What is the difference between an asset purchase and a share purchase when buying a business in Ontario?

In an asset purchase you buy selected parts of the business, while in a share purchase you buy the corporation itself, and the differences touch liability, tax and employees. In a share sale no new legal entity is created, and the corporation's WSIB account, including any amounts owing, stays with the corporation. In an asset purchase, a buyer without a valid WSIB purchase certificate may be held liable for what the seller owed up to the date of sale.

On tax, buying shares does not change the tax values of the corporation's assets, and it is generally not subject to GST/HST, while an asset buyer may need a new business number and its own payroll and GST/HST accounts. A buyer of all or substantially all of the property needed to run the business can jointly elect with the seller on Form GST44 for no GST/HST to be payable.

For employees, if a buyer of a business employs the seller's employee, the employment is deemed not terminated, and time worked for the seller counts toward length of employment under the Employment Standards Act, 2000. Which structure suits you depends on the facts, so confirm it with a lawyer and an accountant.