Running a business isn’t just a job, it’s a lifestyle.
Most owners I meet are juggling early mornings, long days, unexpected costs, and the pressure of keeping staff employed and clients happy. With that reality, it’s no surprise that personal finances often fall to the bottom of the priority list.

But here’s the truth:
Your business can only take you so far if your personal financial structure isn’t working behind the scenes.

After years of working with entrepreneurs, from tradespeople and contractors to small manufacturers and family-run operations, I’ve seen three financial mistakes show up again and again. They’re common, easy to overlook, but incredibly costly over time.

Let’s break them down.

1. Leaving Too Much Money Inside the Operating Company

Almost every owner does this at some point. The business earns profit, the cash builds up, and you leave it there “just to be safe.” It feels responsible, but it can quietly cost you hundreds of thousands over your lifetime.

Here’s why:

It’s usually tax-inefficient.

Active business income is taxed at a low rate, but income you earn on the investments inside your operating company is taxed at some of the highest rates in the country. Once passive income gets high enough, it can even claw back your small-business deduction—costing you more every year. (This is not advice, please contact your accountant for more information) 

It creates unnecessary risk.

If a lawsuit, CRA issue, or creditor problem hits your operating company, all that cash is exposed. Everything you’ve saved can disappear because it’s sitting in the same pot as your business operations. (This is not advice, please contact your legal advisor for more details)

The fix?

Keep what you need for working capital and short-term needs.
Move the rest, strategically, into a holding company or an investment account owned by a holding company. You’re not moving it away from your business; you’re simply protecting it and making it work harder. (This is not advice, please contact your legal advisor and accountant for more details)

This one change alone is often the biggest financial unlock for business owners.

2. Paying Yourself Without a Strategy

Most owners pay themselves based on what the month looks like: cash flow feels good → take more, cash flow feels tight → take less.
It works in the moment, but long-term it creates issues.

Here’s what happens when compensation isn’t planned:

• You miss out on RRSP room
• You shortchange your CPP credits
• You weaken your ability to qualify for mortgages or financing
• You pay more tax than necessary
• You end up with unpredictable personal cash flow

And depending on whether you take salary, dividends, or a combination, your tax situation can swing significantly.

So what’s the right answer?

It depends on your goals.

• Want steady personal income and better borrowing power? → Salary helps.
• Want to keep taxes low now? → Dividends might be better.
• Want the best long-term plan? → A blend often wins.

A custom compensation plan can save thousands a year while making your financial life cleaner and more predictable.

3. Treating the Business as the Only Investment

This one is surprisingly emotional.
Many owners have built everything with their own hands. Naturally, they trust their business more than the markets. But relying on the sale of the business as your only retirement plan is a massive risk.

You can run a great business and still face:

• A sudden downturn in your industry
• A recession during your sale year
• Buyers offering less than you think it’s worth
• Health events that force an early exit
• Partnership issues
• Family complications

I’ve seen owners who should retire at 55 end up working into their late 60s because they assumed their business would sell for a certain number, and it didn’t.

(This is not advice, please contact your accountant or legal advisor more information) 

The solution is simple:

Start building wealth outside the business while things are going well.
That can happen within your corporation (if structured properly), through a holding company, or personally.

Diversification isn’t just an investing concept, it’s a life concept.

(This is not advice, please contact your accountant for more details.)

Final Thoughts

None of these mistakes happen because business owners are irresponsible. They happen because owners are busy, focused, and doing everything they can to keep their companies healthy. But your personal finances deserve the same level of attention.

Fixing these three areas, managing retained earnings, paying yourself properly, and diversifying your wealth, creates more security, more freedom, and more control over your future.

If you want a second set of eyes on where you can save money and reduce risk, I’m always here to help.