A recent survey conducted on behalf of Imperial Life shows that only 42% of small business owners have put a continuation plan in place in preparation for retirement, disability or death. Of that 42%, 10% could not identify what is in their continuation plan.

“Given that 67% of all small businesses in Ontario are family-owned and that there are close to a million small businesses in Canada, the survey results indicate that a significant number of businesses are vulnerable to unexpected financial and physical setbacks,” says David Machry, senior financial advisor with Finactive, the online division of The Imperial Life Assurance Co. of Canada.

“A comprehensive business financial plan that includes a continuation strategy is absolutely critical to the survival of all small businesses. This is particularly important when you consider that 14% of survey respondents indicated that their business would not be able to continue operations if the owner or primary decision maker were to become disabled for a short term.”

“Overall, the survey shows that many Ontario businesses are not taking advantage of the tools and products available to them to protect their investments, employees and families,” says Al Kinch, director, Elite Case Team at Imperial Life. “In fact, only half of Ontario small business owners are aware that certain business expenses can be tax deductible. Even those business owners who prefer to manage their finances independently can benefit from information, advice and strategies provided by financial advisors.”

The survey revealed that there is low awareness of products and strategies that are designed specifically to protect businesses and minimize taxes, such as estate planning, estate freezes and group insurance plans.

It showed that although 55% of Ontario small business owners or primary decision makers have an estate plan, only 54% understand that an estate plan can help minimize the taxes arising at death. As well, only 46% have made the necessary arrangements to ensure that their heirs are protected from paying taxes.

“An estate freeze is an extremely effective strategy designed to allow business owners to leave their business assets to their heirs with the least amount of tax and possibility of future complications,” says Kinch. “However, only 25% of Ontario’s small business owners are familiar with the benefits of an estate freeze, and of those, only half or 12% of Ontario’s small business owners have made arrangements for an estate freeze with a professional advisor.”

The findings released today result from a telephone survey of more than 500 Ontario small business owners / primary decision makers whose business has one to nine employees. Conducted by Decima Research, the margin of error for a sample of this size is +/- 4.38%, 19 times out of 20.