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How your accountants help the self-employed with personal finance

Being self-employed is, for the most part, great. It gives you the freedom to fit your work around your personal obligations.

Building up a successful business from scratch feels good. It builds confidence and you acquire many new skills that stand you in good stead in other areas of your life.

However, there are some drawbacks to being self-employed. One of the biggest issues is the impact it has on your personal finance, especially your ability to borrow money.

Unfortunately, lenders are not as comfortable lending to those who work for themselves as they are to those employed under a contract. Many see sole traders and the self-employed as high-risk borrowers.

This is disappointing because, in reality, most small business owners actually manage money better than other members of the population do. They have to do so to be successful in business.

If you want to borrow money, you need to convince potential lenders of this fact and your accountant can help you with this. Here’s how:

Prove the profitability of your business

A good accountant will keep your records up to date. This will enable you to quickly prove to potential lenders that you are able to pay your loan back.

Access to income proof from HMRC

They can also help you to get your hands on an SA302 form, which is provided by HMRC. This document shows the level of earnings you have declared to the tax authorities. Many lenders are now asking to see these forms, so having access to them is increasingly important.

Fortunately, things are changing. With nearly 15% of the working population of the UK registering as self-employed, demand for finance from this sector is increasing. The fact that 4.6 million workers now fall into this category is pushing the providers of financial services to think again about the criteria they use to when assessing someone’s suitability for a loan. However, as a self-employed person, you are likely to always need to jump through additional hoops to secure a loan or mortgage.

Help you to earn more

Generally, the more you earn, the easier it is for you to secure a mortgage or other finance. A good accountant will help you to make more profit and therefore earn more.

For example, they can produce regular profit and loss reports for you. These reports enable you to identify which products and services are making you the most profit. By focusing more on marketing those, you can make your business more profitable and improve your chances of being able to earn more and secure good personal finance deals.

Posted by Peter
March 12, 2016

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