Add-Backs

Add-Backs Explained

Private companies tend to reduce their tax liability by recording personal expenses blended with the company's operating expenses which lowers profits. Our goal is to isolate the true earnings capacity of the company so we need to understand the full earnings potential .

An add-back is an expense incurred that a new business owner would not pay. This might be personal expenses paid to owners above an industry market-based pay, one-time charges such as legal fees for an unusual event, damage from a storm, personal expenses, etc.

Group the add-back items by a category and enter the corresponding numbers for each year. Enter up to 5 add-back categories and include the dollar amount.

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