If you are considering buying a business in Canada as a foreigner, there are lots of benefits that come with it. There are several options available for foreign business people interested in buying or starting a business in Canada. Under Canada’s federal and provincial laws governing corporations, a non-resident or foreign entrepreneur or investor may register a company in Canada from scratch, or by setting up a branch office or creating a subsidiary company in Canada.

Some options for buying a business in Canada for non-citizens may include routes for temporary or permanent residence. You may be eligible for Canada’s Start-Up Visa program with the support of a  designated investor organization or venture capital fund. Under this program, you are expected to have a qualifying business, be proficient in English or French, and have enough resources to support yourself and your family when you move to Canada.

Secondly, if you already have an established business you wish to expand in Canada, note that each individual province or territory maintains its own registration procedures and required fees controlling extra-provincial incorporation. If you wish to expand into multiple provinces, you will need to contact the province’s provincial registry and also meet all the requirements for the extra-provincial corporation.

In Canada, the acquisition of the business by a foreign national is expected to be supported by a suitable business plan that will, along with other conditions, result in the creation or retention of Canadian jobs.

Once a non-citizen has identified a Canadian business to purchase, a Labour Market Impact Assessment (LMIA) must be submitted together with a suitable business plan. This business plan is expected to show that the purchase of the business by a foreign national will result in the retention or creation of Canadian jobs, among other conditions.

Once the foreign investor submits the assessment and business plan and a positive LMIA opinion has been issued, the foreign entrepreneur may then apply for a renewable temporary work permit. After arriving in Canada on a temporary work permit, the non-citizen may then begin applying for permanent residence as a federal skilled worker under Canada’s Express Entry program or under a provincial immigration program.

Tips for Buying a Business for Immigration Purposes in Canada

The following are tips to be considered when trying to buy a business in Canada;

  1. Buy a Business That Is Relevant To Your Background

One key factor Canadian immigration authorities will look out for on your immigration application is whether or not you can manage a newly acquired Canadian business. These officers will also analyze if your business purchase in Canada makes sense given your background and previous business experience. It is imperative to avoid businesses that are completely new to you as this might raise questions about your fitness to operate such a business.

  1. Franchising vs. the Independent Business

As a buyer, you have the option of purchasing an existing independent business or a franchise. Each has its strengths and weaknesses. Franchises come with a set of rules that you are expected to follow. The franchisor has taken the time to develop a business template, which is rolled out from location to location.

If you are looking to use your managerial skills, and won’t feel cramped if you can’t put your own ideas into play, this may be the ideal form of business for you. Buying an independent business gives you the freedom of setting your own rules. You set the vision of the company, control human resources, and get to choose which supplier you’re going to buy from

In an independent business, the decisions and the success of the business rest on your shoulders. There is room for creativity and innovation, but your choices may destabilize the business. Unless you are buying a business with a strong, existing brand, you may not have the same recognition that you would get with a franchise. On the flip side, you won’t have to pay franchise fees and royalties.

  1. Buy An Active Business That Has Been Operational For At Least 12 Months

If you intend 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 intend to acquire has been in the 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 adequate revenue to support your permanent residence application.

  1. Buy A Business with Good Gross Sales for The Past 2-3 Years

When acquiring 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, try to pay adequate attention to Schedule 100 and Schedule 125 and check the reported gross sales numbers of the company in the past year. In addition, review the most recent GST/HST filings to have an idea about the current sales volumes.

Since your business in Canada is expected to have sufficient revenue streams to support your permanent residence application, always strive to buy a company that has $250,000+ of gross sales per year. Also, ensure to check the net profit number to ensure whether the company you are buying is profitable. However, the Canadian immigration authorities are not strictly concerned with the company’s profitability, but rather review if the gross sales are substantial enough to support your wages and operational costs.

Where to Find Businesses for Sale in Canada

While you can find listings in the classifieds of your local newspapers, you probably won’t find what you’re looking for there. Have it in mind that finding the right business will take time, effort, and more than a little detective work; here are a few resources you can use to find businesses for sale.

  1. Trade Publications

Trade publications specific to the industry you want to be in are a sure and useful resource, as they often have businesses for sale listed in the classified section. You can find listings for many Canadian trade magazines online at the Canadian Business Press site.

  1. Newspapers

In Canada, newspapers have classified sections, where you can find listings for local businesses. Look for real, local businesses, but be wary of vague “business opportunities.”

  1. Commercial Investment Magazines/Newsletters

This kind of investment can often be found in more populated areas. For instance, in southern Ontario, there are a lot of free publications, such as the Business Exchange, which can be picked up at magazine racks throughout the Greater Toronto Area (GTA). In these publications, you will typically find retail businesses, such as restaurants, apartments, and convenience stores, where a property is often linked to the sale of the business.

  1. The Internet

The Internet is speeding up the pace of business, making it easier for businesses to close transactions around the world. There is still room for further development in this aspect of the Internet, but currently, you can find businesses listed for sale on http://www.buysell.com/ (for Western Canada, includes generic goods for sale).

  1. Word of Mouth

For centuries, this has been an excellent way to learn about a business that has just come up for sale or one that may not be listed but the business owner would consider selling. Networking and business events can help you leverage this channel of information, such as communication with your banker, lawyer, and accountant. In addition, when you are looking for a specific type of business, you can put the word out in the industry that you are looking to buy and ask contacts in the industry about businesses that might be for sale.

  1. Brokers

Have it in mind that brokers earn commissions when they help a seller close a deal. A good broker is an excellent resource; a part-time broker or half-serious broker will not likely add value to your search. Note that the best way to find a broker is to tap into your network and ask people you trust for referrals. If you are looking to buy a business in a specific industry, ask people within that industry if they can recommend a broker for you.

In Conclusion;

It is important to note that a foreign entrepreneur, eager to live in a particular area of Canada, can acquire a suitable business and relocate to that area of choice. This is far more advantageous than trying to meet provincial immigration programs. With the exception of the Quebec Immigrant Investor program, provincial investment-based immigration programs are becoming less attractive to foreign entrepreneurs.