Reality Hits on the First Day of Business Possession
The first few months after the successful acquisition of an existing business can be daunting. The opportunity and the excitement of steering the new “purchase” into your vision can be overshadowed quickly by the reality of running a business. Marketing, human resources, and of course, financial decisions will have to be made as soon as the first day of the business’ operations begin. For many business owners, particularly first timers and recent immigrants to British Columbia, the financial and compliance requirements of running a business in this province can be confusing and overwhelming.
After the closing date but prior to the possession date of a business, the future owner can begin the process of eventual ownership so that he is not buried under with administrative and compliance matters during the first few months of running the new business.
During this gap prior to possession date, begin the process of registering your business with the various levels of government concerned.
Below is a list of government entities who need to be informed of your business:
- Register your business with CRA so that it gets a Business Number (BN). A BN is needed for you to make a sale and collect GST, hire an employee and open a bank account. The easiest way to get a BN is to go online to The Canada Revenue Agency’s website and register.
- If you are selling tangible goods, you must register with the Provincial Sales Tax office. Go to ETaxBC to register.
- If you have employees, you need to register with WorkSafe BC. Do not forget that a shareholder/manager receiving a salary or dividend from the business is considered insurable from WorkSafe’s point of view.
- The business must also be registered with the City of Vancouver to operate in Vancouver.
Another factor to consider is whether the current reporting and information systems, particularly the accounting system(s), need to be updated or changed in the near future to keep pace with future business goals. Many business owners do not upgrade their software if their intention is to sell the business in the near future. As a consequence, many new owners inherit an outdated reporting system and then are consumed by the onerous task of moving to newer software after the takeover of the business. Consult an accountant prior to the possession date to determine which software your business should migrate to or purchase. It is often dicey for the business owner to attempt the migration on his own so the accountant can assist and prepare a detailed migration plan.
The main priorities after taking possession of the business would be the retention of existing customers and the retention of the existing human resources to serve these customers. If customers leave or if there are no human resources, the business will surely suffer. However, most often, change of business ownership is kept secret from the customers and the employees until the actual possession date, so there is very little the future owner can do to prepare or pre-empt the situation until then.
While waiting for possession date, get the required government compliance and accounting matters in order.
If you’re looking for a Vancouver accounting firm for succession planing and other business consulting, please don’t hesitate to contact us to learn more about how we can help you!
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