A financial records checklist for buying a Canadian business lists the statements, filings and supporting schedules a buyer should request and reconcile before relying on any number the seller has presented, from several years of financial statements through to a check for outstanding CRA balances.
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This checklist lists the specific financial records a buyer should request when evaluating a Canadian small or medium business, and what each one is actually for. Request everything before relying on any number the seller or their broker has quoted verbally — a business is worth what its documented financial history supports, not what a summary sheet claims.
Request the core financial statements
Ask for several years of financial statements, not just the most recent yearOne good year proves little on its own; a buyer needs a trend, and a seller who resists sharing prior years is worth asking why.
Confirm whether the statements are audited, review-engagement or compiled (notice-to-reader)The level of assurance behind the numbers changes how much independent verification a buyer still needs to do before relying on them.
Get copies of the corporate tax returns and Notices of Assessment that match the statementsA red flag is when the numbers shown to a buyer do not reconcile to what was actually filed with the CRA.
Ask for current sales-tax filings and confirm there is no outstanding remittance problemAn unresolved GST/HST filing gap can become the buyer’s problem after closing if the deal is structured as a share purchase.
Verify cash flow, receivables and payables
Request bank statements and reconciliations for the same period as the financial statementsBank records are harder to dress up than an internal summary, and discrepancies between the two are worth chasing down before, not after, closing.
Get an accounts receivable aging schedule and ask about historical write-offsA large receivables balance sitting mostly in the aged, unlikely-to-collect column can mean the reported revenue is not the same as the cash the business actually collects.
Get an accounts payable aging schedule and confirm nothing is being deliberately delayedA seller can flatter short-term cash flow by quietly stretching out payments to suppliers in the run-up to a sale.
Ask for the fixed asset register and depreciation scheduleThis shows what equipment the business actually owns, its age and its book value, which a buyer should compare against what they physically inspect.
Understand what has been added back
Get a documented, itemized list of every add-back proposed to the reported earningsA red flag is an add-back asserted without a receipt, invoice or clear explanation behind it — 'my personal vehicle' is a claim, not a document.
Ask how owner compensation and any family members on payroll compare to market rates for the roleUnderstating what it actually costs to replace the owner’s labour inflates the earnings a buyer is really being asked to pay for.
Confirm whether any related-party transactions run through the financials at non-market termsRent paid to a numbered company the owner controls, or supplies purchased from a related business, can distort what the business would actually cost to run independently.
Confirm there are no hidden obligations
Check for outstanding CRA debts or liens registered against the corporationAn unresolved tax debt can attach to corporate assets and, in a share purchase, becomes the buyer’s liability along with everything else in the company.
Ask for a schedule of existing loans, leases and any security registered against business assetsA buyer needs to know what debt or security interests need to be paid out or assumed as part of closing, not discover a registered lien afterward.
Request the most recent budget or forecast and ask how past forecasts compared to actual resultsA seller who consistently misses their own projections is telling a buyer something about how much weight to put on this year’s forecast.
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.