You might not even realize you’re doing it. But to a buyer, it’s a red flag that screams “This business isn’t ready.”
It happens all the time. You run personal expenses through the business to lower taxes — meals, car payments, maybe even a family member on payroll.
That might save you money in the short term, but when it comes time to sell, it hurts you.
Here’s why:
Buyers want clean, predictable profit. If they can’t tell what’s real profit and what’s “owner perks,” they get nervous. Confused buyers lower their offer — or walk away completely.
You might say, “Oh, I’ll explain it all during due diligence.”
But if they don’t trust your books, they may never get that far.
Here’s a simple exercise you can do today:
These are called add-backs — things buyers may adjust back into profit if they trust them and if you document them well.
If your add-back list is long or messy, start cleaning it up now. The clearer your profit, the higher your valuation.
Make a simple spreadsheet with three columns:
Keep this updated and ready to show any serious buyer. It’s proof your business is more profitable than it looks — and helps you defend your asking price.
Want a toolkit that helps you prep clean financials and boost your valuation?
Download the free Exit Toolkit and start making smart moves today.
