As an incorporated company owner, you have the power to decide whether to take your money out as salary or dividends. So which do you choose? The answer, in true Economist style, is - "well, it depends."
Probably the first consideration for a small business owner is whether you want to participate in CPP and RRSP plans. To contribute to Canada Pension Plan, you have to have "earned income", and that usually means salary. Same goes for RRSPs. So for most of you, you'll probably want to take enough salary ($51,100 in 2013) to maximize your CPP contributions, and then maybe more (up to $132,889 in 2013) to maximize your RRSP contribution room. How much RRSP room you need depends on your RRSPs to date, and how much you'll need in retirement - a more complex question and a good one for your financial advisor.
After that consideration, it's usually also wise to pay out enough salary (hopefully to yourself) to bring your corporate earnings under the $500k Small Business Deduction mark - at that point the corporate tax rate drops significantly.
Other considerations? Your personal tax rate, and whether you have other sources of "earned income". It also matters whether the dividends are coming from public companies (eligible), including if they flow through the private company.
Whew! Every situation is different and you need to plan ahead. It may be advisable in some cases to meet jointly with your financial advisor and your accountant.
Want more information or help with this? Email or call to speak with me personally!