How should I negotiate the closing date when selling my business?

For a seller, the closing date is the day the sale completes under the agreement. It is also the day several official obligations can start counting. This page looks at the date from the seller’s side, and the closing date answer covers how to work backward from the slowest condition. Before you agree to a date, find out what it triggers for you and whether the steps fit in the time between signing and closing.

What the date can set off with the CRA

The CRA says that if you are closing your business, your GST/HST cancellation date is the day it closes, and that if you are selling it you may be able to elect jointly with the purchaser to have no GST/HST payable on the sale of the business or part of it, if you meet the conditions for a joint election. For payroll, the CRA says that before closing the account you must, among other steps, remit all payroll source deductions and file your final payroll information returns. These apply if the sale ends the need for those accounts. If the buyer takes over the corporation by buying its shares, the accounts may carry on, so confirm which applies to your deal.

Notices that run on a clock

Some regulators set their own deadlines from the date activity stops. AMVIC in Alberta says a business that is closing or changing ownership must notify it in writing within 15 days of ceasing activities related to the automotive business, and licensees must also return the licence. The Saskatchewan WCB says any outstanding balance on a closed account is due 30 days from when the account is closed and a Statement of Account is sent. If your business is regulated, ask each body what a sale triggers and count the days from your proposed date.

What to negotiate

• The date itself, with room for the notices and returns above.
• What each side must deliver before closing, such as clearance letters or consents.
• Who prepares the GST/HST election and when it is signed.
• What happens if closing slips, including whether a date can be moved by agreement.