Buying a business in Ontario

A business for sale in Ontario can look complete on paper and still come with obligations a buyer only discovers after closing — an unpaid WSIB assessment, a liquor licence that will not transfer without its own review, a corporate registry filing that was never made. None of this shows up in a set of financial statements. Buying well in Ontario means treating the province’s registry, workplace-insurance and licensing systems as part of due diligence, not as paperwork to handle after the deal is done.

Confirm the seller’s corporation is actually in good standing

Before you get attached to a specific business, have your lawyer search the Ontario Business Registry for the corporation you are buying from, or the corporation whose assets you are buying. This confirms the corporation exists, is not administratively dissolved, has filed what it owes, and matches the directors and structure the seller has represented. A buyer who skips this and only discovers a lapsed filing during the week of closing has turned a routine check into a closing delay.

Ask for a WSIB clearance certificate before you rely on the seller’s word

If the business has employees in Ontario, ask the seller for a current clearance certificate from the Workplace Safety and Insurance Board confirming the account has no outstanding assessment. This matters more than it might seem, because certain unpaid amounts can attach to a successor business rather than staying the previous owner’s personal liability. Do not treat a verbal assurance that everything is paid up as sufficient — get the certificate, and get it close to the actual closing date rather than months earlier.

Check that any sector licence actually transfers to you

A liquor licence, a Commercial Vehicle Operator’s Registration for a trucking or delivery business, a motor vehicle dealer registration with the Ontario Motor Vehicle Industry Council, or a municipal food premises licence generally does not follow a change in ownership automatically. Each has its own application or transfer process, and some regulators will assess the buyer personally — a criminal record, a safety rating, or a compliance history can affect whether you are approved to hold the licence at all. Find out what applies to your target business, and start that process in parallel with negotiating the deal, because a great price attached to a licence you cannot obtain is not really a deal.

Understand what an asset purchase does and does not include

Most small business purchases in Ontario are structured as asset sales, meaning you buy specific assets — inventory, equipment, the lease, the goodwill — rather than the seller’s corporation with its full history. This generally shields you from liabilities you were not told about, but it also means contracts, supplier agreements and licences do not automatically come with you; each one needs to be checked for whether it is assignable, and whether the other party’s consent is required. Confirm this list early, because discovering mid-negotiation that a key supplier contract will not assign can change what the business is actually worth to you.

Check for judgments, liens and outstanding debts before you sign

An execution or judgment search, run against both the corporation and, where relevant, the individual seller, can reveal outstanding claims that could affect what you are actually buying, particularly in an asset purchase where certain claims can attach to specific assets. This is a routine, relatively inexpensive check that a lawyer runs as part of closing preparation, and skipping it to save time is a common regret among first-time Ontario buyers.

Employees come with obligations, not just experience

If you plan to keep the seller’s staff, understand how Ontario’s Employment Standards Act, 2000 treats their service on an asset purchase — in many circumstances their prior service with the seller is deemed continuous for entitlement purposes unless you make a clear decision not to hire them. This affects termination and severance calculations down the road, sometimes years after closing, so it is worth understanding before you finalize your offer rather than after a dispute arises.

Financing and closing mechanics

Financing an Ontario acquisition often combines your own down payment with a lender’s term debt, frequently supported by a federal small business financing program, and sometimes a vendor take-back note from the seller. On closing day, expect to deal with the registry search results, the WSIB clearance certificate, any sector licence transfer approvals, and — where the business includes real property or a long lease — Ontario’s Land Transfer Tax. Build a closing checklist specific to your target business well before the date, because these are the items that actually determine whether closing happens on schedule.

• Search the Ontario Business Registry for the seller’s corporation before you negotiate seriously
• Request a current WSIB clearance certificate close to your target closing date
• Identify every sector licence — liquor, carrier, motor vehicle dealer, food premises — that needs transfer
• Run an execution and judgment search against the corporation and the seller
• Confirm how the Employment Standards Act treats staff you plan to keep on