Make Sure You Have Realistic Expectations

One of the benefits of owning your own business is the ability to have the business cover some of your expenses that if you did not own your business you might have to pay yourself. I am not referring to anything illegal, I mean when you have a business meeting with prospects who are also friends, the business might pay for it. I mean the cell phone that you use for business purposes, or the truck you drive for work everyday.

When I meet with sellers and we review their finances I often ask for these “owners benefits” as they are often called. From time to time some owners, or their accountants, are fairly creative in what they classify as business expenses and it is difficult to separate those expenses out.

If you are looking to sell your HVAC or Plumbing company, put yourself in the shoes of the buyer. Obviously when selling you are looking to get the most you can for your business, but you need to be sure you have realistic expectations. If you have not been paying taxes on the income for 5 years, it is difficult to expect a buyer to add those back in to create a fair offer. I call it double dipping. If you came me looking to buy a business and I said, ” I have a great one for sale that shows $50,000 of profit on a tax return, but they really make $150,000 but I cannot prove it”. You would look at me like I lost my mind, and you certainly would not base your offer on what you cannot see or prove.

I have been self employed all of my adult life, and obviously have even owned a HVAC company, and so I realize completely there are some grey areas when separating expenses, all that I am saying is to be sure what you are claiming can be proven, or do not expect to be paid for it. One of the best things you and your accountant can do when planning on selling your business is to be sure your books and records are clean and up to date.