With International Accounting Day approaching on 10 November, we’re celebrating the accountants who help business owners understand their numbers, and use them to make informed decisions.
Your accounts explain what has happened. A conversation with your accountant can help you decide what happens next.
That conversation is particularly valuable when you’re considering a major change. Before an agreement is signed or money is committed, your accountant can help you question assumptions, understand the costs and prepare for the financial consequences.
Here are six decisions worth discussing early:
A second location, a new service or an interstate expansion can bring opportunities. It can also mean paying for premises, recruitment, equipment and marketing well before the additional revenue arrives.
Your accountant can help estimate the investment required, the sales needed to cover costs and how long the existing business may need to support the expansion. They can also test a slower-than-expected start, so your plans don’t depend entirely on the best-case outcome.
The aim is to understand what growth will demand from the business, alongside what it could deliver.
“How much can we invest in this expansion without putting pressure on the existing business?”
Buying a business or bringing in a partner can change your direction, responsibilities and financial commitments.
For an acquisition, your accountant can help examine the quality of earnings, outstanding liabilities and the cash needed to keep the business operating. Strong revenue alone may not reveal whether a business produces a sustainable return.
For a partnership, they can help you consider contributions, ownership interests and how profits may be shared. Alongside your legal adviser, they can help you understand the arrangement before you commit.
“What does the financial information tell us about the value of this deal, and what could change that assessment?”
A lender’s approval confirms that funding is available. Your business still needs to manage the repayments alongside wages, suppliers, tax and other commitments.
Whether you’re purchasing equipment or investing in premises, your accountant can help assess the full cost, compare funding arrangements and consider the effect on cash flow. They can also explain the tax treatment without letting a potential deduction overshadow the commercial decision.
Looking at a quieter trading period or a fall in revenue can help you judge how much flexibility the business would retain.
“How much room would these repayments leave us if trading conditions weakened?”
The structure you started with may need reviewing as the business changes. New owners, additional activities, investment or succession plans can all raise questions about whether the current arrangement remains suitable.
Your accountant can explain how different options may affect tax, reporting and the movement of money between entities. Legal advice may also be needed, particularly where ownership and responsibilities are changing.
Discussing the structure before a transaction gives you time to understand the options and any costs involved.
“What are the tax and financial trade-offs of changing our structure compared with keeping it?”
Hiring a management team, outsourcing a function, introducing subscriptions or discontinuing a service can reshape how your business earns and spends money.
Your accountant can help you look beyond total revenue to understand which activities contribute to profit, and which consume more time and resources than expected. A busy service may produce little return once delivery costs and staff time are included.
That information can help you decide where to invest, what to change and how much the business can afford to spend during the transition.
“Where are we earning the strongest margins, and where are we tying up resources for too little return?”
Selling or handing over a business takes preparation. The financial records, dependence on the owner and expectations about value can all influence the process.
Your accountant can help you understand the financial position, prepare information for potential buyers or successors and identify tax matters requiring attention. They can also help estimate what may remain after debt, tax and transaction costs.
Starting early gives you time to address issues and coordinate with family members, legal advisers and other professionals.
“What would we need to change now to improve the business’s value and our options at exit?”
You don’t need a finished plan to speak with your accountant. An early conversation can help you refine the idea, identify unanswered questions and decide what further advice you need.
As International Accounting Day approaches, we recognise the care and judgement accountants bring to these conversations throughout the year.
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