Selling a business

When selling your business or even part of your business, there are things that you need to know. The following information will help you in the sale of your business.

Business Number (BN), Payroll and Goods and Services Tax/Harmonized Sales Tax (GST/HST)

If the business you are selling has a business number (BN), you may have to cancel your BN. It is important to contact your tax services office.

If the business you are selling has employees, you must close your payroll account.

If the business you are selling has a GST/HST account, you must close the account by advising your tax services office.

Change of ownership

When the owner of a sole proprietorship or one of the partners in a partnership or one of the members of a corporation's board of directors changes, it is important that you contact your tax services office.

Depending on your business structure, a change of owner(s) will have a different impact on your business. It depends on your partnership agreement and whether or not your business was registered using the legal names of each partner or the provincially registered partnership operating name, it could trigger a legal name change or require the registration of a new Business number (BN) and CRA accounts. For corporations, it is important that we have the correct name and social insurance number (SIN) for each director.

Value of the inventory and other assets

If you are selling your business or part of your business, you generally set an amount for the entire business. In some cases, your sales agreement sets out a price for each asset, a value for the inventory of the company and, if applicable, an amount that can be attributed to goodwill.

Depending on your situation, you may have a recapture or a terminal loss of capital cost allowance (CCA) on the sale of your assets.

You may also have sold an eligible capital property. If this is the case, you have to subtract part of the proceeds of disposition from your cumulative eligible capital (CEC) account. For more information, see eligible capital expenditures.

Capital gains deduction

If you realized taxable capital gains from the disposition of qualified farm property or qualified small business corporation shares, you may be eligible to reduce your taxable income by claiming a capital gains deduction, see Line 254 - Capital gains deduction.

Restrictive covenant

If you are selling a business and a restrictive convenant is part of the selling agreement, see Restrictive covenant.

There are also tax implications when selling a business.

Forms and publications

• T4001, Employers' Guide - Payroll Deductions and Remittances
• Guide T4002, Business and Professional Income
• Guide RC4022, General Information for GST/HST Registrants
• Booklet RC2, The Business Number and Your Canada Revenue Agency Program Accounts

Related topics

• Business structure
• Claiming capital cost allowance (CCA)
• Closing accounts
• Eligible capital expenditures
• GST/HST and selling a business
• Line 254 - Capital gains deduction
• Line 9947 - Recaptured capital cost allowance
• Line 9948 - Terminal loss
• Payroll
• Restrictive covenant
• Tax implications
• Terms you should know
• What should you do if an employee leaves?
• You are deregistering your GST/HST account because you are closing your business
• Canada Business
• Related provincial and territorial government sites
• Industry Canada

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