Limited Company vs Sole Trader

[Big J]

Just now, Steve Bullman said:

I think some mortgage brokers take into account what you have in your company aside from what you have paid yourself

 

 

That's useful to know. East/Mid Devon isn't a cheap place to buy!

[Steve Bullman]

1 hour ago, dig-dug-dan said:

My accountant kept advising me to go limited. It was double the accountancy fees, change of bank accounts, plus if you wanted to then get finance, you had no trading history effectively. I decided against it after speaking to several people who basically got inspected by HMRC and had paid the wrong dividends ending up with massive Bill's of back tax. The loophole of doing it to get round tax has been closed, my accountant no longer pushes me to do it.

The only benefit I can see is you cannot be sued, if you are you just close the company and start again

Sounds like the people you spoke to had crap accountants. I wouldn't let them put you off. Find yourself a decent accountant and get it done. You will save money. I felt physically sick for months when i went limited at the thought of how much tax I had been paying unecessarily previously. Can't do nothing about it though and I will never ever get that money back.

[Steve Bullman]

1 minute ago, Big J said:

That's useful to know. East/Mid Devon isn't a cheap place to buy!

Yep...I don't know for sure though, but thats what my mortgage broker told me. I just took a mortgage out last year based on my sole trader accounts and expressed concern about when it comes time to remortgaging. He told me theres always a way, and theres lenders who specialise in limited company directors. As always, its a case of finding the right broker! If you get stuck when the time comes i'll be happy to give you my guys number.

[Big J]

5 minutes ago, Steve Bullman said:

Yep...I don't know for sure though, but thats what my mortgage broker told me. I just took a mortgage out last year based on my sole trader accounts and expressed concern about when it comes time to remortgaging. He told me theres always a way, and theres lenders who specialise in limited company directors. As always, its a case of finding the right broker! If you get stuck when the time comes i'll be happy to give you my guys number.

Really helpful, and I may take you up on that. Many thanks!

[monkeybusiness]

What mortgage companies don't like is companies shrinking/making less money than previous years etc. If you are going for a mortgage try and show year on year growth, or at least consistent figures. 

[swinny]

All banks give a toss about is you earning big profit and paying tax..

 

 

Best way to get forwards is having a Mrs with a decent job and salarie lol

[swinny]

Just now, monkeybusiness said:

What mortgage companies don't like is companies shrinking/making less money than previous years etc. If you are going for a mortgage try and show year on year growth, or at least consistent figures. 

Yes. Knobbling your tax down and lowering profits can kick you up the arse come the time to borrow

[Big J]

Just now, monkeybusiness said:

What mortgage companies don't like is companies shrinking/making less money than previous years etc. If you are going for a mortgage try and show year on year growth, or at least consistent figures. 

(I'm derailing the thread)

 

That much I'm aware of. We took the trading name with us when we moved, but changed the business obviously. No drop in turnover or profit in first year here, which is helpful, so we should be OK. 

[Big J]

1 minute ago, swinny said:

All banks give a toss about is you earning big profit and paying tax..

 

 

Best way to get forwards is having a Mrs with a decent job and salarie and lovely breasts lol

Fixed that for you. ?

[monkeybusiness]

I had a real fall out with my bank (HSBC) when moving house a few years ago. I'd previously gone limited for various reasons, and have always paid myself as little as possible to limit my tax burden. During a meeting with the bank about a possible business loan to buy some machinery (which they granted but I didn't end up bothering with) the bank manager commented that my income would make getting a mortgage difficult (not an issue at the time as I was already sorted in the house I lived in). As I have my personal account as well as current and previous business accounts all with HSBC the manager could see that things were healthy/affordable and suggested I came to see him if ever wanting to get a new mortgage.

Fast forward a couple of years and we decided to move house, and I needed a mortgage for £250k against it. Computer said no on the figures I was paying myself so I went to arrange a meeting with the bank manager - it turned out that particular chap had moved on and I saw someone else. She pretty much laughed in my face when I ran through the figures with her... I asked her how much I needed to pay myself in order to borrow the money - 'It doesn't work like that' was the response.

'OK - forget about my current set up/employment/business. If I get a job tomorrow earning £80k a year, how long do I need to be employed before I am mortgageable for the amount required?' said I.

'3 months' she replied.

'OK - I'll see you in 3 months with my pay slips then'.

'No - it doesn't work like that!!!!'....

'Rrrraaaarrrrrrgggggfghhhhhhhhhhhhh!!!'

In the end Virgin money sorted it through my broker, happy to lend against the company accounts etc (and I didn't have to pay myself any more). But ideally you want to show continuous growth or you can severely limit the lenders willing to look at you.