Buying or selling a business can be both exciting and nerve-wracking - there are many potential financial risks involved. Let us help you so you can buy or sell with the utmost confidence.
When you are deciding to buy or sell a business, our comprehensive service is designed to aid you every step of the way. If you are looking to purchase a business, we can perform an extensive due diligence to accurately measure the financial health and potential of the business. This will allow us to ensure that the selling price of the business is fair and reflects true market value. Once you decide to move forward, with a sale or purchase, we will advise you on the most tax efficient structure so that you can minimize your tax obligations. If you also require financing in order to purchase a business, our service can also compile and formulate financial related documents that you would need.
This is my first year using Madan Chartered Accountant and I am very impressed with their work and their level of service. They have been very good at answering all my questions and getting back to me in a timely way. I am definitely going to continue using their services for my future tax needs. I highly recommend them to you! - Lila Azouz
Can you please provide me with some due diligence procedures which would be done?
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.
I would like to incorporate my business. Would it be best to include my spouse as a shareholder?
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.
I am looking to purchase a business. How can I evaluate the financial health before I make my decision?
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
I am looking to hire employees for my new business. How can I pay them a salary?
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.
I have paid my spouse dividends from our corporation. Am I required to issue a slip?
Yes, a T5 slip should be issued and filed by February 28. We can prepare and file T5 slips for you. Please contact us.
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.
If there is any liability or tax owed during the period before acquiring, but finding out after, will the new shareholders/management teams still be liable for those debts?
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.
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.
Thank you Allan. By the way, will there be any major tax benefit/disadvantage between having a holding company initially buying the shares vs. buying the shares first (then transferring them to a holding company, if later needed)?
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.