Selling a business: How do you value your business?

Are you considering selling your business? For most small business owners, their business represents a major chunk of their assets or net worth. For many, they see the eventual sale of their business as their ‘superannuation’, in effect, to provide the lump sum for funding their retirement.

Or sometimes the sale of a business is to fund the next business or exciting chapter in the owners’ lives.

Either way, selling a business is a major life event.

There are probably two dollar figures you have in mind:

What you WANT to sell your business for

What someone will actually PAY for your business.

If the second figure above is much smaller than the first figure, you’re headed for disappointment and potential financial difficulties.

One of the first steps to bridging the gap and achieving your ideal business sale is understanding the various business valuation methods that prospective purchasers or investors are likely to use. That way you can pragmatically and realistically assess the value of your business and then take concrete steps to improve the eventual sale value of your business.

Following are five common methods used to value a business…

1. Asset valuation

In an asset valuation, the market value of a business is determined by its assets — e.g. its equipment, cash and real estate. Other non-tangible assets are also valued, such as company relationships.

2. Financial evaluation/historical earnings

For a historical earnings evaluation, any debts and the gross income of the business will be considered. If you have had historical debts that you were able to pay off quickly, this can boost the value of a business.

3. Relative valuation

This method compares different companies in the same industry with similar assets against your business so you have a reasonable comparison when creating a sales price.

4. Future earnings valuation

If you can prove your profits will remain stable or increase, you can calculate the potential future earnings of your business as a method of valuation. Consider things such as your expenses, sales and losses over the past 3-5 years to determine your future maintainable earnings.

5. Return on investment method

Return on investment, or ROI, is a profitability ratio used to determine the efficiency of an investment, and therefore evaluate a company. The simplest way to calculate ROI involves dividing net profit by total assets. Potential investors or individuals looking to purchase a company can use ROI to measure the profitability of a business.

Depending on your type of business and the industry you are in, different types of valuation methods will be the norm. It’s crucial you know the most likely valuation methods your prospective purchasers or investors will use. Your accountant and business brokers can guide you here.

3 major components of a sale price:

Goodwill: Goodwill is a non-physical asset held by a company that usually proves a business can create profit — e.g. a company's customer base, location, etc.
Plant & Equipment: The equipment and physical assets owned by a company can improve its sales price — e.g. if a company owns heavy expensive machinery.
Stock (at the date of sale): How much stock is for sale can affect a sales price — if a company for sale owns stock in its distribution partner, this may increase the sales price.

Remember: In a sales agreement, the above three components must be separated as they are treated differently for tax purposes.

Tax considerations in the sale of a business

Sales of businesses as going concerns, are GST-free. However, if the sale of a business involves the sale of goods associated with Australia or Australian property, GST may be taxable. Due to these complexities, always use a lawyer to prepare your sales agreement to ensure you comply with all tax regulations.

Achieving your target business valuation

In addition to deciding on your ideal sale price, you need to decide the date by which your business is to be investor-ready or sale-ready. Usually getting a business ready for sale isn’t an overnight process. It can take many months and sometimes years.

But that’s okay. And that’s why planning is crucial.

Let’s say you want to be ready to sell your business in 3 years’ time for $2 million. If your business is currently valued at $800,000 then you need to improve the business’ value by $1.2 million dollars over three years.

Breaking it down into achievable steps

Let’s break that down to show how achievable that is:

Improve the business valuation by $1.2 million over 3 years
That’s $400K improvement in the valuation each year
That’s $100K improvement in value each quarter
That’s $33,333 improvement in value each month, on average.

Here’s why it’s crucial to know which business valuation method to use and to be familiar with your business’ financial performance each month…

Let’s say your business, based on the industry you’re in, is valued based on a multiple of its Net Profit After Tax (NPAT) and that in three years’ time, your accountant or business broker estimates that the likely multiple will be 3 times NPAT. This means your business will be worth whatever your Net Profit After Tax is, multiple by three. So to have a business valuation of $2 million, your NPAT would have to be $666,666, one-third of $2 million.
And let’s say you typically achieve a 20% NPAT. (Your accountant can tell you this.) This means that 20% (or one-fifth) of your revenue (total sales) typically ends up as NPAT.
So to achieve an NPAT of $666,666 would require 5 times that amount in revenue. That’s $3,333,333 in sales as your target by then.

Breaking that down into the monthly target:

To achieve a $33,333 increase in value each month
Requires a $11,111 increase in NPAT each month
That requires 5 times that—$55,555—increase in revenue each month
On a weekly basis, that’s approximately a $13K increase in sales.

Can you see how focused that will make you in your business, especially knowing that it’s all part of your master plan to sell your business for $2 million in a few years’ time?

That’s the power of having a business target valuation tied to a target ‘ready date’ to sell your business. It stops business owners from drifting along, and gets them building real value—and future wealth—in their business.

Want to talk about a plan to achieve your target business valuation?

We love helping small business owners achieve their business and financial wealth goals. It’s why we exist. If you’d like to sit down with us and have a chat about how to achieve your target business valuation by your target date, just get in touch with us.

We look forward to getting you set on a clear and achievable path.

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What Registrations Do I Actually Need When Starting a Business?

February 13, 2026

Starting a business is an exciting milestone, but the paperwork can quickly become overwhelming. At Ascent Accountants, we often see new business owners get caught in the "registration trap"—either registering for everything at once (and creating unnecessary admin) or missing critical deadlines that lead to penalties. Knowing which registrations are mandatory and which are optional depends on your business structure, turnover, and whether you have a team. Here is our high-level guide to the essential registrations you need to consider. 1. The Foundations ABN & TFN. Australian Business Number (ABN): Your ABN is your business’s unique 11-digit identifier. While not strictly compulsory for everyone , you almost certainly need one. Without an ABN, other businesses must withhold 47% of any payments they make to you. Tax File Number (TFN): Sole Traders: You use your personal TFN. Companies, Partnerships, and Trusts: You must apply for a separate business TFN. 2. Tax Registrations (ATO) Goods and Services Tax (GST): You must register for GST if your business has a GST turnover of $75,000 or more ($150,000 for non-profits). If you drive a taxi or provide ride-sourcing services (like Uber), you must register regardless of your turnover. Fuel Tax Credits: If your business uses fuel in heavy vehicles, machinery, or for other eligible activities, you can claim a credit for the excise or customs duty included in the price. Note: You must be registered for GST before you can register for Fuel Tax Credits. 3. Employer obligations when hiring a team. If you’re moving from a "solo-preneur" to an employer, your registration requirements change significantly: PAYG withholding: You must register for Pay As You Go (PAYG) withholding before you make your first payment to employees or certain contractors. This allows you to withhold tax from their wages and send it to the ATO. Superannuation: You don't "register" for super in the traditional sense, but you have a legal obligation to pay the Superannuation Guarantee (currently 12% on July 1, 2025) for eligible employees. We recommend setting up a Superannuation Clearing House to streamline these payments. On 1st July 2026, super will be required to be paid each payday. Workers’ compensation insurance: This is a mandatory insurance policy for almost all employers in Australia. It protects you and your employees in the event of a work-related injury. Each state has different rules; for example, in WA, you must have a policy if you employ anyone defined as a "worker." 4. Business Identity: ASIC If you want to trade under anything other than your own legal name (e.g., "John Smith" vs. "Smith’s Landscaping"), you must register the name with the Australian Securities and Investments Commission (ASIC). Our advice? Don’t over-register too early. We often see clients register for GST before they reach the $75k threshold. While this allows you to claim GST credits on your setup costs, it also means you must lodge regular Business Activity Statements (BAS). Speak with us before you hit "submit" on your registrations. We can help you determine the most tax-effective timing for your specific situation. Contact the team today.

Protecting Your Property Investment With Title Insurance.

February 13, 2026

When you find your dream home, the process often feels like a whirlwind of inspections, mortgage documents, and packing boxes. Most buyers are diligent about checking for termites or structural cracks, but there is one significant risk that a physical inspection can’t uncover: legal defects in the property’s title. When it comes to real estate, one of the most effective ways to safeguard your equity is through Title Insurance. What is title insurance? Unlike standard home and contents insurance—which covers future events like fires, storms, or theft—Title Insurance is a specialised policy that protects you against existing but unknown legal risks that occurred before you bought the property. It is a one-off premium paid at the time of settlement that provides cover for as long as you own the home. Despite its value, statistics suggest only about 50% of buyers currently opt-in. How it works: real-world scenarios. Title insurance steps in when "discrepancies" surface after you’ve already moved in. Here are the most common ways it protects you: Illegal building work & conversions: It’s common to find a garage that was converted into a bedroom or a deck built without council approval. If the local council discovers this later and demands you bring it up to code or demolish it, Title Insurance can cover the legal and construction costs. Boundary & encroachment issues: Imagine discovering your fence, garage, or driveway is actually sitting on your neighbour’s land or Crown land. The cost of surveys, new building plans, and reconstruction can be staggering. Title insurance handles these expenses. Unpaid rates or taxes: If the previous owner left behind land tax or council rate debts that weren't discovered during settlement, the policy can cover these outstanding costs. Planning & zoning violations: Protection against loss if you cannot live in the house because it doesn't comply with local zoning laws. Is it worth It? These problems often stay hidden for years. You might buy a house that looks perfect, only to find out it has issues when you apply for your own renovation permits. For a relatively low, one-time fee, Title Insurance offers "peace of mind for your purchase." However, it is not a substitute for due diligence. Before you sign: Consult your conveyancer: They can help you finalise the policy during the settlement process. Research the provider: Ensure the company has a strong history of payouts and longevity in the market. Review the coverage: Understand what is specific to your property type (e.g., strata vs. green title). The Ascent perspective. From a financial planning standpoint, an unexpected $20,000 council-ordered demolition or a boundary dispute can derail your investment strategy. Title insurance is a small price to pay to ensure your property remains a secure asset rather than a legal liability. Are you planning a property purchase? Talk to the team at Ascent Property Co and Ascent Accountants to ensure your tax and financial structures are as solid as the roof over your head.

Understanding the New Payday Superannuation Requirements (1 July 2026).

February 13, 2026

From 1 July 2026, the way employers make superannuation guarantee (SG) contributions will change. The Australian Taxation Office (ATO) has introduced Payday Super . This reform requires employers to pay super at the same time they pay employees’ wages. This is a significant update to the timing of super payments, and it’s important that your payroll processes and software are prepared well before the new rules commence. For full details, including eligibility and exceptions, see the ATO’s information on Payday Super. Key changes. Current requirements. Under the existing system, employers can make Super Guarantee payments to an employee’s fund up to 28 days after the end of the quarter. SG can be paid quarterly or more frequently (for example, monthly), and the current quarterly due dates are 28 October, 28 January, 28 April, 28 July. From 1 July 2026 Under the new Payday Super regime, Super Guarantee payments must be paid to an employee’s super fund at the same time as paying qualifying earnings (QE) — that is, on the employee’s payday . The payment must be received by the super fund within 7 business days of payday. There are limited exceptions to this 7-day deadline, such as for new employees. What you should do now. To ensure compliance with the new requirements, we recommend the following steps: 1. Review your payroll software and processes Confirm that your current systems can support on-payday super payments. If updates or changes are required, plan for implementation well in advance of July 2026. 2. Adjust internal procedures Update payroll calendars and workflows to align with the new payment timing, and ensure responsibilities and deadlines within your team are clear. 3. Seek advice if needed If you are unsure how the changes affect your business, or if your current setup requires modification, please contact us! We are here to help. 4. Review business cashflow. Ensure that the business cashflow will allow you to pay the superannuation on time, each payday. If not, you’ll need to put plans in place. We’re here to support you. These changes will affect all employers with staff and will require planning and preparation. If you have any questions or need assistance reviewing your systems and processes, please get in touch with the Ascent team.