How do I sell my business if I never incorporated?

A business that was never incorporated is owned by a person or a partnership, not by a company. There is no corporation whose shares can be transferred. What changes hands is a collection of assets and the relationships attached to them, and the person selling is you.

The business name is not the business

A trade name feels like the thing being sold, but Alberta’s registry states that a business name does not have a legal existence in its own right and that registering it does not grant ownership of the name. The agreement therefore has to say plainly that the seller transfers the goodwill and the right to use the name, and you then deal with cancelling or amending your own registration.

Listing what is actually sold

The CRA notes that a sales agreement may set a price for each asset, a value for the inventory and, where applicable, an amount attributed to goodwill. You may have a recapture or a terminal loss of capital cost allowance on the assets you sell. The CRA describes the capital gains deduction in terms of qualified farm or fishing property and shares of a qualified small business corporation. An unincorporated owner has no shares to sell, so ask your accountant whether any part of your sale qualifies.

Closing your accounts

The CRA says a seller may have to cancel the business number, must close the payroll account if the business has employees, and must contact the tax services office about the GST/HST account. You may be able to elect jointly with the purchaser for no GST/HST on the sale of a business or part of one, but not if you sell only one or more assets or if you are a registrant and the purchaser is not.

Liens registered against you

Because the assets belong to you personally, security interests are registered against you rather than a company. British Columbia’s Personal Property Registry, for example, records security interests and liens against personal property belonging to businesses and individuals. Searching the registry in your province before you list shows you what a buyer’s search will find.