What closing deliverables must a seller provide in a business sale?

A seller’s closing duties come mainly from the purchase agreement, and your lawyer will draw up the closing list. The items below are the ones a public source ties to a sale. Start early, because several depend on a third party such as the CRA or a workers’ compensation board. The buyer’s view of closing day is in what a buyer should expect.

Records the buyer will have examined

BDC lists documents a buyer should examine: incorporation documents, company minutes, contracts, inventory lists and audited financial statements. Having them current and consistent puts you in a position to answer what the buyer’s lawyer asks for. Ask your lawyer whether the agreement will have you confirm any of them as accurate at closing.

Tax paperwork you sign or file

If the buyer and you make a joint GST/HST election under section 167 of the Excise Tax Act, the form must be in the prescribed form, and the recipient files it if it is a registrant. The election applies where the buyer acquires all or substantially all of the property reasonably regarded as necessary to carry on the business or part as a business. The Act does not allow the election where the supplier is a registrant and the recipient is not. If you are a non-resident selling taxable Canadian property, section 116 of the Income Tax Act has its own notice rules, including a notice to the Minister by registered mail within 10 days after the disposition in some cases. It also has excluded property and exceptions, so ask your accountant whether it applies.

Telling the workers’ compensation board

Saskatchewan’s board says that for a sale the seller should complete its policy change form, and that purchasers and sellers should make sure their accounts are up to date. Alberta’s board places the responsibility for getting a clearance on the buyer, but ask whether you must supply information. Other provinces differ.

If you close the business afterwards

The CRA says that when you decide to close your business and no longer need your business number, you have to fill in certain forms before the accounts can be closed. For payroll, the steps include remitting all source deductions, filing final information returns and giving your former employees their T4 or T4A slips. Once a corporation has been dissolved, it says to consult Form RC145 to determine whether you need to fill it in. In a share sale the corporation continues, so ask your accountant whether any of these steps fall to you.