Let’s be honest—most business owners know someone who’s blurred the line between personal and business spending. Maybe it’s picking up groceries or a family dinner with the company card, running the family SUV through the business, or writing off a beach trip because of one quick client meeting. Some even sneak a little “personal shopping” into the Costco bill for “supplies.”

It’s more common than most people admit—and on the surface, it can look like smart tax strategy. After all, if you can deduct a personal expense as a business one, that’s a 20–30% discount, right?

Here’s the catch: those little “tax perks” can come back to bite you when you’re ready to sell.

Why Short-Term Savings Can Cost You Long-Term Value

As business brokers, we have this conversation all the time with owners preparing to sell—and we often wish we could rewind three to five years to say: stop running personal expenses through the business.

Buyers base their offers on your company’s earnings. If you’re funneling $50,000 a year in personal expenses through the business, you’re not just lowering your tax bill—you’re lowering your sale price.

When your business is valued at 2.5×, 3×, or even 4–5× earnings, that $50,000 can turn into $125,000–$250,000 (or more) lost at the closing table. That’s a huge price to pay for short-term savings.

Clean Books = Stronger Offers

Even if you try to “add back” personal expenses during the sale process, it’s rarely smooth—or convincing. Yes, a broker can justify reasonable add-backs, but banks don’t love it. Lenders will scrutinize every number, challenge your claims, and often reject portions of those adjustments altogether.

And buyers? They get skeptical, too. If you were in their shoes, wouldn’t you wonder: What else aren’t they being honest about?

What could have been a high-value, straightforward sale can turn into a drawn-out negotiation filled with doubt—and discounted offers.

If you’re thinking about selling within the next few years, start cleaning up your books today. Run your business like the valuable asset it is. Keep personal expenses separate. Yes, your tax bill may rise a bit—but the payoff at sale time will more than make up for it.

Tax Minimization vs. Tax Evasion

There’s a big difference between being smart about taxes and being reckless. Great owners work closely with their CPAs to legally minimize taxes through deductions, depreciation, and forward-thinking planning.

But charging personal expenses to your business without documentation? That’s not strategy—that’s risk. Even if the IRS never flags it, a serious buyer almost certainly will. And when they do, it signals sloppy financial management and poor transparency—two major red flags during due diligence.

Final Takeaway

The financial habits you practice today directly shape the offers you’ll get tomorrow. That “harmless” $500 Costco run or “business” vacation might not seem like a big deal—but when it’s time to sell, it could cost you hundreds of thousands.

Clean up your books. Keep personal and business spending separate. And above all, run your company like someone’s going to buy it—because one day, someone will.