Accounting Issues to Deal With Before Selling a Pharmacy in Canada

September 9, 2025

Selling a pharmacy is not only about finding the right buyer and negotiating a fair price. It also involves careful preparation of financial records and resolving accounting issues well in advance. 

Without addressing these matters, the process of a pharmacy for sale can become longer, more complex, and potentially less profitable. For pharmacy owners in Canada, understanding the accounting aspects before going to market is essential for a successful transaction.

This article outlines the key accounting concerns to address in preparation for a pharmacy sale in Canada.

1. Organizing and Verifying Financial Statements

Accurate and up-to-date financial statements are essential for demonstrating a pharmacy’s true performance. Buyers, lenders, and valuation specialists rely on these records to assess profitability and sustainability.

The process should include:

• Reviewing at least the last three years of financial statements.
• Ensuring statements align with accepted accounting standards.
• Reconciling all bank accounts and correcting any discrepancies.

If the financials are inconsistent or unclear, buyers may view the investment as risky and adjust their offers accordingly. Clean records help to support the asking price and build confidence in the transaction.

2. Addressing Tax Liabilities and Compliance

Taxes can significantly impact the structure and outcome of a pharmacy business for sale. Before listing the business, it is essential to clearly document or pay all outstanding sales taxes, corporate income taxes, and payroll remittances.

An accounting review can also identify potential tax planning opportunities. For example:

• Using a share sale structure may allow the seller to take advantage of certain capital gains exemptions.
• Adjusting asset values or inventory recording policies might improve after-tax proceeds.

Early consultation with professionals ensures compliance and minimizes the risk of unexpected liabilities after the sale.

3. Managing Inventory Valuation

Inventory is often one of the largest assets in a drugstore for sale. Its valuation affects both the sale price and potential tax obligations.

It is important to conduct a precise count of prescription drugs, over-the-counter products, and other retail goods before listing. Pay special attention to expired or slow-moving products, which may need to be discounted or written off.

Some buyers prefer to value inventory separately from the business, while others prefer including it in the total purchase price. Clear accounting on inventory avoids disputes during closing.

4. Reviewing Accounts Receivable and Payable

Uncollected debts and outstanding payables can affect the perceived health of a business.

Before selling:

• Review accounts receivable to ensure timely collection.
• Write off amounts that are unlikely to be recovered.
• Settle supplier invoices and clear overdue balances.

A pharmacy with low outstanding payables and clean receivables appears stronger during due diligence. This reduces the chance that the buyer will request price concessions.

Proper Accounting Translates to Better Valuation 

Accounting preparation is one of the most important steps for a pharmacy for sale in Canada. This covers organizing financial statements, separating personal and business expenses, valuing inventory, addressing receivables, and payables. All these contribute to a more transparent and appealing business profile.

For pharmacy owners planning a sale, addressing these issues early can lead to a faster process and better outcomes. Ready to prepare a pharmacy for sale? Learn how EVCOR helps owners address key accounting and valuation matters to achieve a successful transaction.