Taxation and Legal Considerations

There is a wide range of tax and legal issues you will need to consider when selling or transferring ownership of your business. While there are common methods for dealing with these considerations, each situation is unique and your tax specialist and lawyer can advise you in the context of your own particular circumstances.

If your business is a qualifying small business corporation, your shares may be eligible for a capital gains exemption of up to $500,000. If your business is larger or does not qualify for the exemption, the disposition may trigger a sizable capital gain. Fortunately, there are several strategies you can use to minimize the tax impact and your tax advisor can help determine which of these may be appropriate for you.

Your lawyer will need to prepare several legal documents to give effect to your succession plan. Some of these relate directly to the transfer of ownership, such as the purchase and sale agreement, while others,such as your will and power of attorney, relate to your personal financial and estate planning.

It is important that you consult with your tax and legal advisors early in the process to make sure that your plan achieves your objectives. Do not attempt to undertake a tax planning strategy, enter into an agreement or sign a legal document without first seeking the appropriate professional advice.