Episode 234: Retained Earnings Are Growing—So Why Does It Still Feel Uncomfortable? A Canadian Business Owner Case Study

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What should you do when your corporation has more cash than clarity?

Many incorporated business owners hit a silent milestone: revenue is steady, personal income is solid, but inside the corporation, retained earnings quietly pile up—doing nothing. Inflation erodes their value. Investment options seem risky, tax-heavy, or too complex. The real challenge isn’t just finding a strategy—it’s knowing what role that idle money should play. In this episode, Tyson, a physiotherapy clinic owner, shares his journey from uncertainty to empowerment as he reframes his financial approach and builds a stable foundation for growth.

You’ll discover:

• Why retained earnings can become a hidden liability if left unstructured
  

• The mindset shift from chasing returns to preserving optionality
  

• How corporate-owned whole life insurance can offer growth, access, and protection—without rushing into risky decisions
  

If your retained earnings feel stuck or exposed, press play now to hear how stability and strategy can unlock new possibilities.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

If you’re a Canadian business owner aiming for financial freedom and early retirement, having a clear, structured wealth plan is essential. This episode explores how to align your investment strategy, tax planning, and retirement tools into one cohesive system—so you’re not just building wealth, but building it with purpose. Learn how to balance RRSP optimization, corporate wealth planning, and capital gains strategies, while making smart decisions around salary vs. dividends and personal vs. corporate taxes. Whether you’re navigating real estate investing in Canada, considering your legacy planning, or simply trying to make sense of your financial buckets, this conversation is packed with actionable insights to help you build long-term, diversified wealth. It’s a must-listen for entrepreneurs ready to take control of their finances and design a financially independent future in Canada.

Transcript:

There’s a moment many incorporated business owners reach and it rarely shows up in your spreadsheets. You know, the business is working, revenue is somewhat consistent and you’re paying yourself what you need for your lifestyle. But inside the corporation, cash is building and no one ever taught you what that money is supposed to do next. We all try to figure it out on our own and you know, not, you know, they didn’t teach you how to invest it or how to optimize it, just how to think about it. Like it’s retained earnings there, it’s ready for us to have, hey, we should pay ourselves. Today’s episode is the story of Tyson, a physio clinic owner in British Columbia who found himself in this exact position. This is his case study. It’s a story about retained earnings, inflation, hesitation, and what changes when you stop asking, what should I do with this money? And start asking, what job should this money have. Tyson and his wife, like I said, own a physiotherapy clinic in BC. They incorporated, they worked hard, and the business became profitable. Sounds like a success. And like most business owners, they didn’t immediately notice the issue. It crept up slowly. Here’s Tyson.

We found that pebble started to grow as retained earnings just as we slowly incorporated and we didn’t know what to do with them. And then we kind of became aware of some, was it some new laws that were changing regarding the capital gains tax? We just found that the capital gains started to grow and I didn’t want to remove them for just to avoid the tax hit if we didn’t have to. So we kind of just came to realize that we’re not really sure where to go.

What Tyson is describing here is incredibly common. Retained earnings feel like success until they don’t. The money isn’t needed personally. It’s not earmarked for expansion. It’s also not doing anything productive. And then inflation will show up like it always does. Here’s Tyson again.

especially in the last five to six years, the inflation’s been a huge problem. Having that catch to sit there and not grow and not do anything was kind of painful, very painful for us to watch and to feel that money. Knowing that it’s withering away and not growing or contributing to your growth was something that was picking at me all the time.

This isn’t fear of markets or loss. It’s something more frustrating. Watching purchasing power quietly disappear, well, you hesitate. This is erosion. That tension is what pushes people to act too fast or not at all. And that’s often harder to tolerate than volatility. So Tyson did what responsible owners do. He didn’t rush, he didn’t speculate, he asked questions. Here’s Tyson again.

We talked to our accountant and she kind of did mention the fact that we could invest in real estate and we’d never done that. That was something we were potentially looking at. We were also just kind of searching for options to do with stock trading. So we discussed kind of those with her. We had also discussed the potential of maybe taking a company loan to look at doing a few of these things, which they all seem to involve some excess tax burden that we didn’t love, but we thought maybe one of those pathways might be the best to avoid. to the cash sitting there withering away to inflation. But we’re pretty new and we didn’t really know where to turn. We felt like we were kind on our own.

And here’s the key insight. Every option came with more complexity. Every option introduced more tax friction, more responsibility, more to manage. Each one feels like starting another business. This is where many owners get stuck because the advice they hear is usually about offense, returns, growth, upside, all of the above. But internally, what they’re craving is certainty.

kind of relate this to if you want to relate it to a sport maybe but but playing really good defense first.

Now that sentence matters because defense doesn’t mean doing nothing. It means not losing ground while you’re learning. Before chasing upside, Tyson wanted stability. So this is where Tyson came across the Canadian Well Secrets podcast. He was searching for education, for information. He didn’t want leverage. He just wanted clarity and education on what he could do better and more practical. And then through our conversations, Something clicked. Epiphanies were formed and a carefully created corporate-owned whole life insurance policy was the right tool to give him the optionality he was looking for. Here’s Tyson again.

Yeah, just the optionality, think, was one of the main things that was created for us through learning from you both in the things that we are legally allowed to do with our money, to have it grow in one place and then to also leverage it for investment opportunities at the same time while still having your retained earnings continue to grow. For me, that really blew my mind. had no idea that… You know, we could do that as a small business and that was the solution ultimately.

Optionality is one of the most misunderstood ideas in wealth building. It’s not about acting faster, it’s about keeping doors open. Instead of asking where should this money go, Tyson started asking, where can this money live while I figure that out? It’s not about doing more, it’s about keeping doors open. This is where the mental shift happens. Retain earnings don’t need to be rushed into action, they just need a home that preserves purchasing power, remains accessible, grows like a fixed income asset and his corporate-owned policy gives him that. Tyson explained the tool and the strategy using a metaphor from something he practices, Brazilian jiu-jitsu.

I’ve been relating it to, I love Gracie Jujitsu. So shout out to those guys and they have a position in the back mount called the triple threat. And I think this, what you guys have offered is like the triple threat of solving the corporate retained earnings problem that I’ve learned. You can have your corporate retained earnings grow, have a death benefit that protects your family and also leverage for investment purposes.

This is a powerful metaphor. What Tyson is describing isn’t an investment, it’s a financial infrastructure, growth, protection, access. Not because you must use leverage, but because you can, when it makes sense. One of the biggest misconceptions in wealth planning is that risk lives in markets. Often, it actually lives in misunderstanding. Here’s Tyson explaining this.

We jumped on a phone call with my wife and I and Kyle and our accountant. And yeah, we kind of had a, just a discussion about what the insurance policy would look like on the, on our balance sheets. And that was sort of a new concept for myself. And she had, I believe dealt with this in the past, but she consulted with her, her business partner as well.

That’s what education first planning looks like. This matters. Real strategies stand up to scrutiny, especially from accountants and alignment removes doubt. Today, Tyson isn’t chasing returns. He’s not rushing into new ventures. He’s not frozen either.

I know that I’m walking down the right path because I have two great guides in yourselves and Kyle. I know that leverage is key and I’m walking that path by creating these structures and putting them in place. I have my money growing in a place that is solid like it’s been described as GIC-like returns. So you’ve got that stability there, a nice foundation. And then we’ve got the options to build on top of that foundation.

This is what most business owners actually want, not complexity, not brilliance, just a foundation that lets them think clearly.

So I think for me, it’s a combination of stability options, so having different options and then learning on top of that. So I can continue to learn on top of a foundation that is safe and growing.

Tyson’s story isn’t unique. What’s unique is the moment he stopped asking, what should I invest in? And started asking, what do I need this money to do for me right now? Sometimes the right move is an offense, it’s defense with intention. If you’re in a corporate business owner sitting on retained earnings or feeling stuck, this episode isn’t a roadmap, it’s a mirror. You don’t need to rush, you just need a foundation. And if you’re looking for guidance like Tyson got just someone to talk to a thought partner, a think partner, head on over to Canadianwellsecrets.com, force us discovery, put a call with us. We will be talking with you about your plans, your strategies, your worries, your fears, your decisions that you’re making for your business, for your personal side. We help you do that. We meet with business owners every single day. If you also want to get a snapshot of where you are on your journey, head on over to CanadianWellSecrets.com. You can take a quick assessment just to see where you are and get started.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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