HOW TO USE TRADEDOLLARS PERSONALLY

Everyday business owners take money (CDN$) from their company to pay personal expenses, the most common payments are payment of shareholder loans, dividends, or regular income.   These options are equally valid for taking TRADEdollars from their business.  However, some business owners feel like they can't take the TRADEdollars from their company as it increases their personal tax liability.  For these business owners the best way to extract the TRADEdollars from their companies and utilize them for personal expenses is through the Personal Trading Manoeuver outlined below.  

 

For businesses with multiple owners it can make sense to open sub-accounts (no additional charge), which allows for the transactions to be assigned to each of the individual owners.  

 

THE PERSONAL TRADING MANOEUVER

The Personal Trading Manoeuver allows you to convert personal expenses into trade purchases and send the after tax cash to your own company.  Tradebank can help you to utilize this opportunity.

 

How It Works

The first requirement for the Personal Trading Manoeuver is that there is a viable business corporation or partnership that can be marketed through Tradebank, and that sufficient TRADEdollars are available in the company’s Tradebank account to complete the manoeuver.  The second requirement is that a personal expenditure by the owner of the company exists and that this expense can be paid for via their Tradebank account.  One area that this can work really well is in a real estate transaction.

 

An Example of the Personal Trading Manoeuver with Real Estate

An individual is selling their house for $300,000 and, because the listing agent also sold the house, the real estate commissions are going to be $15,000, or 5% of the selling price. The individual owns a business, a restaurant, which happens to be a Tradebank client, and has made an agreement with the agent that once they receive their cash commission, the agent would exchange it for an equal amount of TRADEdollars.

 

Flow of Dollars (Cash and Trade)

Step 1: The real estate agent receives their commission cheque from their office a couple of weeks after the closing date and immediately writes a cheque to the individual. At the same time the individual provides written instruction to their company to pay the agent an equal amount of TRADEdollars from their Tradebank account thereby creating a shareholder loan of $15,000.

Step 2: Individual deposits the cheque from the agent into their personal bank account and then writes a personal cheque to their company to pay off the loan.

Following the tables below, on this one transaction the company has increased cash flow by $8,500 and received $15,000 in new business from within the Tradebank network.  Because of the Personal Trading Manoeuver, the individual is neither further ahead nor behind.  There are no personal tax implications because the individual paid back the shareholder loan. 

The Personal Trading Manoeuver can be used for any and all personal purchases contemplated by the business owner. 

 

Using Tradebank for Real Estate Deals

 

 

 

Transaction With The Manoeuver                                           Transaction Without The Manoeuver

 

Individual

Company

Sale of Home

$300,000

$0

Real Estate Commission

$0

$(6,500)**

Legal Fees

$(1,500)

$0

Individual Pays off Loan

$(15,000)

$15,000

Net

$282,500

$8,500

 

Individual

Company

Sale of Home

$300,000

$0

Real Estate Commission

$(15,000)

$0

Legal Fees

$( 1,500)

$0

Net

$282,500

$0

 

 

 

 

 

 

 

 

 

 

 

 

** The variable cost for a restaurant to receive incremental sales T$15,000 is approx. 30% -- or $4,500.  The fees to spend the T$15,000 would be approx. $2000. Therefore the total cash expenditure for the company in this transaction is $6,500. (Note: The fees are fully tax deductible regardless of the purchasing transaction).

 

 

 

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