It’s Not What You Sell Your Business For, It’s What You Keep

It's not what you sell your business for

There are many discussions these days about how much businesses are actually worth. You hear about companies being sold for tens or hundreds of millions of dollars, and it can be tempting to think your business is worth just as much. But many people don’t realize that the sale price isn’t nearly as important as how much you keep for yourself and your family after the sale. In other words, it’s not what you sell your business for that matters; it’s what you keep in your pocket. 

If you’re interested in maximizing the value of your business, there are several things you can do to make sure you’re getting the most out of it. If you want to avoid writing a big cheque to the government after the transaction, you will want to pay close attention to this article.

Lifetime Capital Gains Exemption (LCGE)

When it comes time to sell your business, you want to get the best price possible. But did you know there’s a way to shield some profits from capital gains tax? It’s called the Lifetime Capital Gains Exemption (LCGE), and if you qualify, you could save a significant amount of money.

So what is the Lifetime Capital Gains Exemption? Basically, it allows you to exempt a certain amount of profit from capital gains tax when you sell a qualified small business or family farm. The current exemption is $913,000, meaning up to $913,000 of profit can be shielded from tax. To qualify, you must have owned the business for at least two years and ensure that you don’t have too much passive income held within the company.

If you’re thinking of selling your business, it’s worth taking the time to see if you qualify for the Lifetime Capital Gains Exemption. It could mean substantial savings on your taxes.

Set up a Pension for the Business Owner

As a business owner, you have a lot of important decisions to make about your retirement savings. One of the most critical questions is how to structure your savings to maximize your return. Many business owners choose to invest in an RRSP, but another option may be more beneficial – an IPP, or individual pension plan. IPPs offer many advantages over RRSPs, including greater contribution levels, the ability to get more money out of your business, having a rate of return guaranteed by your business and cleansing your business to help qualify for the lifetime capital gains exemption (LCGE).

 Setting up an IPP is relatively easy. It’s worth exploring the differences, especially when you see the much greater value you’ll have when it comes to retirement. If you’re considering an IPP, you may choose to look at this video.

What is a Retirement Compensation Arrangement?

A Retirement Compensation Arrangement (RCA) is a registered vehicle for business owners. If you’ve capped your RRSP or IPP, you may want to investigate an RCA to increase your retirement savings and effectively get money out of your business. You may want to look at this quick explainer video to see all the advantages available.

Use of Philanthropy When Selling Your Business

When selling your business, you are left with a choice; write a big cheque to the government or write a meaningful cheque to a charity you’re passionate about. Many business owners don’t realize that contributing to a charity is so powerful in many different ways. You can create a legacy for your family and leave a robust endowment for a charity they are passionate about. Working with a philanthropy advisor, you can accomplish all of those things. Not only did it help reduce taxes, but it also allowed the business owner to create a legacy that would last for generations. And because we planned everything so carefully, all of their future estate planning and taxation issues were taken care of. It was the perfect way for the business owner to ensure that their family and the causes they cared about were taken care of long after the business owner was gone. If done correctly, the tax credits were enough to cover what would’ve been paid to the government otherwise. You decide, would you rather write a big cheque to the government or to a cause you’re passionate about?


We’ve seen that there are several things business owners can do to help minimize the taxes they pay on the sale of their businesses. First, it’s essential to take the time necessary to prepare your business for sale – this will ensure you get top dollar and won’t have any nasty surprises down the road. Secondly, some of the financial vehicles available take time to set up and be financially viable. Finally, always work with experienced professionals who understand tax laws and how to negotiate a successful deal. Would you rather write a cheque to the government or a charity you love? The choice is yours – but remember, planning ahead is vital when minimizing taxes on your business’s sale.

It’s not what you sell your business for