The move from employment income to business income, or the move from employment income to retirement income, is a major hit for a lot of people because they don’t take into account the amount of taxes that have not been withheld on their pay. 

As an employee, your monthly tax remittances are done by your employer as part of your paycheck. That's the difference between gross and net. But when you retire, not enough tax is being taken off from your pension plans or RIFs. You are left with a hefty bill at the end of the year, and a lot of people get angry that they weren't told this information beforehand.

It’s based on a percentage of what their tax rate actually was. This means taking their taxable income and making that divisible by the amount of taxes that they paid, leaving them with what their actual tax rate was. It doesn't matter if their tax rate is 2% - if they have to pay $2,000 at the end of the year, they're not going to be happy because that comes as a shock to them.

For those people that are retired, or just became retired, make sure that you were withholding enough tax on your retirement income. I would say 20% would be a healthy percentage to start with. Of course, it always depends on your specific situation. But if you overpay, you will get that back. It's an easier pill to swallow if you're getting a refund than it is to pay.

For people switching to business income, your taxes will instead be higher. If you've gone from employment income to business income, someone who makes $100,000 in business income would pay somewhere around $26,000 in taxes. That's a lot of money, especially if it’s unexpected. If you just started a business and you're unsure about how much taxes you could potentially have a bill for, make sure you're talking to your accountant.