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  • FIRST POST
    • smurkej
    • By smurkej 5th Sep 17, 8:29 PM
    • 19Posts
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    smurkej
    Inheriting a Business - using past accounts?
    • #1
    • 5th Sep 17, 8:29 PM
    Inheriting a Business - using past accounts? 5th Sep 17 at 8:29 PM
    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.
Page 1
    • G_M
    • By G_M 5th Sep 17, 8:48 PM
    • 41,921 Posts
    • 48,519 Thanks
    G_M
    • #2
    • 5th Sep 17, 8:48 PM
    • #2
    • 5th Sep 17, 8:48 PM
    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
    • By smurkej 5th Sep 17, 9:21 PM
    • 19 Posts
    • 0 Thanks
    smurkej
    • #3
    • 5th Sep 17, 9:21 PM
    • #3
    • 5th Sep 17, 9:21 PM
    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.
    Originally posted by G_M
    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
    • By AdrianC 5th Sep 17, 10:21 PM
    • 15,459 Posts
    • 13,782 Thanks
    AdrianC
    • #4
    • 5th Sep 17, 10:21 PM
    • #4
    • 5th Sep 17, 10:21 PM
    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
    • By phillw 6th Sep 17, 9:49 AM
    • 937 Posts
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    phillw
    • #5
    • 6th Sep 17, 9:49 AM
    • #5
    • 6th Sep 17, 9:49 AM
    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.
    Originally posted by smurkej
    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
    • By LandyAndy 6th Sep 17, 10:02 AM
    • 23,944 Posts
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    LandyAndy
    • #6
    • 6th Sep 17, 10:02 AM
    • #6
    • 6th Sep 17, 10:02 AM
    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.
    Originally posted by AdrianC

    This^^^is the correct answer.
    • phillw
    • By phillw 6th Sep 17, 5:12 PM
    • 937 Posts
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    phillw
    • #7
    • 6th Sep 17, 5:12 PM
    • #7
    • 6th Sep 17, 5:12 PM
    This^^^is the correct answer.
    Originally posted by LandyAndy
    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
    • By Guest101 6th Sep 17, 5:14 PM
    • 15,128 Posts
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    Guest101
    • #8
    • 6th Sep 17, 5:14 PM
    • #8
    • 6th Sep 17, 5:14 PM
    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.
    Originally posted by phillw
    That's because a limited company is a totally separate legal entity? So quite a lot changed
    • AdrianC
    • By AdrianC 6th Sep 17, 5:27 PM
    • 15,459 Posts
    • 13,782 Thanks
    AdrianC
    • #9
    • 6th Sep 17, 5:27 PM
    • #9
    • 6th Sep 17, 5:27 PM
    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.
    Originally posted by phillw
    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
    • By phillw 6th Sep 17, 5:38 PM
    • 937 Posts
    • 555 Thanks
    phillw
    If you take over a limited company, "they" will. Because it's the exact same legal entity.
    Originally posted by AdrianC
    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.
    Last edited by phillw; 06-09-2017 at 5:42 PM.
    • smurkej
    • By smurkej 7th Sep 17, 8:39 PM
    • 19 Posts
    • 0 Thanks
    smurkej
    Thank you for the replies everyone, they make perfect sense. A silly question I suppose but thank you for your answers.
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