Closing or Selling Your Business - A Succession Plan Info-Guide


The following document was based on one prepared by the Canada-Ontario Business Service Centre (COBSC), a single point of access to information on federal and provincial government programs, services and regulations.

Although many questions will be answered in this guide, the list of resources given here is not exhaustive.

Further information on programs, services and regulations listed in this document can be obtained by using the following resources:

  • calling the telephone number(s) listed under most sections;
  • seeing the document(s) listed under most sections;
  • visiting the Web site(s) listed under most sections;

Some of the organizations listed below are not subject to the federal Official Languages Act. Their services may not be available in both official languages.


  1. Introduction
  2. Selling Your Business
  3. Closing Your Business
  4. Dissolving Your Business Accounts
  5. Succession Planning
  6. Dissolving a Corporation
  7. Resources and Web sites of Interest

1. Introduction

Throughout the life of a business there are many changes that can happen, one of the most important is the decision to no longer continue with your organization. Once you have decided that you will no longer be responsible for a business there are some choices to make, whether you plan on selling the business, passing it along to family member or partner, or just closing the business down outright. This info guide will point you towards some of the more common issues and concerns that an entrepreneur faces when their business is in transition.

2. Selling Your Business

When it's time to sell the business

The sale of a private business is usually a unique event in the life of a business owner. Selling a company built on hope and hard work can create a sense of loss. Therefore, it is not always easy for the owner to decide whether a sale is the correct course. A methodical analysis can help you reach a decision.

The process should begin with an overview of the most common reasons why businesses are sold. The primary motivations for sale are:

  • desire for personal liquidity;
  • need of expansion capital;
  • partial sale;
  • anxiety caused by personal liability and unreasonable risks;
  • age and health; and
  • need for a change.

For further information:
see Selling a Business

Evaluating Your Business' Worth

The selling prices of similar businesses in your area should provide you with an indication of what you can expect to receive. Do note that we are looking at selling price not asking price: typically, small businesses sell for significantly less than the asking price. Sophisticated buyers might evaluate your business on the basis of projected cash flow for the next few years. They will then discount the value of that cash flow to reflect the amount of risk inherent in the business and the importance of their personal efforts in maintaining the success of the business.

For further information:
visit the website: What's your business worth ?

10 Steps to a Successful Sale

  1. Have a valid reason to sell
  2. Do not wait until you have to sell for economic or emotional reasons
  3. Gather the information needed
  4. Be a part of the marketing team
  5. Maintain confidentiality
  6. Think like a potential buyer
  7. Do not let things slip because you are selling
  8. Engage professionals who understand the sales process
  9. Be patient and study carefully every offer
  10. Help create a win-win situation

Selecting Professional Services

The use of professional services is essential to a successful closing or sale of a small business. Professionals can provide knowledge and expertise in the areas where you may have little.
Professional services often used by entrepreneurs may include:

  • lawyer;
  • insurance broker;
  • accountant; and
  • banker.

Lawyers can be especially helpful. There are two areas where it is strongly suggested that you consult a lawyer when selling a business:

  • when you prepare a document summarizing your business for potential buyers: if the business turns out to be less successful or easy to run than anticipated, the new buyer may assume that the business was fraudulently represented. A lawyer can review your document to avoid the risk of litigation; and
  • when you prepare a purchase and sales agreement: you should have a lawyer review, if not actually prepare the purchase and sales agreement.

How do you find a lawyer?
First, try to identify the areas of law in which your problems fall so that you can find a lawyer capable with dealing with the specific area. Some of the main areas of legal practice linked to business are:

  • Company / commercial / securities law;
  • Labour / employment law;
  • Civil litigation law;
  • Real Estate law; and
  • Wills and estates.

For further information:
Lawyer referrals services. This free service provides names of lawyers practicing in particular areas of the law. Simply call, explain your problem and you will be given the names of a few lawyers in your areas.
Lawyer referrals services across Canada:

Alberta 1-800-661-1095
British Columbia 1-800-663-1919
Manitoba 1-800-262-8800
New Brunswick 1-506-458-8540
Newfoundland 1-709-722-2643
Northwest Territories 1-867-873-3828
Nova Scotia 1-800-665-9779
Nunavut 1-867-979-2330
Ontario 1-800-268-8326
Prince Edward Island 1-902-566-1666
Quebec Montreal 1-514-866-2490
Quebec 1-418-529-0301
Hull 1-819-777-5225
Longueuil 1-450-468-2609
Laval 1-450-686-2958
Laurentides Lanaudière 1-450-752-6774
Saskatchewan 1-800-667-9886
Yukon 1-867-668-4231

Also, see the document Selecting Professional Services

A real estate agent can also be a great help to you through the process of selling your business, for a listing of agents in Alberta contact:

Real Estate Council of Alberta (RECA) - licenses real estate agents, real estate salespeople, mortgage brokers, property managers and business brokers.

Calgary: 403-228-2954
Toll free in Alberta: 1-888-425-2754
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

3. Closing Your Business

Another option for a business owner is to close down the business outright, and while this may be a shorter process than a sale of your business there are still a variety of steps and regulations involved in the process.

If you decide to close your business, or have already closed your business, you need to advise the Ministry of Finance immediately. You will be required to file a final return and pay any outstanding tax amounts.


These are the three types of bankruptcy:

  • Voluntary Assignment;
  • Involuntary Assignment; and
  • Deemed Bankruptcy.

The Office of the Superintendent of Bankruptcy (OSB) helps to ensure that estates in bankruptcy, commercial re-organizations, consumer proposals and receiverships are administered in a fair and orderly manner.

For further information:
visit the Web site:
Office of the Superintendent of Bankruptcy
see the document Office of the Superintendent of Bankruptcy Canada

Business owners must upon declaring bankruptcy send copies of the court issued Assignment in Bankruptcy, the Bankruptcy Notice, or correspondence entitled First Meeting of Creditors to your a tax services office.

For further information visit the Web site:

Note: Usually, the Business Number of a bankrupt client will be closed after discharge. For more information visit the Canada Revenue Agency website.

4. Dissolving Your Accounts

Once you have sold or closed your business you must now begin the process of dissolving your business accounts. For business owners, there are a variety of services that can help you through this process.

Each business account has its own procedures (remitting and filing obligations) and forms that need to be completed:

  • Payroll;
  • T4 slips and T4 Summaries;
  • Deregistering your GST/HST accounts; and
  • Requests to close your Business Number accounts.

The Canada Revenue Agency (CRA) has services for business owners that can help them through the process of closing their accounts.

Closing Accounts


Make sure that your employees hear about a potential sale or closing of your business from you and not a third party. Rumours breed nervousness, some of your staff might decide to seek employment elsewhere and leave immediately.

If you decide to advertise the sale or closing of your business openly, tell your employees before the advertisements run. Explain that it could take a long time to happen to eliminate employee stress. Remain truthful but emphasize the positive.

Remember that when you dismiss your employees you are bound to follow the rules and regulations of the Employment Standards Act to ensure that they are lawful dismissals.

Record of Employment

The Employment Insurance Act and its Regulations require every employer to complete a Record of Employment (ROE) when an employee stops working. This is considered an interruption of earnings. This happens when the employment ends, or an employee leaves due to pregnancy, injury, illness, adoption leave, layoff, leave without pay, or dismissal. A penalty under the Employment Insurance Act for non-compliance may apply to employers who fail to issue a ROE as required. All employees are entitled to a record of employment.

For further information see: Record of Employment (ROE)

5. Succession Planning

For many entrepreneurs, the term "succession planning" may immediately evoke the idea of passing the torch on to a family member. However, in reality, succession planning is about finding the right exit strategy when you're ready to hand your business over to somebody else. There are many different ways to define succession planning.

One approach is to think of it as a process occurring over time during which a family plans for the transfer of knowledge, skills, labour, management, control and ownership of a business between the founder (retiring) generation and the successor (next) generation.

For further information: see the Succession Planning guide

Your succession plan should contain the following:

  1. A statement of the distribution of ownership
  2. The identity of the new leader or leaders
  3. How the new leaders are to be trained for their roles
  4. A definition of the roles of other key members of the business during the transition
  5. Mechanics for the purchase or sale of stakes in business
  6. Taxation and legal considerations
  7. Financial considerations
  8. Retirement considerations
  9. A procedure for monitoring the process and dealing with disputes and problems
  10. A timetable.

For further information:
visit the Web site: Business Transition

The Canadian Federation of Independent Business acts as a voice for SME's in the public arena. They provide members with a variety of services and information resources. They also have a variety of publications that deal with issues of succession planning for both Agri-businesses as well as SME's in a variety of sectors.

For further information:
visit these web pages:

6. Dissolving Your Corporation

If your business has been incorporated there are some additional rules and regulations to follow. For information visit these Web sites:

Dissolution under the Canada Business Corporations Act (CBCA)

Dissolving / Intending to Dissolve/Revoking of the Intention to Dissolve an Alberta Corporation

7. Resources and Web Sites of Interest

Leaving Your Small Business: Your plan for a successful transition

The Canadian Federation of Independent Business

Business Development Bank of Canada

Succession Planning

Related Reading

Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.