What records buyers want when you sell a small business in Canada
Buyers do not buy a stack of paper. They buy a story they can check. For a Canadian sole proprietorship, that usually means a few years of books, the tax filings that match them, and the contracts that show the work can continue. This checklist is the pack people often ask for. Your buyer may want more, or less. Ask them.
If you are still deciding what the numbers say about price, read how much a small business is worth. For the wider sale, including GST/HST questions to raise with a professional, read selling a sole proprietorship in Canada.
This checklist is for general information only. It is not tax, legal or accounting advice. Every sale is different. Confirm what you need with the buyer, the Canada Revenue Agency and a qualified professional.
A short list you can print and tick off as you gather files:
- Income and expense logs for 2-3 years, with invoices and receipts
- GST/HST and QST returns, or quarterly summaries, and your registration status
- Year-end totals sorted by T2125 line
- Bank and payment statements that match the books
- Vehicle trip log and home office notes, if you claimed those costs
- Client agreements, leases, software subscriptions, and supplier terms
- A list of equipment, inventory, and what is included in the price
Income and expense logs
What. Dated invoices and receipts, a category for each cost, and monthly totals. Two or three years is the usual request. One strong season is not enough for someone who has to live with the slow months too.
Why it matters. Income and expenses are the raw material for every other question a buyer asks. If the log is missing months, or if personal spending is mixed in, they cannot tell what a normal year looks like. They will either discount the profit or wait until you rebuild it.
Tip. Keep logging in the same categories you already use. A new system started in the final month is harder to trust than a plain log that has been consistent.
GST/HST and QST records
What. Returns, or quarterly summaries, that show tax collected, input tax credits, and the net amount owing. Note whether you are registered. If you were never registered, say that plainly so nobody hunts for filings that do not exist.
Why it matters. Sales tax you collected is not your revenue. A buyer who cannot see the tax apart from the sales will not know what the business actually kept. Quarterly totals also show whether the account was kept up, which is part of trusting the rest of the books.
Tip. The sales tax calculator can help you check the tax on a single amount. The GST/HST registration checker is only a threshold tool. Neither one replaces your returns, and neither one tells you how tax applies to the sale itself.
Year-end and T2125 summaries
What. Annual totals by expense line, in the same shape as the figures you used at year end. A one-page summary next to the monthly log is easier to review than a folder of loose receipts.
Why it matters. Accountants in Canada already read expenses this way. If your private categories do not map to those lines, someone has to translate them under time pressure. Translation is where totals get dropped or double-counted.
Tip. If a line is large, be ready to name the few receipts inside it. "Supplies" with no detail is a question waiting to happen.
Bank and payment statements
What. Statements for the accounts you use for the business, covering the same years as the books. Include the payment service you actually get paid through, if that is where customer money lands before it reaches the bank.
Why it matters. Statements are the outside check on your log. When deposits match income, and when the costs you claimed left the account, a buyer can stop wondering whether the spreadsheet was hopeful. When they do not match, the conversation slows down until they do.
Tip. Reconcile before you share. Mark transfers that are just you moving money between your own accounts, so they are not read as sales or expenses.
Vehicle and home office logs
What. If you claimed vehicle costs, a trip log with the date, purpose, kilometres, and odometer readings. If you claimed a home office, the area you use for work and the annual home costs that went into the claim.
Why it matters. These claims are easy to doubt because they mix personal life with the business. A log shows the share that was for work. Without it, a buyer may ignore the deduction or treat the whole cost as personal, which changes the profit they think they are buying.
Tip. The mileage and vehicle expense calculator explains allowance rates and a simple business-use share. It does not build your log, and it does not decide whether the vehicle is part of the sale. Keep the log with the receipts.
Contracts, subscriptions and recurring revenue
What. Client agreements, leases, software subscriptions, and supplier terms. Note which ones transfer, which ones end when you leave, and which customers come back without a written contract.
Why it matters. Recurring work is often the reason someone buys a small business. If that work lives only in your inbox, the buyer cannot see it. A short list of who pays you, how often, and on what terms is more persuasive than a promise that "people always come back."
Tip. Mark anything personal, such as a software login in your own name, so it is not presented as an asset. Ask a lawyer before you share a contract that limits what you can disclose.
Assets and inventory list
What. Equipment, tools, and inventory, with a plain note of what is included in the price and what you are keeping. Age and condition matter more than a formal appraisal for a first conversation. Say if something is leased rather than owned.
Why it matters. The price is partly stuff and partly the ongoing business. If those are blended into one number, you will argue later about a missing tool or a shelf of stock. A list keeps the argument small.
Tip. Photograph the larger items when you write the list. Photos do not set a value. They stop a dispute about what was in the room.
How long to keep records
What. The CRA generally expects records to be kept for six years from the end of the last tax year they relate to. Confirm current CRA guidance before you throw anything out, including after a sale.
Why it matters. A buyer may want copies. You may still need the originals for your own tax questions. Shredding the year you sold, because the deal is done, can leave you without the support for the return that includes the sale.
The CRA explains its record-keeping expectations on its site: Keeping records. This page does not add other deadlines.
Related guides and tools
- How much is my small business worth?
- Selling a sole proprietorship in Canada
- Sales tax calculator
- GST/HST registration checker
- Mileage and vehicle expense calculator
- Getting started with the bookkeeping tracker
FAQ
How many years of books should I show a buyer?
Often 2-3 years. Ask the buyer's accountant.
Do I need my GST/HST returns ready?
Yes, if you were registered. Returns and quarterly summaries help.
What if my records are messy?
Clean them up before you list, and keep logging from now on.
Does a bookkeeping spreadsheet replace an accountant for a sale?
No. It organizes the information they'll review.
Is this a legal checklist?
No. It's general information only.
This checklist is for general information only. It is not tax, legal or accounting advice. Every sale is different. Confirm what you need with the buyer, the Canada Revenue Agency and a qualified professional.