How to Value a Business: Why You Should Leave it to the Pros

Man learning how to appraise a business

When it’s time to appraise your business, it’s best to leave nothing to chance. There are countless factors that go into the process of determining the value of a business, and it only takes one miscalculation to lead to massive inaccuracies. Still, many business owners attempt to go it alone before looking into alternative options. When it doesn’t go according to plan, many are left asking themselves, “how do I appraise my business accurately?”

There are many reasons to appraise your business — whether you’re liquidating, selling, applying for an SBA loan or evaluating inventory for tax purposes, this step is an important part of the process. In these situations, many businesses are crunched for time and need a fast appraisal without sacrificing accuracy. Read on to see how professional appraisers give business owners an advantage during these crunch times.

USPAP Experience

The Uniform Standards of Professional Appraisal Practice (USPAP) are a set of standards meant to increase uniformity among business valuations. These standards outline the process and reporting requirements appraisers must follow when determining the value for personal or business property. Professional appraisers follow these rules without deviating from the process, creating consistency in their appraisal reports.

While anyone can complete an appraisal that meets these standards, the rules are not always easy to understand and implement correctly. For example, every business has intangible assets like intellectual property that are not easy to assign a value to. Teams like ours have worked with these standards for decades, and can accurately navigate the rules so you don’t have to worry about them.

Avoiding Disputes

One of the most common reasons for appraising a business is the decision to sell to new ownership. These transactions require an accurate account of the value of your business in order to avoid problems down the road with the new owner. If you misjudge your business assets and sell for a higher price than your company is worth, you could be pulled into a legal battle you never asked for.

Another situation where accuracy is essential is when you need to appraise your items for tax purposes. Many companies attempt to write off as much of their tax burden as possible, but end up in trouble with the federal government after an audit. The IRS is not lenient with businesses that misrepresent the value of their assets, so it’s in your best interest to create an accurate appraisal with a professional.

An Accurate Snapshot of the Business

Many business owners decide to appraise their items simply to gain a better understanding of their assets versus their liabilities. Completing an appraisal can help business executives to understand the state of their company, which makes planning finances for the future much easier. Unfortunately, completing this task alone can create an inaccurate representation of the business.

Professionals who specialize in appraisals make accuracy a top priority, so there are never any misunderstandings about the value of the company’s inventory. When your company can put its full confidence in the appraisal process, you can focus on other business ventures that will help you grow and succeed.

Find Your Value

Ready to start assigning a value to your company’s assets? We can help. Take a look at our appraisal services and learn how we help businesses with the appraisal process. If you decide that professional appraisal is right for your company, contact our team to get started!