A lot of buyers are only interested in owner-operated enterprises.  Although many share responsibilities with their spouses, they’re not particularly interested in managing a large pool of employees except perhaps some part-time help.   Since the business most likely represents their sole source of income,  an accounting presentation should include all the benefits derived from the business.

These buyers are often trading a livelihood as an employee for self-employment that will provide them with at least the same income, along with more freedom, flexibility,  and most importantly, control.  It’s important to emphasize how accounting can provide these advantages:

Owners may adjust their taxable income for a given year in a variety of ways.  For example:

• Scheduling the payment of necessary business expenses and/or entering into obligations to pay those business expenses to reduce personal income (if on an accrual basis).
• Investing in tangible assets that may be expensed in the year of purchase (up to $125,000 but not more than income).
• Owners may also take out loans from their businesses – in many cases,  cash flow is greater than the net income (due to non cash expenses) and should be invested in vehicles that provide a return.

I recommend that all business owners discuss their situation with their accountant – the earlier in the year, the better – there’s not a whole lot he/she can do if the horse is already out of barn.

The accounting presentation should also outline the many tax benefits of business ownership.  Some examples:

• Mileage deductions for vehicles used in the business (this includes privately owned vehicles used for both business and personal reasons).   As an owner, mileage to and from the place of business is deductible versus an employee’s commute which is not)
• Deductions for the business use of computers, printers, mobile phones, etc.
• Deductions for the interest paid on loans/leases for equipment used in business  (multiply the % used for business times the interest only).
• Deductions for home office.  Caveat:  this deduction has been abused quite a bit so make sure you follow the IRS guidelines carefully.
• Deductions for education that further your expertise in the business you operate.

Lastly, you might want to emphasize the greatest freedom of business ownership:  the possibility of making more money when you work harder and/or smarter – try that argument with most employers!