Selling a business

When selling your business or even part of your business, there are things that you need to know. The following information will help you when selling your business:

• Business Number (BN), Payroll and Goods and Services Tax/Harmonized Sales Tax (GST/HST)
• Change of ownership
• Value of inventory and other assets
• Capital gains deduction
• Restrictive covenant

Business Number (BN), Payroll and Goods and Services Tax/Harmonized Sales Tax (GST/HST)

If the business you are selling has a business number (BN), it is important to contact your tax services office, since you might have to cancel your BN. To find your tax services office, go to Tax services offices and tax centres - Addresses and fax numbers.

If the business you are selling has employees, you must close your payroll account.

If the business you are selling has a GST/HST account, you must contact your tax services office to close the account.

Change of ownership

It is important that you contact your tax services office whenever an owner of a sole proprietorship, a partner in a partnership, or a member of a corporation's board of directors changes.

Depending on your business structure, a change of owner(s) will have a different impact on your business. Depending on your partnership agreement and whether or not your business was registered using the legal names of each partner or the provincially registered partnership operating name, it could trigger a legal name change or require the registration of a new Business Number (BN) and CRA accounts. For corporations, it is important that we have the correct name and social insurance number (SIN) for each director.

Value of the inventory and other assets

If you are selling your business or part of your business, you generally set an amount for the entire business. In some cases, your sales agreement sets out a price for each asset, a value for the inventory of the company and, if applicable, an amount that can be attributed to goodwill.

Depending on your situation, you may have a recapture or a terminal loss of capital cost allowance (CCA) on the sale of your assets.

You may also have sold an eligible capital property. If this is the case, you have to subtract part of the proceeds of disposition from your cumulative eligible capital (CEC) account. For more information, go to eligible capital expenditures.

Capital gains deduction

If you realized taxable capital gains from the disposition of qualified farm property or qualified small business corporation shares, you may be eligible to claim a capital gains deduction. For more information, go to Line 254 - Capital gains deduction.

Forms and publications

• Guide T4001, Employers' Guide - Payroll Deductions and Remittances
• Guide T4002, Business and Professional Income
• Guide RC4022, General Information for GST/HST Registrants
• Booklet RC2, The Business Number and Your Canada Revenue Agency Program Accounts

Related topics

• Claiming capital cost allowance (CCA)
• Closing accounts
• Eligible capital expenditures
• Line 254 - Capital gains deduction
• Line 9947 - Recaptured capital cost allowance
• Line 9948 - Terminal loss
• Payroll
• Restrictive covenant
• Tax implications
• Terms you should know
• What should you do if an employee leaves?
• Closing a GST/HST account
• Canada Business Network
• Related provincial and territorial government sites
• Industry Canada

Date modified:

2017-01-03