Documents Needed to Sell Your Business in Alberta: Checklist

Selling a business is easier when the paperwork is ready before the first serious buyer appears. A buyer will want to confirm what they are buying, what the business earns, and what claims exist against it. Missing or messy records slow the deal down and can lower a buyer's confidence.

This article walks through the document groups buyers commonly ask for, the registry searches that show what is on public record, and how GST can affect the sale. What a buyer asks for will vary with the size and type of business.

This article covers the law of Alberta.

Why preparing documents early helps

Buyers carry out due diligence, which simply means checking that what you told them is true. They compare your statements with your records. If the records are organized and consistent, the process tends to move faster and with fewer surprises.

Start by building one folder, paper or digital, with a clear index. Label each document with its date and keep only final, signed versions. Mark anything that is missing so you can track it down.

The main document groups buyers ask for

• Corporate records: articles, bylaws, share register, director and shareholder records, and minute books.
• Financial records: recent financial statements, general ledger, bank statements, accounts receivable and payable lists.
• Tax records: income tax returns, GST filings and payroll remittance records.
• Premises: your lease, any amendments, and any landlord consents or correspondence.
• Employees: a staff list, employment agreements, pay rates, benefits and any contractor arrangements.
• Contracts: customer and supplier agreements, equipment leases, licences, permits and insurance policies.
• Assets: an equipment list, vehicle details with serial numbers, intellectual property and software licences.
• Debts and security: loan agreements and any security granted to lenders.

Not every item applies to every business. A sole proprietor, a partnership and a corporation will have different records, so adjust the list to fit your situation.

Check what is on public record

Alberta Corporate Registry searches are requested through a registry agent, and the options include a certified current search, a certified historical search, a certificate of status, a historical certificate of status, and certified copies of information, transactions and attachments. Current and historical searches can show the registration date, owners, directors and legal addresses.

A certificate of status confirms status as of a given date only. Certificates of status are not available for trade names and partnerships.

Personal Property Registry searches can be done by individual debtor name, business debtor name, serial number, registration number, distribution seizure, or certificate of expired or discharged registration. A search returns an exact match, an inexact match, no match, or both exact and inexact matches. If a registration shows up that you did not expect, questions about it go to the party that registered the interest. Running these searches on your own business lets you deal with surprises before a buyer finds them.

GST on the sale of a business

The business-assets rule applies where a supplier sells a business or part of one and the buyer gets all or substantially all of the property that can reasonably be regarded as necessary to carry on that business. Without an election, each property and service is treated as a separate supply, so GST of 5% in Alberta can apply to the taxable parts, and Alberta has no provincial sales tax.

The going-concern exemption works through a joint election by the seller and buyer, made on the prescribed form with the prescribed information. If it is valid, no tax is payable on the supplies under the agreement. The CRA form is GST44.

• The election is not available where the seller is a registrant and the buyer is not.
• Tax is still payable on a taxable service the seller will render, on a taxable lease, licence or similar supply, and, where the buyer is not a registrant, on a taxable sale of real property.
• If the buyer is a registrant, it must file the election by the filing deadline for its first reporting period in which tax would otherwise have become payable, though the Minister may accept a later date on the buyer's application.

Because the election depends on both parties' tax status, ask your accountant about it before you sign an agreement.

What to do next

• Create your indexed folder and fill in the groups above.
• Order Corporate Registry and Personal Property Registry searches through a registry agent.
• List any loans or security registered against the business and plan how they will be paid out or discharged.
• Ask your accountant whether the GST election is likely to apply.
• Have a lawyer review your documents and the purchase agreement before you share sensitive records widely.

Frequently asked questions