Can I Afford to Hire? And Four Other Questions Your Numbers Can Answer

Your numbers can tell you a lot more than how much tax to pay. Used well, the figures already sitting in your accounts can answer the decisions you are weighing up as you run and grow the business. Here are five questions we hear from business owners all the time, the short answer to each, and how we would work it out with you.

Can I Afford to Hire Someone?

The real test is whether your cash can carry the new wage every month, including the quiet ones. The cost is also more than the salary, because you add superannuation and on-costs like leave and insurance on top, so the true figure sits well above the headline pay.

So we map out all these numbers before you make the offer. We build a cashflow forecast, which is a month-by-month projection of the money coming in and going out, put the full cost of the role into it, and run it as a what-if. That shows the months where things get tight and how much extra work or revenue the hire needs to bring in to cover themselves, so you decide with the whole year in front of you rather than on a gut feel.

Should I Put My Prices Up?

Start with the margin you are already making. Your profit and loss shows your gross margin, which is what is left from each sale after the direct cost of delivering it. That number tells you how much room you have, and because your costs do not move when you lift a price, a rise often drops almost straight through to profit.

Your profit and loss is where we start. We turn it into a pricing model, a simple calculation of your costs, your margin and the profit you want to make, then run a sensitivity check. That means we change one number, say a five per cent rise, and show you exactly what it does to your bottom line over a year. If you want to pressure-test your own numbers first, our free breakeven calculator shows how much you need to sell to cover your costs.

Is This Work Actually Making Money?

A job only makes money once you take off everything it cost to deliver, and that is easy to lose sight of when you are flat out. The cost includes the hours your team puts in and a share of your overheads, as well as any materials.

Working that out is called costing analysis. We add up the true cost of delivering a particular job or service, including labour time and a slice of your fixed costs, and set it against what you charged. It shows you plainly which work pays well and which is quietly running at a loss, so you can put your prices and your effort where the money actually is.

Should I Buy This Now, or Wait?

The question is what the purchase does to your cash and your tax over the next year or two, not just whether you can cover the price today. Timing changes both. Buying before 30 June can bring a tax deduction forward, while holding off can protect your cash when things are tight.

We run the timing both ways. We model the purchase as a what-if and change the variables, the cost, the timing and the interest rate if you are financing it, then show how each version flows through to your cash position and your tax bill. If the purchase is a vehicle, our tax calculator for buying a car through your business gives you a quick read on the numbers. And if it is another business you are buying, we go through its figures with you first to make sure they hold up before you commit.

When Can I Take More Money Out of the Business?

There is usually more than one way to pay yourself, and each is taxed differently. You can draw a wage, declare a dividend (a payment to you as a shareholder out of company profit), or take a trust distribution if you run through a trust. The right mix depends on your structure and the rest of your income.

This is the heart of a tax planning session. We look at your profit and your structure together and work out the most tax-effective combination of wage, dividends and distributions, then prepare the paperwork that makes it official. We also keep any money you have borrowed from your own company properly documented, so it stays clear of Division 7A, the rule that stops owners taking company cash tax-free by calling it a loan.

The Answers Are Only as Good as Your Numbers

Every one of these decisions leans on your figures being accurate and current. Reliable books are what let you trust a forecast or a pricing model enough to act on it, which is why we keep that side running quietly in the background. If you would like the detail on how the everyday accounting and the forward-looking work fit together, we have written about that here.

Talk It Through With Us

These are the conversations we have with business owners every week. If one of these questions is sitting on your desk right now, we can help you see it clearly before you make the call.

Not working with us yet? We're the kind of accountants you can actually talk to. Book a discovery call.