Glossary · Reading the business
In short
A business structure (like an S-Corp or LLC) where profits and losses are "passed through" directly to the owners' personal tax returns, avoiding corporate-level taxation.
Most small businesses are structured as pass-through entities. This means the business itself doesn't pay income tax; instead, the owners report the income (or loss) on their personal 1040s. When reviewing financials, you'll need the seller's personal tax returns (Form 1040s with K-1s or Schedule C) to verify business income, not just corporate returns.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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