Hi Everybody. I am John Sears from Sears Chartered Accountants and today we are going to talk about buying or selling a business. This can be quite a lengthy topic and I’ll try to keep it as short as possible. We are going to start from the buying side.
Generally, as a buyer of a business, you always want to buy the assets and never the shares of the corporation. The main reason for this is you don’t want the liability that is attached with the business. Often, there is more of an ability to do tax write-offs when you are buying the assets. From the selling side naturally it’s a flip, you want to be able to sell the shares as opposed to the particular assets in the business. The main advantage of that is what’s called the lifetime capital gain exemption which is $750,000 in tax free capital gains that you can get by selling a qualified small business or corporation. The biggest thing that we definitely want to take advantage of from a seller’s perspective of the lifetime capital gains exemption which is $750,000. To first determine that we have to see if your corporation qualifies as a small business corporation.
One of the great things of coming to see me is that I can take a look at the company and see if it does and if it doesn’t I know a few ways to make sure that it can. If it qualifies to be this particular kind of corporation, you are able to get the first $750,000 in taxable capital gains out tax free which is a wonderful thing if you are able to do this.
Remember, I am an accountant you can count on, call this CA today.