What to Ask Before Buying a Business in British Columbia

Buying a business is a big commitment, and the seller knows far more about it than you do. Good questions, asked early and answered in writing, are your main tool for closing that gap.

This article gives you a practical set of questions grouped by topic. It cannot cover every business, so use it to prepare for conversations with your lawyer and accountant.

This article covers the law of British Columbia.

Questions about the money

Start with how the business really performs. Ask for several years of financial statements and tax filings, and ask an accountant to review them.

• Do the sales and profit figures match the tax returns?
• Which assets are included, and what is each worth?
• How much of the price is for goodwill?
• Which parts of the price are subject to tax?

On an asset purchase, the price must be allocated to each asset at fair market value, with the remaining balance attributed to goodwill. The allocation should match what the vendor reports. Parties cannot raise the goodwill price and lower the taxable-asset prices to avoid PST.

Questions about debts and liens

Ask the seller to list every loan, lease, lien and unpaid bill, then check the answers against public records.

The Personal Property Registry records security agreements, commercial liens and buyers' interests in goods left with the seller. A government-staff PPR search costs $10. A PPR search alone does not reveal every lien, because builders' liens, family maintenance liens and some other liens are filed with other agencies. If the business owns land, a Land Title Office title search costs $11.06 as at April 1, 2026.

Also ask whether the seller has been bankrupt or whether any proposal or receivership exists. The Bankruptcy and Insolvency Records Search covers bankruptcies and proposals registered in Canada since 1978 and receiverships registered since January 1993.

If the seller's lender holds a registration against the assets, ask how it will be removed. A person with an interest in property within the collateral description may give a written demand that a secured party amend or discharge a registration, and the secured party must register a financing change statement within 40 days.

Questions about tax, staff and the lease

Ask the seller whether all taxes are paid. The PST publication tells a buyer to obtain a PST clearance certificate before buying a business, and without one the buyer is liable for an amount equal to any outstanding amount owed by the seller. The buyer applies online or by Application for Clearance (FIN 447), with the collector's consent.

Ask who the employees are, how long they have worked there and what they are owed. If all or part of a business is disposed of, an employee's employment is deemed continuous, so the buyer takes on the seller's obligations to employees who stay. If the seller terminates employees before the sale, the seller owes their outstanding wages and compensation and the purchaser is not liable.

If the sale includes land or a lease, get the terms in a signed writing. A contract respecting land is not enforceable unless there is a signed writing, an act or acquiescence by the party to be held, or reasonable reliance that makes enforcement necessary to avoid unfairness, and paying or accepting a deposit counts as such an act. Ask whether the landlord must consent to a transfer, how long the lease runs and what the rent will be.

Questions about licences and why it is for sale

• Which licences and permits does the business need, and can they be transferred to you?
• Is the business in good standing with WorkSafeBC? Ask the seller for proof, and confirm the requirements with a lawyer.
• Will a new CRA business number and program accounts be needed? A change of owners may require them.
• Why is the owner selling, and how long has it been on the market?
• Who are the main customers and suppliers, and will they stay after the sale?
• Is the seller willing to stay on for a handover period?

A seller's reasons can be perfectly ordinary, such as retirement. Still, ask for the answer in writing and test it against the numbers.

What to do next

• Put your questions in writing and ask for written answers and supporting documents.
• Order the searches that apply to the business.
• Ask an accountant to review the financials and tax position.
• Ask a lawyer to review the agreement, the lease and any deposit terms before you pay anything.
• Do not sign or pay until the answers are satisfactory.

If a buyer or seller faces forfeiture of a deposit, the court may relieve against penalties and forfeitures on terms it sees fit, but the Act has no dedicated deposit rules. It is better to settle deposit terms clearly up front.

Frequently asked questions