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Small business accountant in Melbourne: celebrate when you breakeven!

First of all, what is a breakeven? It is when your business is making enough revenue to cover expenses and become profitable. It focuses on fixed and variable cost as well as profit.

As mentioned above, it focuses on fixed and variable cost, you need to identify those costs first. Fixed costs are expenses that do not fluctuate with the amount of units you produce. For example, your office rental cost, whether you are selling 100 units or 1000 units, you need to pay for monthly rentals. Another name for fixed costs is ‘overhead’ costs.

Variable costs are cost that varies, as suggested by the word ‘variable’, which is usually product-related cost like shipping costs.

Conducting a breakeven analysis isn’t a hassle anymore, you can DIY by searching for an online breakeven calculator and experiment different figures. For instance, with changes to unit per price, you can see how many units you need to sell to breakeven.

Breakeven analysis is an excellent tool for entrepreneurs as it is important to understand startup costs. It tells you exactly the figures you need attain to be profitable. Breakeven point is really important, so other than doing it yourself, you should talk to a professional. They will tell you if you are doing it right and if your figures are realistic or not.

Lastly, when you see the numbers turning from “red” (loss) to “black” (profit), celebrate!! You broke even.

For more useful tips and advice on how to grow your small business, contact us here at mas accountants, the original accountants for small business, servicing Sydney and Melbourne for over fifty years.

 
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