PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Inheriting a Business - using past accounts?

Options
smurkej
smurkej Posts: 24 Forumite
First Anniversary Combo Breaker
in House buying, renting & selling
Hi all,

I inherited a business this year. I was wondering if I'd be able to use the past accounts of the business in order to help secure a mortgage.

Does it work like this and is that possible? I realise I have my own credit rating etc. but can I go to a mortgage lender and show them the past few years accounts of the business to use them in terms of securing a mortgage?

Currently renting privately but wish to get on the housing ladder.

Many thanks for any help.

Comments

  • G_M
    G_M Posts: 51,977 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    And surely it's not the company accounts that matter, but the dividends and/or salary that you take from the company?

    But I'm no expert.
  • smurkej
    smurkej Posts: 24 Forumite
    First Anniversary Combo Breaker
    Options
    G_M wrote: »
    And surely it's not the company accounts that matter, but the dividends and/or salary that you take from the company?

    But I'm no expert.

    Thanks for the feedback both.

    Regarding the business it's a sole trader setup. I simply repair computers and sometimes buy new computers for people etc. so fairly straightforward in terms of accounts and what I draw from the business.. I have no employees.

    I have an existing business also, which does exactly the same thing and have been trading for a number of years, but I wondered if I could combine my new business' accounts. The new business was passed onto me by my father who retired earlier this year.
  • AdrianC
    AdrianC Posts: 42,189 Forumite
    First Anniversary Name Dropper First Post
    Options
    If it's a "sole trader setup", then there is no business to have taken over. The business is inseparable from the individual. Your father may have passed the goodwill and some other assets to you, but he has not passed the business itself. His accounts are his personal accounts relating to his personal business activites.
  • phillw
    phillw Posts: 5,594 Forumite
    First Anniversary Name Dropper First Post
    Options
    smurkej wrote: »
    I have an existing business also, which does exactly the same thing and have been trading for a number of years, but I wondered if I could combine my new business' accounts.

    How can you prove that you will be able to do all the work you currently do, plus all the work that your father did?
  • LandyAndy
    LandyAndy Posts: 26,377 Forumite
    First Anniversary First Post
    Options
    AdrianC wrote: »
    If it's a "sole trader setup", then there is no business to have taken over. The business is inseparable from the individual. Your father may have passed the goodwill and some other assets to you, but he has not passed the business itself. His accounts are his personal accounts relating to his personal business activites.


    This^^^is the correct answer.
  • phillw
    phillw Posts: 5,594 Forumite
    First Anniversary Name Dropper First Post
    Options
    LandyAndy wrote: »
    This^^^is the correct answer.

    Although it doesn't matter whether it's a sole trader. If you take over running of a business then they won't accept the past accounts either.

    I know someone who went from being a partner in a company to a director when it changed to a limited company and even though nothing else changed, they couldn't use the company accounts & they couldn't use their old income either as they had essentially changed jobs.
  • Guest101
    Guest101 Posts: 15,764 Forumite
    Options
    phillw wrote: »
    Although it doesn't matter whether it's a sole trader. If you take over running of a business then they won't accept the past accounts either.

    I know someone who went from being a partner in a company to a director when it changed to a limited company and even though nothing else changed, they couldn't use the company accounts & they couldn't use their old income either as they had essentially changed jobs.
    That's because a limited company is a totally separate legal entity? So quite a lot changed
  • AdrianC
    AdrianC Posts: 42,189 Forumite
    First Anniversary Name Dropper First Post
    Options
    phillw wrote: »
    Although it doesn't matter whether it's a sole trader. If you take over running of a business then they won't accept the past accounts either.

    If you take over a limited company, "they" will. Because it's the exact same legal entity.
    I know someone who went from being a partner in a company to a director when it changed to a limited company

    There y'go. Completely different legal entities - partner in an unlimited partnership is basically multiple sole traders.
  • phillw
    phillw Posts: 5,594 Forumite
    First Anniversary Name Dropper First Post
    edited 6 September 2017 at 5:42PM
    Options
    AdrianC wrote: »
    If you take over a limited company, "they" will. Because it's the exact same legal entity.

    Sure, but as a new director all bets are off. It would be like getting a job and showing the payslips for the guy you replaced.
  • smurkej
    smurkej Posts: 24 Forumite
    First Anniversary Combo Breaker
    Options
    Thank you for the replies everyone, they make perfect sense. A silly question I suppose but thank you for your answers.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards