As year-end approaches, many business owners rush to shrink taxable income by prepaying expenses, stocking up on inventory, and running borderline personal costs through the company.
That might cut this year’s tax bill, but if you’re thinking about selling your business in the next couple of years, those same tactics can cost you far more in valuation than they save in taxes.
This topic (pay more now; earn more later) is one we’ve written about before, but it’s worth resurfacing now, as the calendar turns to the final months of the year.
Buyers pay for earnings, which specifically means clean, defensible EBITDA. Every dollar you hide with aggressive deductions lowers that number, raises red flags in diligence, and invites scrutiny over “add-backs.”
A buyer who doubts your earnings quality will discount your valuation or walk away entirely.
Instead of chasing deductions, use year-end to present your company like a buyer will see it:
- Eliminate personal or non-recurring expenses.
- Normalize owner compensation.
- Keep revenue steady and margins strong.
- Invest only in initiatives that improve long-term value, not short-term tax savings.
Paying a bit more in taxes now can yield a much bigger payday later.
In short, run your business like it’s already under due diligence, because soon, it might be.
