Canada is the second-biggest country in the world in size and ranks at number 10 for strongest economy in the world. With a Gross Domestic Product (GDP) Value growth of 3.5 percent, the country is stable, wealthy, and has plenty of opportunities, making it the ideal place for anyone ready to buy a Canadian business.
During the Covid-19 pandemic, the country’s GDP also significantly increased from $1,883,49 in 2020 to $2,030,62 in 2021, which shows that unlike many countries worldwide, Canada is only getting stronger.
There are many reasons why people choose Canada as a new country of residence, whether it be for work, to improve their quality of life, or to start a business. However, compared to some of the best nations worldwide, like Australia and the United Arab Emirates, Canada still ranks higher with the strength of its economy.
The country has a very modern way of operating, and with an unemployment rate of just 8 percent, many people are interested in finding out why. It sparks an even greater interest for people that want to immigrate to a country where they can make their dreams come true.
If you would like to live anywhere in the world to either find a job that will advance your career or buy a business, making the move to Canada may be your best one yet.
You will be happy to find that the startup or buying process for a business in Canada, is one of the easiest globally.
As you can imagine, this can also get you a visa to Canada much faster, as it shows that you are serious about contributing to the country’s economy.
Another plus side is that you get access to government grants, including entrepreneurial support, mentorship, and financial assistance, which will contribute to the success of your business. So, if you have never been a business owner before, there is no need to worry.
Now, the question of all is, how do you start?
How to Buy a Canadian Business in 2021
Buying an existing business in Canada has a different process from starting a new one. The option that you choose directly impacts how you will account for the business assets of the business you purchase. This information is required for the Canadian government to determine your income tax.
When you buy a Canadian business, you must ensure you are serious about your investment because it requires you to generally pay a set amount of money to buy the entire business in one go. While this is not always the case, it is more likely to happen.
Sometimes there is also a sale agreement that stipulates the price of each asset, the value of the inventory, and an amount that can be contributed to goodwill. In the sale agreement, individual asset prices are set out and are all reasonable. These prices can be used to determine your claim for Capital Cost Allowance (CCA), which will give you an estimation of what it will cost to buy a business.
If the individual asset prices are not displayed in the contract, you must decide the amount of the purchase price that you are reasonably willing to pay for each asset, inventory, and goodwill (if any). All of these amounts should match what the vendor determined when the sale was reported.
The amount you are willing to pay for each asset should be its Fair Market Value (FMV). Any balance that remains after the purchase price (for assets and inventory) should be contributed to goodwill.
By buying a business as a foreign national, you are classified as a business immigrant. As a foreign investor entrepreneur that wants to move to Canada, you can buy the established business and then apply for a work visa as a management level employee under the Federal Temporary Foreign Worker Program (TFWP).
As a successful temporary work visa holder, you can apply for permanent residency in just a couple of months. This can be done with a Federal Skilled Worker Program under Express Entry or a provincial immigration program.
If you are ready to start the process of buying a business, you must present a suitable business plan and conditions that will detail how you will create new Canadian jobs. Without it, you will not get very far, especially because the Canadian government is focused on creating opportunities for foreign business investors based on the goal to benefit the economy.
Do You Qualify?
To become a business owner in Canada, you must meet the following requirements:
- Be a foreign investor with verifiable and transferable management experience.
- Have assets to purchase in Canada.
- Have proper language abilities in either English or French to work as a management level employee in the business you would like to buy.
What is the 3-Step Process to Buy a Canadian Business?
- A foreign investor must identify a Canadian business to purchase.
- As a potential investor, you must submit a Labour Market Impact Assessment (LMIA) with a suitable business plan.
- Once you have issued the positive LMIA, you must apply for a temporary work permit that will last between 12-24 months.
Once you have found a suitable business to buy, it takes 2 to 3 months to complete your LMIA application. It will then also take less than 3 months to receive your work permit. As soon as you qualify to buy a business, complete the 3-step process, and arrive in the country, you can apply for a permanent visa to Canada.
Is Buying a Business in Canada for You?
To get approved to start a business in Canada, you must be eligible for the role to manage the business. Keeping this in mind with the fact that you should be able to fund the business and create a business plan to create new employment opportunities in Canada, will give you the answer you need.
The reason why it is important to be serious about buying a business in Canada, is because most provincial-based residence immigration programs only operate on the Invitation to Apply (ITA) system. It may take anywhere between 12 to 36 months to conclude. However, if you meet all the requirements as a foreign investor entrepreneur, this duration can be reduced and you can start operations for your Canadian business before you know it.
Have a Question? We Can Help!
The next step is to plan and start. You will need a solid business plan, but first, a business to buy. You can become one of the best entrepreneurs Canada has ever seen, but only if you find the right business.
One of the best things about buying a Canadian business is that you can have your pick in all of the 13 provinces and territories. If you need help to decide where it would be best to buy a business that you are passionate about, and also a province you want to work and live in, then you will find value in getting advice from an expert.
For more information on how to buy a business in Canada and to make it your own, you can get in touch with one of our affiliated Regulated Canadian Immigration Consultants (RCICs).
Let us help you make your entrepreneurial dreams come true.