If an Accountant does their job for a business owner, should Accountants suggest showing a profit to their business clients?
A rarely discussed fact between an Accountant and their customer is that, when an Accountant does their job, they may cause expected hardships down the road for the business owner.
Should an Accountant tell a business owner some of the longer term advantages of showing a profit? As a licensed professional, they are obligated to give their customers the full picture related to the customer’s financials.
Some factors they should discuss with the customer is that by showing a profit rather than no profit, or even a loss, the customer will:
– Appear to be in a better financial position to anyone reviewing their financials.
– If the customer decides to sell the business, part of the business, or attracts an investor, their business will appear more attractive to any potential buyer, thereby increasing the value of an offer to buy their business.
For these reasons, Accountants should make it a point to review not only the tax advantages of showing a low profit or loss, but also the advantages to the business of showing a profit.
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