Selling Dental Practice in Ontario
Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to setting up or selling a dental practice, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you. I should know – I’m one of them and you can contact me directly (email@example.com).
The need to incorporate your Dental Practice
If you’re selling your dental practice, you should incorporate it first. Why? To save big $$$ on taxes! Look, you have a choice in selling the assets of the dental practice or the shares of a dentistry professional corporation. You definitely (as the seller) want to go the route of selling the shares. Why? Because of the lifetime capital gains exemption that comes from the sale of shares of a small business corporation. You can read up more about his here. With a good accountant, you can even multiply the lifetime capital gains exemption by using your family members as non-voting shareholders or by setting up a trust for your minor children. Think about it: why use up only YOUR lifetime capital gains exemption when you can use YOURS, YOUR WIFE’S, YOUR CHILDREN’S, etc. The basic idea is that, if you sell shares, you can avoid paying big taxes by using your lifetime capital gains exemption. Make sure to speak with a qualified accountant to see if you’re eligible and to get things started towards saving big $$$!
Need help with incorporating and getting a Certificate of Authorization? You can contact me for a quote. I’ve blogged extensively about the laborious process of getting your corporation organized and up and running such that it complies with Ontario laws, College requirements, etc.
Now, as a Dentist, are you practicing under your own name or under another name (e.g. Yonge Street Dental Care). Did you know that you need to get the approval of the Royal College of Dental Surgeons of Ontario in order to use a practice name? Basically, you’re carrying on business as a sole proprietorship (not a partnership or corporation). But you should get a Master Business License from the Ontario government and you should also submit an application for approval to use the name from the College. Contact a lawyer if you need to get these things done.
Rolling Over Your Practice
You’ll need to work with your accountant and lawyer in order to transfer the assets from your sole proprietorship to your professional corporation. If you plan on selling the shares of your professional corporation, the professional corporation will need to acquire the assets of your dental practice FIRST. Otherwise, the shares of the professional corporation are not worth anything. To fully document this, you’ll need to have an asset purchase agreement between you or your sole proprietorship and your professional corporation.
Assigning the Lease
A lot of times, a share purchase agreement is about to close but all is hanging on getting the consent of the Landlord in order to assign the lease. Things can get somewhat tricky here. You should get a lawyer to review the terms of the lease to find out what are the conditions or requirements in order to transfer over the lease. For instance, how much longer is the term of the lease? Is the Landlord’s consent required? Can consent be withheld? Are there any expenses associated with getting consent? Is there a specific way for consent to be requested (in writing, timelines, etc.)? What if there is a transfer of ownership in the professional corporation? Does the Landlord have to give consent for that? There are a lot of things to think about here and you should definitely have a professional check out the lease agreement.