Self Employed? Here Are Some Things to Consider BEFORE Your Tax is Completed.
It’s that time of year when we, as business owners, sit down with our accountants and plan. We plan for our tax return and for reducing our tax as much as possible within the rules. It is also a time when we should be talking to our accountant about any potential borrowing for property purchases that we plan to make next financial year and cross-reference these figures with our mortgage broker to ensure our goals align.
It is important that our financials can meet our borrowing requirements, but this is getting easier with more flexible policies for the self employed. The catch is you need to plan in advance.
A new policy that has been helping business owners is called the “Simple Self Employed” policy. It is a policy, not a loan product, so you get to choose the same lending options and rates as everyone else. The policy is quite simple: pay yourself a salary sufficient to cover your lending needs, provide a pay slip for your borrowing like an employee, and you have no need to provide the bank with your tax returns or financial statements.
For this policy, you generally need to be paying yourself this salary for six months, so it is time to plan for this now if you want to borrow in the new financial year. It is also essential to check that this salary meets your requirements, so make an appointment with one of the Sphere Team now to work out these numbers before making any changes.
Not all business owners pay a salary sufficient to cover their lending. Some are better suited to a policy where we can use all your combined income, including your salary, company profits, and add-backs. If you need to use full financials and you plan to borrow next financial year, it is important that your mortgage broker gets to see your draft financials before they are lodged to ensure that they meet your borrowing goals as well as your tax goals.
Some lenders will review one year returns in isolation from previous returns, so with one year well planned, you can meet your borrowing goals. Again, I stress that it is too late when these returns are lodged, so we need to look at this one year’s financials and work out your borrowing capacity before finalising your returns.
At Sphere Home Loans, we have mortgage brokers dedicated to the self-employed, and we will work strategically with you and your accountant to ensure your financial year plan meets all your goals.
It costs nothing to use our services and we act fearlessly on your behalf, so please reach out to the Sphere Team. To book an appointment please email hello@spherehomeloans.com.au
Sphere Home Loans Team of Brokers