There is so much to consider in regards to this topic and as usual I will make mention that each person’s/corporation’s scenario is different and the knowledge in this article should be used in conjunction with good planning with professionals. As always, you can ask me questions anytime by contacting me through the contact information listed on the blog or our website www.kustomdesign.ca.
Let’s start by looking at the basics of selling your corporation. We already spoke about the Capital Gains exemption on the sale of qualified small business shares and in the last blog, we even went into what makes the shares of your corporation qualified for this $750,000 lifetime Capital Gains Exemption that you have access to. This is only on the sale of the shares of your corporation, so in essence, this is a sale of the actual entity (corporation). Selling your business this way brings very favorable tax consequences due to the $750,000 Capital Gains Exemption and if the corporation that is sold is owned by a trust then the trust has its own $750,000 Capital Gains exemption as does all the beneficiaries of the trust. So in the case of a corporation owned by a trust being sold, there could be millions of dollars in tax free capital gains eligible to the trust and beneficiaries of the trust where the profits from the business sale would be split.
The other way to sell a corporation is to sell the assets. If there is no gain on the assets from the current value on the books, then there is no tax issue. However, if there is a gain being made on the sale of the assets then there could be tax owing. The other factor in selling the business is Goodwill. This is the value of the business other than the physical assets, such as the branding of the company, the repeat client base and other non physical value of the business. This basically comes down to how much the buyer of the business is willing to pay for all the sweat equity that you’ve done in building the business.
No comments:
Post a Comment
Thank you for your comment!