heard a few clients lately bemoaning that they were charged "huge taxes" when they spend TRADEdollars® personally. If you already pay yourself a hefty salary, and then spend TRADEdollars® personally on top of that, you may be charged income tax at the highest tax bracket, paying about 40-50% taxes on this.
This seems like a bad proposition to some people, but I ask you, what is the alternative? If you were going to do that renovation at home anyway, or you were going to go on a vacation anyway, you were going to be spending your after tax personal money anyway with the renovation company or the travel agency, etc.
Why not use your TRADEdollars® to pay for it, that you acquired by choosing to accept work at a time when you could do it without affecting your regular cash inflow, and use that same after tax cash that you were going to spend anyway and write a cheque back to your company? You are basically buying TRADEdollars® from your company to use personally. This completely eliminates the tax implications and also serves to spend your TRADEdollars® allowing you to take on more new sales!
There's more! If you currently take dividends instead of salary, just use the TRADEdollars® to pay one of your dividends and keep your cash dividend in your company. We have personal Tradebank accounts that can be attached to the business Tradebank account you have.
For businesses with multiple owners who all view and use Tradebank differently, we understand spending personally can be problematic. We suggest sitting down with all owners and discussing the pros and cons of accepting and spending TRADEdollars® personally, and find a way to make it more lucrative for an owner to spend them over spending the company's cash dollars.
A simple solution one of the members has come up with is as follows:
In their business there are three owners – each owning a third of the company – all 3 work in the company and in addition to dividends, take a regular salary and bonuses from the company through payroll.
Their deal is that for every TRADEdollar® that an owner purchases from the company the owner gets a 25% bonus paid on the next pay run in Canadian dollars. The company’s cost of goods is 40%.
The Math for the Company