Keep Tax Implications in Mind when Preparing to Sell
Sooner or later most entrepreneurs consider selling their business, whether it's because they're approaching retirement or they just want to take on new challenges. If you're thinking about selling your business, whatever the reasons, it's important to keep the tax implications in mind as you negotiate the sale with a purchaser. Careful planning is key to ensure that you can make the most of the sale proceeds that wind up in your pocket after taxes are paid.
When you're finally ready to sell your incorporated business, there are two general approaches that you can take--either for the corporation to sell the assets of the business, or for you to sell your shares of the corporation. Some business owners may prefer to sell the shares because, if your shares qualify as "qualified small business corporation shares", you may be able to claim a lifetime capital gains exemption for up to $848,232 of your capital gain on the sale. Buyers, however, will often prefer to purchase the assets. While this will normally allow the buyer to claim higher capital cost allowance on the cost of depreciable assets, it also means that no capital gains exemption is available to the seller. Each of these options have their own distinct tax implications.
To help you get acquainted with additional tax consequences of selling a business, KPMG presents "Top 5 Things You Should Consider In Preparation for the Sale of a Business", the latest webinar in KPMG's new Enterprise Tax on Demand series. Other upcoming short and specific Enterprise Tax on Demand webinars will focus on other important tax-related areas of your business, including Scientific Research and Experimental Development (SR&ED) and structuring a business.
To learn more about how proper planning can help when selling your business, please contact Dino Infanti or visit our website KPMG private company tax.
Information is current to March 04, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500