Selling Your Business: Why Incorporation Can Make a Big Difference

Let's talk about how an incorporated entity may be more beneficial when you want to sell it versus a sole proprietorship. And a lot of people ask, you know, is it better for me to be incorporated versus a sole proprietorship? And really the answer is going to be it depends. Does it make it easier for me to sell my business? Not likely easier to sell it. But there definitely are some benefits if you structure your exit properly. One such example would be if you are one individual owner of a business, you're selling it for $500,000. In Canada, there's a lifetime capital gains exemption, which only applies if you own shares of a qualified small business corporation or a qualified farming enterprise, but typically a qualified small business corporation, which means you've got a corporation that's set up and you own the shares of it. If you sell that corporation or the shares of that corporation, you would qualify for your lifetime capital gains exemption, which means you wouldn't pay tax on that sale. If you sell as a sole proprietor.