How your accountant can help you get a mortgage.

I wanted to write this article because I see a lot of accountants advertising that they will get a business owner’s tax bill as low as possible and after years of cleaning up after them it’s time that people understood why a more balanced approach is needed.

You may have heard that getting a mortgage or any other type of funding as a small business owner is much harder that getting one as an employee working for someone else.

This is certainly true, and typically while someone with a job can usually get away with providing 3 months’ worth of payslips and have it approved, a small business owner might have to provide 3 years’ worth of accounts and tax work (SA302 statements).

When we’re working with clients we try to help them think a bit further ahead and consider how their application would look to a bank if they tried to get a loan and then their priorities often change to trying to run a business that looks healthier.

Remember low tax often equals low profits (unless it’s as a result of certain tax breaks for investment) so as accountants we often need to encourage our clients to avoid putting excessive expenses through their businesses.

There’s also quite a few banks out there now that ignore accounts altogether and just make a decision based on a client’s personal tax work (SA302 statements).

For a limited company owner, this means that it’s pointless having a business that’s making profits if they aren’t being distributed properly through salary and dividends as mortgage lenders will often ignore them.

This article isn’t about trying to get people to manipulate their accounts to look healthier but about the importance of having healthy accounts that are accurate and reflect the performance of the business.

We’re a firm of accountants based in Northampton, if you’re interested in finding out a bit more about how we look after our clients then please get in touch.

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