Build from reported results
Start with reconciled profit and loss statements, tax returns, and a current balance sheet. Explain differences between the records. Adding adjustments to unreliable books will not give a buyer a dependable earnings figure.
Keep owner distributions separate from operating earnings. Money withdrawn from the company is not automatically another expense that can be added back.
Classify each proposed adjustment
List the amount, accounting period, account, explanation, and supporting document. Explain why the cost will not continue under a buyer or why it differs from a normal operating expense.
Be careful with owner compensation. A buyer replacing you with a manager must consider the cost of that role. Owner operated cash flow and earnings after market management pay answer different questions.
Expect a buyer to challenge the schedule
A recurring legal bill, deferred maintenance, or essential vehicle expense may continue after the sale. Calling an item personal does not make it removable if the next operator needs the same resource.
For unusual income, ask whether it belongs in recurring earnings at all. Proceeds from disposing of an asset should not be presented as ordinary customer revenue.
Use the exercise before you pick a price
A defensible schedule lets you discuss value with more confidence. It can also identify accounting cleanup that is easier to address before a buyer has an exclusive negotiating position.
Ask your accountant and valuation partner to review both the adjustments and the replacement costs. The objective is an earnings picture a buyer can verify.
Continue your sale preparation
Request a business sale introduction when you are ready to discuss your company.