As an incorporated business owner, your health is paramount to your business's success. Investing in personal well-being, like regular massages to relieve work stress, is a smart move, but it can get costly. If you're spending about $5k per year on such health expenses, with taxes and other factors considered, the real cost can be as high as $8k. Seems hefty, right?
Well, what if I told you there's a smarter way to manage this expense? Say hello to the Health Spending Account, or HSA.
An HSA, in simple terms, is like a piggy bank for health-related expenses that your corporation sets up. You decide on an amount (usually 10-15% of your income is within CRA's reasonable limits) that can be spent on health care each year.
Here's how Health Spending Account works:
You pay for your health expense (like that well-earned massage), then submit a claim to your corporation via the myHSA app. Your corporation pays you back the full cost. Although there's a small fee your corporation pays when you submit a claim, the great news is that both the health expense and this fee are completely tax-deductible for the corporation.
So, let's compare:
Paying with your personal dollars:
You spend about $5k per year.
Considering personal taxes and other factors, the total real cost can be around $8k.
Using an HSA:
You still spend the same $5k per year.
Including the claims cost, the total outlay is roughly about $5k because you now tax deduct this expense directly from your corporation.
See the difference? Using an HSA could save you around $3k each year! And you still get to spend the same $5K on your massages.
Think about what you could do with that extra $3k. That's a nice vacation, a sizeable business investment, or a marketing campaign to grow your business even further.
So, if you're an incorporated business owner investing in your health, an HSA isn't just a good idea - it's a game changer. Making your hard-earned dollars stretch further is the name of the game, and an HSA is a winning move.
You can set up your HSA account for FREE with me here. OR, drop me a note at mac@minhmac.com to learn more about it.
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