Get off to a good start
Whether you operate as a limited company or sole trader, the principle is the same. Good financial management will help you in the long – run.
Separate personal and business expenses as early on as possible, if not from day one.
Implement efficient and accurate systems for recording income and expenditure. If in doubt, seek advice and where possible training, to gain more knowledge on how to go about this. There are numerous online courses in book keeping an accountancy that you can access free of charge enabling you to learn at your own pace.
In addition, using a good accountant will help to get things organised, giving you access to invaluable support with ensuring you pay the correct amount of tax on time. Shedding light on any savings you can make, and assisting to provide clarity further down the line, when it matters the most.
Proving your income
If you complete your self – assessment online, HMRC Form SA302, demonstrates the income you have received and taxes due, in such this needs to be filed accordingly, and kept in a safe place until required.
In some instances, when operating as a limited company, directors may opt to pay themselves a lower salary taking a dividend at the end of the year. Whilst this may have some appeal with relation to making tax savings, it can also make it seem as though you are on a lower income and thus distort the bigger picture when attempting to demonstrate affordability.
Again, this is where an accountant can come in handy, as they will be able to prepare your financial statements to address this.
Regardless of your employment status, getting a mortgage has its difficulties. Borrowers have to be in the position to demonstrate that they can afford to make repayments, based on their annual income.
If you are self – employed lenders will want to see at least two years proof of income, mainly through bank statements and pay slips.