Our Tips for Buying a Business for Immigration Purposes
Tip No. 1: Buy an active business that has been operational for at least 12 months
If you want to buy a business in Canada for your immigration purposes, the rule of thumb is to buy an established company with several years of operational history behind it and loyal employees.
Canadian immigration authorities, in general, do not like ‘job offers’ made by start-up companies under the Express Entry program. If the company you plan to buy has been in business for less than 12 months, be prepared to provide sufficient documents to show that your newly acquired business is actively engaged in business and has sufficient revenue to support your permanent residence application. Alternatively, operate your business for 12 months before applying for permanent residence status in Canada.
Tip No. 2: Buy a business with good gross sales for the past 2-3 years
When buying a business in Canada, always request that the seller of the business provides you with some fundamental documents related to the company, including the following:
- Articles of incorporation & shareholders agreements;
- Official corporate tax filings for the past 3 years (T2), including Schedule 100 – Balance Sheet Information and Schedule 125 – Income Statement Information;
- T4 Summary of Remuneration paid for the most recent year;
- GST/HST filings for the current year;
- Lease agreement for the premises, and
- All other documents & agreements related to the operation of the business.
When reviewing the corporate tax filings, pay close attention to Schedule 100 and Schedule 125 and check the reported gross sales numbers for the company in the past year. Also, make sure to review the most recent GST/HST filings to have an idea about the current sales volumes.
Since your business in Canada must have sufficient revenue streams to support your permanent residence application, always aim to buy a company that has $250,000+ of gross sales per year. Make sure to check the net profit number to ensure whether the company you are buying is profitable as well. However, the Canadian immigration authorities are not strictly concerned with the company’s profitability, but rather review if the gross sales are sufficient to support your wages and operational costs.
Tip No. 3: Buy a business that is relevant to your background
One of the factors that Canadian immigration authorities will check when assessing your immigration application is whether or not you can manage your newly acquired Canadian business.
The officers will also assess if your business purchase in Canada makes sense given your background and previous business experience. That’s why we recommend avoiding businesses that are completely new to you as this might raise questions about your fitness to operate that business. For example, do not buy a restaurant in Canada if you have no experience in the food or hospitality industry in your home country.
If you need assistance with buying a business for immigration purposes, we are here to help you.
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 to relocate to Canada using the most suitable immigration programs. We take time to learn about you, your goals and 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!
Watch a video about buying a business in Canada for immigration and profit below.