Creative ways to invest company Profits?

[banafinfodafuggiano]

My Canadian Legal entity has 6+ figs in profits sitting in the bank since last year,
I need to invest these money and I'm looking for ways to invest these funds by having these investments classified as expenses possibly.

I have a lot of expenses already but the profits are racking up quickly and I need to put these money out of my company accounts for security
purposes (creditors, ex wife, people that could sue me for whatever reason, inflation, etc...).


Please shoot your ideas on where to invest these funds. (just don't say ETFs lol).

 

[manukahoney]

Not a Canadian, but in the UK you are not recommended to mix investment with operations within one entity. Incorporate an investment vehicle, make a market loan to it from your existing corp, invest the funds in whatever you want, utilise the tax regimes available for non-trading companies.

 

[void]

depending on what business you're in IT/legal/marketing services can get pretty "expensive", easy to justify and allow moving the capital wherever it's needed

also (still in most places of the world - not sure how about Canada) one is allowed to fail in his business decisions and invest into development that doesn't go well...

 

[BritishSecret]

Not a Canadian, but in the UK you are not recommended to mix investment with operations within one entity. Incorporate an investment vehicle, make a market loan to it from your existing corp, invest the funds in whatever you want, utilise the tax regimes available for non-trading companies.

By incorporate an investment vehicle, do you mean make an LLC as the way of making investments and holding them? Does it have to be in the same country to make a market loan to it from your existing LLC?

 

[latindev]

If is for tax purposes you can't reduce the investment from the balance sheet easily because it's actually Capital and you need to follow the Capital Cost Allowance rules from Canada. If on the other hand is only for what you say about creditors, ex wife and possible creditors... that's still capital and it can be recalled if is just used with a second company which invests the funds.

I think you need to first define exactly the reason and plan from there because creditors and inflation are two completely different things and most reasons you gave require different approachs

 

[manukahoney]

By incorporate an investment vehicle, do you mean make an LLC as the way of making investments and holding them? Does it have to be in the same country to make a market loan to it from your existing LLC?

Again, not a slightest idea about Canadian tax code.
However the company doesn't necessarily have to be in the same jurisdiction as long as it makes economical sense.

 

[JohnnyDoe]

Intellectual property (TMs, patents) can be a very useful investment

 

[wellington]

Intellectual property (TMs, patents) can be a very useful investment

Do elaborate, i have a company that owns IP, and another for Investment, and another for products/services.

Never realised there's a method to reduce tax by investing in say the IP arm.

 

[JohnnyDoe]

Do elaborate, i have a company that owns IP, and another for Investment, and another for products/services.

Never realised there's a method to reduce tax by investing in say the IP arm.

You can lease the IP, use it as a collateral for a loan, take advantage of favorable taxation of royalties… you can be creative and setup a strategy that fits your situation.
You might find out that the IP is much more valuable than what you thought, if the independent evaluator says so.
You might also discover that you can patent a particular invention or process, or that a TM is useful for your business…

 

[inector]

You can lease the IP, use it as a collateral for a loan, take advantage of favorable taxation of royalties… you can be creative and setup a strategy that fits your situation.
You might find out that the IP is much more valuable than what you thought, if the independent evaluator says so.
You might also discover that you can patent a particular invention or process, or that a TM is useful for your business…

Which country is good for this? Anything out of popular options like HK, EU, SG, etc.

 

[JohnnyDoe]

Which country is good for this? Anything out of popular options like HK, EU, SG, etc.

It depends on your setup and on DTAs. Cyprus is good in the EU, you can also use a U.S. company. Better to avoid offshore (zero tax) jurisdictions.

 

[stronco]

if the independent evaluator says so.

How independent / convicable are these evaluators?

 

[JohnnyDoe]

How independent / convicable are these evaluators?

Usually they are quite flexible. There are various methods for calculating the value of an IP, especially if that is the market value (not the fair or liquidation). It also depends on what you feed them with.
If interested I can give you a contact in private.

 

[stronco]

Usually they are quite flexible. There are various methods for calculating the value of an IP, especially if that is the market value (not the fair or liquidation). It also depends on what you feed them with.
If interested I can give you a contact in private.

Noted, thank you.