What financial records should I ask a seller for?

A seller’s summary numbers are a starting point, not evidence. The documents behind them are what let you check whether a business earns what the listing claims, whether those earnings are consistent, and whether they are actually yours to inherit once you own the business.

The core financial package

Ask for accountant-prepared financial statements for at least the last two to three fiscal years, plus current-year interim figures. Request the matching corporate tax returns and notices of assessment for the same period, so you can compare what the seller is showing you against what was actually filed with the Canada Revenue Agency. A difference between the two is one of the first things worth checking.

The supporting detail

• General ledger detail for the trailing twelve months, not just summarized totals
• Bank statements and merchant or payment processor statements for the same period
• Aged accounts receivable and accounts payable listings
• A fixed asset list showing what is owned outright versus leased or financed
• Payroll summaries and any outstanding loan, lease or line of credit agreements

Why the tax return is the anchor

Financial statements a seller prepares for a sale can be optimistic. A tax return filed with the CRA carries consequences for inaccuracy, which makes it a more reliable starting point. Reconciling the two — and asking the seller’s accountant to explain any gap — tells you more than either document alone.

What to do once you have the records

Read the records yourself before handing them to an accountant, and note anything you cannot explain: a sudden change in gross margin, a spike in a specific expense line, receivables that stopped aging normally. Bring those specific questions to whoever runs the formal review — a targeted question gets a better answer than a general request to "check the financials."