3 Advantages to Purchasing a Business vs. Starting Your Own for an Owner Operator LMIA
Obtaining a positive Labour Market Impact Assessment (LMIA) from Employment and Social Development Canada (ESDC) is required for companies who seek to hire foreign workers. It is meant to protect the labour market by ensuring that citizens and permanent residents are given first consideration to fill a role. If a company can prove that no such applicants were available – and that the role is truly required and of benefit to the company and country – an LMIA will be granted.
One of the main requirements is placing a job advertisement. However, this requirement is currently waived when it comes to an Owner Operator LMIA. The Owner Operator program allows a foreign worker that intends to own a controlling interest (50.1% +) in and oversee operations of a business – hence owner/operator – to receive a positive LMIA if they meet certain requirements.
While this program can apply to starting a new or purchasing an existing business, both options are not created equal. A complete purchase of an existing business is the least onerous route as it is easy to provide proof for all requirements. However, even partial purchase of an existing business provides many advantages over starting your own.
1. Easier to justify feasibility when you can demonstrate actual performance – One of the main things that are considered when reviewing your owner operator LMIA is whether the business, under your leadership, is likely to succeed. It is much easier to convince an ESDC officer that business is feasible and has merit if it already has a track record.
2. Easier to support job creation/retention & economic benefit – More specifically, it needs to be evident that the business will have a positive impact on the labour market and overall economy. This is primarily evidenced through job creation and financial contribution.
- Job creation – The number of jobs for Canadians is always a factor in these decisions. First, in most cases, it is easier to maintain existing jobs than create new ones, which is a luxury that is not available in a startup. Furthermore, it is easier to create new jobs in an existing business that already has momentum, especially within the first year of taking over which is the best scenario to be able to present.
- Financial contribution – Beyond job creation, the direct economic impact is often viewed through the lens of financial contribution via taxes. Businesses do not pay taxes when they incur a loss and most new businesses only turn a profit after the first year or more. Therefore, it is easier to demonstrate a positive economic benefit if the company already exists and is already profitable or on the path to become profitable in the first year of your ownership.
3. New businesses must be providing a good or service before approval – One of the particularly strenuous aspects of starting a new business is that the new business must be actively in operations, providing goods or services, before a positive LMIA will be granted. If you aren’t already legally in the country on another type of permit, this can be very difficult to do from abroad.
It is important to note that there are currently many proposed changes to the owner operator LMIA being considered by the ESDC that may fundamentally change the program. If you are considering this option, make sure to consult with an immigration consultant or lawyer or thoroughly research this option. If you choose to proceed, our team of experts will be able to create a fully aligned LMIA Owner Operator business plan to further increase your chances of case success.