Does how I pay myself affect how buyers view my earnings?

Yes. BDC says buyers ask to look at your financial statements, projections, tax returns and other records, and it lists financial statements, the prior-year tax return, discretionary and non-recurring expenses, and management compensation among the records a valuator reviews. How you take money out of the company decides what those lines show. Pay that does not match what your role would cost to replace is something a reader of those records can question, so it is better explained by you first.

Salary

Pay taken as a salary appears as management compensation. A buyer who plans to hire a manager rather than run the business can compare that figure with what the role would cost. If your salary is well above or below that, be ready to explain why. Work out the answer with your accountant, whom BDC describes as important for preparing the year-end and interim statements and projections that buyers ask to see in due diligence.

Dividends

The CRA describes Canadian-source dividends as profits you receive from your shares in a corporation. A dividend is a return on ownership, not payment for work. If most of what you take is dividends, a buyer reviewing the records may ask what you do in the business and what it would cost to hire someone to do it. Have a written description of your role and hours ready.

Personal costs paid by the company

Under s.15(1) of the Income Tax Act, if a corporation confers a benefit on a shareholder, the amount or value is included in computing the shareholder’s income, subject to exceptions listed in the section, including where s.84 deems it a dividend. Whether a given cost is such a benefit is a tax question for your accountant. For selling, BDC lists discretionary and non-recurring expenses among the records a valuator reviews, so separate out and document personal costs. See how to decide what a buyer should offer for how earnings figures are used.