The Australian Taxation Office has added a new calculator to their bag of tricks.
Introducing the ATO business viability assessment tool
The business viability assessment tool lets you see the ATO’s opinion of any weaknesses in your business.
Enter financials here
Once you type in your results for the last quarter and previous 2 years, the ATO will spit out questions to compare your business against key statistics to consider how “healthy” your business is.
Only a quick check
The ATO are very clear that this is only meant to be a quick check with some simple calculations.
For those who couldn’t be bothered putting in all their business information, below is a quick summary of the ATO question areas.
Profitability – The ATO calculates the profitability of the company.
Debtors – The ATO mention that it may be a cause for concern if more than 30% of your debtors are overdue past 90 days
Creditors – The ATO mention that it may be a cause for concern if more than 40% of your creditors are overdue past 90 days.
Business Plan & Cash Flow -The ATO ask if you have completed a business plan and whether you check cash flow monthly.
For a bricks-and-mortar business such as retail, the ATO business viability assessment tool is useful. Even for a small business or sole trader, this could be time well spent to have a cold hard look at your business.
However you should also consider your ‘opportunity cost’. For example, you may be able to earn $80,000 a year in a job and $40,000 running your own business. There are many reasons you might choose the job or the business – but opportunity cost is a consideration that is not mentioned in the ATO business viability tool.