How to Move to Canada by Buying a Business

Canada has several immigration pathways designed to attract wealthy business immigrants. One such pathway is the Owner-Operator program, which allows foreign investors to invest in a business in Canada and move there to operate it.

Below, you will find important information about this pathway as well as answers to the most commonly asked questions.

UNDERSTANDING THE BUSINESS BUY PROCESS IN CANADA

Buying a business in Canada can be a complex and time-consuming process, but with the right guidance, it can also be a rewarding experience. Whether you’re a seasoned entrepreneur or a first-time buyer, understanding the business buy process is crucial to making an informed decision.

Step 1: Research and Planning

Before starting your business buy journey, it’s essential to research and plan carefully. This involves identifying your goals, budget, and industry preferences. Consider what type of business you want to buy, its location, and the size of the company. You can find many businesses for sale in Canada on reputable sites, such as IBBA Canada or Business Sell Canada.

Step 2: Finding the Right Business

Once you have a clear idea of what you’re looking for, it’s time to start searching for businesses for sale. You can browse listings online, network with industry professionals, or work with a business broker. Look for companies with a proven success record, a strong reputation, and a solid financial foundation.

Step 3: Due Diligence

When you find a business that interests you, it’s essential to conduct thorough due diligence. This involves reviewing the company’s financial statements, assessing its assets and liabilities, and evaluating its market position. You may also want to consult with industry experts, lawyers, and accountants to ensure you’re making an informed decision.

Step 4: Negotiation and Purchase

Once you’ve completed your due diligence, it’s time to negotiate the sale. This involves agreeing on a purchase price, payment terms, and other conditions of the sale. Be sure to work with a reputable lawyer to ensure the sale is structured correctly and that your interests are protected.

Step 5: Closing the Deal

After the sale is negotiated, it’s time to close the deal. This involves finalizing the purchase agreement, transferring ownership, and completing any necessary paperwork. Be sure to review all documents carefully and seek professional advice if needed.

Additional Tips and Considerations

• Work with a reputable business broker or lawyer to ensure a smooth transaction.

• Consider the franchise fees and ongoing royalties if you’re buying a franchise.

• Evaluate the company’s intellectual property, including trademarks, patents, and copyrights.

• Assess the company’s market position and competitive landscape.

• Review the company’s financial statements and tax returns.

• Consider the location and accessibility of the business.

By following these steps and considering these tips, you can navigate the business buy process in Canada with confidence. Whether you’re buying a small business or a large company, the key to success is careful planning, thorough research, and a deep understanding of the business buy process.

WHAT IS THE OWNER-OPERATOR PROGRAM?

The Owner-Operator program allows foreign owners of Canadian companies to come to Canada to run their businesses and to settle in Canada permanently. To benefit from this program, foreign investors must buy a business in Canada or establish their own business in Canada and demonstrate to the Canadian immigration authorities that their business is genuine and will create employment opportunities for Canadians. All financial figures mentioned are in CAD (Canadian Dollars).

However, please see our article about the recent changes to this program, which make it somewhat more burdensome.

WHO CAN APPLY UNDER THE OWNER-OPERATOR PROGRAM?

Foreign investors who meet the following requirements are the ideal candidates for the Owner-Operator program:

• A minimum of three years of managerial or business ownership experience.

• Solid financial resources to buy a business in Canada.

• Sufficient language abilities in either English or French to actively work as a manager in the business.

• The ability and desire to operate a business in Canada and to participate in the day-to-day management of the business in Canada.

If you are interested in buying a business, it is advisable to consult an IBBA Canada business broker to assist in the purchasing process.

WHAT KIND OF BUSINESS CAN QUALIFY FOR THE OWNER-OPERATOR PROGRAM?

Foreign investors should consider the requirements for the Owner-Operator program before purchasing a business in Canada. For detailed information, visit “How to Buy a Business for Immigration and Profit in Canada.”

In short, the company in Canada should meet the following criteria in order to support its owner-operator’s permanent residence application in Canada:

• The company in Canada must be active and operational, which means that it must have a physical location (not a virtual or home-based office), customers and at least one employee. Additionally, the business must be located in strategic locations to attract potential buyers.

• The company must have solid financial performance and sufficient cash flow to pay the foreign investor’s salary.

• The company should be operational for the past 3 years or at least for 12 months before the foreign investor can apply for permanent residence.

• The foreign investor must directly hold and control at least 51% of the shares of the Canadian company.

• The Canadian company must demonstrate that the foreign investor’s presence in Canada is required for managing its operations.

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF THE OWNER-OPERATOR PROGRAM?

ADVANTAGES OF THE PROGRAM:  

• The Owner-Operator program does not have a minimum investment amount, but investment must make sense given the business plan.

• The Owner-Operator program is available to any nationality.

• There is no requirement for a pre-existing foreign company.

• There is no minimum language requirement, but foreign investors are often asked to demonstrate their ability to manage a business in Canada and, therefore, should possess an intermediate level of English or French.

• Foreign investors can apply for permanent residence in Canada using this program.

DISADVANTAGES OF THE PROGRAM:  

• The Owner-Operator program is not suitable for start-up companies.

• The company in Canada must be active and operational with adequate financial performance.

• This program requires investment to purchase at least 51% of shares without guaranteeing success.

• It’s not the best model for tax purposes.

WHAT IS THE PROCESS FOR THE OWNER-OPERATOR PROGRAM? 

The Owner-Operator program is a two-step application process. Once the foreign investor buys a business in Canada, the company in Canada must apply to the Employment and Skill Development Canada (ESDC) office to obtain a positive Labour Market Impact Assessment (LMIA). Working with a renowned business broker can significantly ease the process.

Once the company has received a positive LMIA, the foreign investor can obtain a work visa, which is usually valid for 2 years, and apply for permanent residence if he or she meets the eligibility requirements under the Express Entry program.

As immigration laws change constantly, please consult with a lawyer before taking action. In general, the process looks like this:

WHAT IS THE INVESTMENT AMOUNT REQUIRED FOR THE OWNER-OPERATOR PROGRAM? 

There is no minimum investment amount specified in the law regarding the Owner-Operator program. However, investors should keep in mind the following factors when it comes to the investment amount:

• Buying an eligible business in Canada for the owner-operator program would cost at least $100,000 and above; however, solid companies with $500,000+ revenues and good net profits for the owners would cost much more, starting from $200,000 and above.

• Investors should also set aside at least $50,000 as reserve cash to operate their newly acquired Canadian business for 1 year.

• The company in Canada must also generate sufficient revenue to cover the owner’s wages (at approximately $50-$58 per hour), rent, and wages of its Canadian employees (so generate at least $250,000+ in gross sales per year).

All financial figures mentioned are in CAD (Canadian Dollars).

WHAT DOCUMENTS ARE REQUIRED FOR THE OWNER-OPERATOR LMIA PROGRAM?

Foreign investors must provide different sets of documents to the Canadian authorities at different stages of the process. There are several articles available that can assist readers in addressing the challenges of obtaining start-up funding.

During stage 1 (LMIA applications stage), the foreign investors must include the following documents with their application:

• Canadian company’s registration documents

• Proof of new ownership of the Canadian company by the foreign national (agreement of purchase and sale, share certificates, proof of purchase, etc.)

• Corporate tax filings for the company in Canada

• Financial documents for the company in Canada (GST/HST filings, assets ownership, bank statements, Schedules 100 and 125, etc.)

• Proof of active operation of the business in Canada (e.g., marketing material, website, agreements with clients or customers, office lease agreements, invoices, etc.)

• Foreign owner’s passport copy

• Foreign owner’s resume

• Business plan (sometimes required for newly established companies)

During the second stage of the application process, foreign investors will be required to provide more information about their education, work experience, and managerial experience, and they will undergo medical and criminality checks. Here is the list of additional personal documents that foreign investors will be required to prepare in advance:

• Educational credentials (ECA report is required for permanent residence application)

• Proof of business experience and managerial experience, like employment confirmation letters, salary information, business ownership documents or reference letters from former bosses or clients

• Status documents – marriage certificate, birth certificates for children

• English or French language test results (highly recommended)

• Bank statements for the past 6 months

• Passport photo

• Proof of undergoing an advance medical assessment

• Police clearances for every country where the applicants spent more than 6 months

HOW LONG DOES THE PROCESS TAKE?

On average, it takes around 6 months from the start of the process to the approval of the LMIA-based work permit. However, it may take much longer depending on the type of business foreign investors are buying and whether or not the LMIA is intended to support the foreign investor’s permanent residence application. Businesses with a presence spanning many years contribute to a consistent business flow and significant profitability over time.

If you hire us for this program, the average timeline looks like this:

WHAT IS THE LENGTH OF THE INITIAL OWNER/OPERATOR WORK AUTHORIZATION? 

Initial LMIA-based work permits are issued for 1-2 years, depending on the nature of the business.

The businesses must be located in strategic locations to attract potential buyers.

CAN THE OWNER/OPERATOR WORK PERMIT BE RENEWED? 

Foreign investors can renew their work permits in Canada for up to 6 years as long as the company in Canada can demonstrate that it is actively engaged in business and has complied with the law.

Working with a renowned business broker can significantly ease the renewal process.

CAN THE FAMILY MEMBERS OF THE FOREIGN INVESTOR COME TO CANADA UNDER THE OWNER-OPERATOR PROGRAM? 

Family members can accompany foreign investors during their employment time in Canada as foreign owners of Canadian businesses. The spouse of the foreign investor may get an open work permit to work in Canada, and their children may attend public schools for free (this rule does not apply to post-secondary education). Foreign investors and their family members can also get access to free health care during the validity of their work visas. However, different provinces have different rules for access to free health care for foreign workers, and investors should check the rules for the province where they intend to settle.

If someone is interested in buying a business, it is advisable to consult an IBBA Canada business broker to assist in the purchasing process.

HOW CAN WE HELP?

Through our licensed network of partners, we can help foreign investors and entrepreneurs in the following ways:

• Identify suitable businesses for sale in Canada, ensuring it is located in strategic locations to attract potential buyers.

• Assist with purchasing a suitable business in Canada.

• Assist with the Owner-Operator LMIA program application.

• Assist with the permanent residence application as owner/operator.

• Business consulting & support to manage a newly acquired Canadian company.

• Assist with audits and compliance with employment and immigration rules.

HOW MUCH DO WE CHARGE FOR THE OWNER-OPERATOR PROGRAM?

Our law firm charges around $25,000+ in legal fees to assist with the Owner-Operator business immigration program. The fees may increase depending on the applicant’s background, experience, language skills, and the complexity of the case. All financial figures mentioned are in CAD (Canadian Dollars).

At Sobirovs Law Firm, we focus only on business immigration. That is, we help entrepreneurs, business owners and investors with sufficient funds and business experience relocate to Canada using the most suitable immigration programs. We take time to learn about you, your goals and your capabilities and choose the best pathway(s) to Canadian permanent residence and, ultimately, Canadian citizenship for you and your family.

Contact us today and see how we can help you and your business!