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Purchase and sale of a Business-by expert business consultants Toronto

Purchase and Sale of a Business

Buyers and sellers of businesses usually have conflicting views regarding the structure of business transfers. In order to reach an effective conclusion, one must consult with a trusted advisor in order to ensure the chosen strategy is most advantageous to you.

Tax also plays a major role in the transfer of business ownership. At times selling a business can minimize income taxes, whereas at times buying assets can maximize future deductions. As tax specialists and expert business consultants Toronto, we can ensure the best compromise with large selling and purchasing decisions.

By acting as your advisor, Madan Chartered Accountant (business consultants Toronto) can help you deal with most complexities that accompany purchase and sale of a business including the tax, financial, and administrative aspects:-

  • Properly structuring the purchase or sale to minimize income taxes.
  • Evaluating the financial health of the business.
  • Assessing the reasonableness of the sales price.
  • Obtaining financing to fund the purchase.
  • Completing due diligence procedures.





Buying a business in Canada-Business Consultants Toronto explain it all

By: Allan Madan | Oct 3rd, 2010 | Tax, US Tax, Canadian Tax Read more

Are you looking to buy a business in Canada? Do you understand the important implications of your decision? Business consultants Toronto, highlight the important basics for you, telling you the few essential things you must keep an eye out for. Read more.


Management Buyout and Taxes in Canada

By: Allan Madan | Dec 19th, 2010 | Tax, US Tax, Canadian Tax Read more

Attention all employees who want to be business owners! Business consultants Toronto provide a brilliant way to do so. Read all about management buyouts and associated tax services below and become a business owner.


About the Author – Allan Madan

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.


If you find this information useful, kindly +1 and follow Allan Madan on Google Plus by clicking on these two buttons.



# Pascal 2014-10-01 15:13
Can you please provide me with some due diligence procedures which would be done?
# Allan Madan and Team 2014-10-01 15:13
Hi Pascal,

Sure! I order to assess the valuation of property, plant or equipment an appraisal report would be obtained. This will determine the fair market value of the fixed assets which are being obtained as part of the business acquisition.
Additionally, we will observe the fixed assets for existence. Additionally, the assets will be observed to determine whether any foreseeable repairs may be needed. This will need to be included in the valuation.

Feel free to give us a call for more specific due diligence procedures which may be done for your situation.


Best Regards,
# Antoine 2014-10-16 19:35
I would like to incorporate my business. Would it be best to include my spouse as a shareholder?
# Allan Madan and Team 2014-10-16 19:35
Hi Antoine,

If you include your spouse as a shareholder, you will benefit from dividend sprinkling in which case your spouse will pay taxes on the dividend rather than you. This will help reduce the overall taxes that you and your spouse will owe to the CRA.


Best Regards,
# Richard 2015-01-02 23:08
I am looking to purchase a business. How can I evaluate the financial health before I make my decision?
# Allan Madan and Team 2015-01-02 23:08
Hi Richard,

The financial health can be obtained through inspecting the financial statements prior to the purchase.
It may be necessary to perform several analysis, such as comparing to industry, ratio analysis, year-to-year comparisons, etc.
In addition, it is crucial the consider the non-financial aspects before purchasing a business.
Allan Madan and team
# Demar 2015-01-18 23:45
I am looking to hire employees for my new business. How can I pay them a salary?
# Allan Madan and Team 2015-01-18 23:45
Hi Demar,

Employers are required to issue a T4 slip to employees by February 28.
Employers are generally required to remit Canada Pension Plan Premiums, Employment Insurance Premiums, and Income Taxes which are deducted from employee's paycheques.

We can provide a payroll schedule for you as well as instructions on paying your employees a salary. Please contact us.
# Djorkaeff 2015-02-17 17:54

I have paid my spouse dividends from our corporation. Am I required to issue a slip?
# Allan Madan and Team 2015-02-17 17:55
Hi Djorkaeff,

Yes, a T5 slip should be issued and filed by February 28. We can prepare and file T5 slips for you. Please contact us.
# Scott 2016-01-18 08:41
Hi Allan,
We are buying a restaurant in GTA from some friends and considering buying off the shares instead of incorporating a new entity (or incorporating later, if needed). Can you advise the major pros & cons? Which option would be most practical and/or recommended? Thank you.
# Victoria 2016-01-18 11:52
If there is any liability or tax owed during the period before acquiring, but finding out after, will the new shareholders/ma nagement teams still be liable for those debts?
# Allan Madan 2016-01-18 16:50
Hi Scott,

Thanks for your question. Most buyers prefer to purchase the assets of the company from the seller in order to (a) Avoid being responsible for any hidden liabilities of the company (e.g. unpaid taxes, unpaid bills to vendors, pending legal claims) and (b) Increase the cost amount of the assets so that more depreciation can be claimed for tax purposes.
# Allan Madan 2016-01-18 16:53
Hi Victoria,

Thanks for your question. If you buy the shares of the company, then you will be responsible for all of the company's liabilities, including unpaid taxes. For this reason, it's very important that the you put a clause in the purchase agreement to the effect that the seller is responsible for any unpaid and/or unrecorded liabilities as of the closing date.
# Victoria 2016-01-18 20:39
Thank you Allan. By the way, will there be any major tax benefit/disadva ntage between having a holding company initially buying the shares vs. buying the shares first (then transferring them to a holding company, if later needed)?
# Allan Madan 2016-01-19 22:22
Hi Victoria,

The only disadvantage of buying the shares first and then transferring them into a holding company later is that you will have to submit a Rollover Form T2057 along with a Section 85 Share Transfer Agreement to the CRA in order to exempt the transfer from capital gains tax.

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