Why is it essential to seek services from a valuation company that is both independent and compliant? We explore this notion below.

Business valuations can be done for many purposes. You may be planning to sell your business, one of your partners may be leaving, or you may be undergoing a divorce that requires the sharing of assets. Alternatively, you may just want a business valuation to help you get an accurate view of the worth of your business. This could spur new strategies in your production, management and how you engage customers so as to increase profits and improve the business’s value.

Going to the right business valuation firm based on your reasons for seeking a valuation is almost as important as the process itself. This is especially so if the reason for your valuation involves legal action. For such reasons, it is essential to seek services from a valuation company that is both independent and compliant.

Who are independent business valuation firms? 1, 2

An independent valuation firm is a third party that offers its figure of worth after conducting an overall review of your business. The review considers your assets, the cash flow in your business amongst other factors such as how your clients perceive the business’s services. The company then gives its value for your business. Unlike a value from your accountant, an independent business valuation is considered impartial. For services such as tax discounts and the assessment of stamp duty when one business owner is transferring their assets, an unbiased valuation is essential.

For these reasons, any business in Western Australia would be best advised to seek the services of a business valuation firm that are recognized and accepted by the Australia Taxation Office. Their valuations should also be accepted by the Western Australia Department of Commerce.

Who are compliant business valuation firms? 3, 4

Compliant business valuation firms follow the set of standards outlined by the Australia Taxation Office with regards to how the worth of a business should be measured. Whenever you are seeking a valuation for any reason related to taxes, it is critical that your formal valuation is conducted by a compliant valuation company. Most of the time, such valuations are sought when:

  • You have just bought a business and needs to determine the capital gains tax you will be required to pay
  • When it comes to your attention that you have an issue with your company’s stamp duty or tax audit
  • When the ATO believes your business is paying inadequate taxes and you need to confirm you are paying the required amount when it is compared to your business’s worth
  • When you need an accurate statement on the value of a business transaction conducted with a related party for tax auditing

It is important to get a valuation from a compliant firm because the ATO then has more confidence with the assessments and documentation you will forward to them. They will not request further information, and this could save you a significant amount of money especially when the ATO conducts an investigation on your business. This is because such occurrences would require you to pay more advisory fees to other professionals and also get a valuation.

Seeking services from a business valuation firm that is both compliant and independent is very convenient for legal purposes. To reduce your stress, we advise you to look for these services today.

Mathieu Paul
Director – Business Improvement
P: +618 6315 2700
E: enquiries@wabusinessvaluations.com.au

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The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

Liability Limited by a scheme approved under Professional Standards Legislation

Reference Links:

1. http://www.vexus.uk.com/blog/importance-of-independent-business-valuation/
2. http://www.perthbusinessvaluations.com.au/
3. http://smartvaluations.com.au/tax-impacts-on-valuation/
4. http://smartvaluations.com.au/frequently-asked-question/#faq203