Should I engage an accountant before selling my business?

Buyers will ask to see your financial records, and it is worth knowing before then whether yours need work. BDC’s sale guidance names the accountant as one of the professionals to involve, and its due diligence guidance frames the timing as before the selling process begins. This page sets out what the accountant does at this stage, what the accountant does not replace, and how to check the person you hire.

What BDC says the accountant does

BDC says an accountant helps prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see in due diligence. It also says an accountant can help ensure the transaction is structured in a way that minimizes tax liability from the sale. BDC lists the lawyer as a separate role: supplying information to buyers during due diligence, negotiating the purchase agreement and addressing legal issues.

Why the timing matters

BDC notes that buyers will ask to see historic and interim financial statements, projections, tax returns and other records. It advises sellers to review records with their accountant so interim statements are accurate and projections realistic, and, before launching the selling process, to spend time with their accountant and lawyer making sure records are clean, up to date and properly signed and completed. Starting early leaves time to correct gaps. Ask which statements exist for which years, and whether anything is unsigned or out of date.

Tax questions to bring to the meeting

Part of a price may be paid after closing, for example through vendor financing or an earn-out. The Canada Revenue Agency’s guidance for individuals explains that where part of the proceeds of disposition of a property has not yet been received, a reserve may allow part of a capital gain to be reported later, and it sets out who can claim one and the limits. Whether that applies to your sale depends on what is sold and how the deal is built, so it is a question for your accountant. Ask too what the tax result would be for a share sale compared with an asset sale.

Checking the accountant’s credentials

CPA British Columbia states that CPAs perform a variety of services, some of which may require a public practice licence, and that it may consider a firm or office to be engaged in the practice of public accounting in BC depending on the type of services offered and work performed. That guidance is for British Columbia; if your accountant practises elsewhere, check with that province’s CPA body. Ask your accountant which services they are licensed to provide and who at the firm will be responsible for the work.