Add-Backs

Add-backs are the bridge between reported net profit and true owner earnings. Legitimate add-backs include: owner salary and payroll taxes, health insurance and retirement, one-off legal or consulting fees, personal travel/meals through the business, and family-member payroll for non-working relatives. Rejected add-backs include: working ad spend reclassified as 'testing,' necessary software costs, and founder's unpaid time. Aggressive add-backs are the #1 source of valuation disputes.