Sorry, I do not think that it would be in your best interests to answer your questions.
If you are preparing the accounts for a sole trader in the knowledge that they will be using the accounts specifically to raise finance then you will have created proximity and any exclusion clause can be overturned. (That is different to preparing accounts where the client later uses the accounts as there is no proximity at the point of preparation).
In the event of default the building society could hence pursue you for the debt as they depended upon financial information prepared by yourself.
Also note that if you are working beyond your experience level you will also find that your PII will not cover you which could result in the event of default in the building society pursuing you.
I don't want this to come accross the wrong way but considering the level of questions and the knowledge that the accounts are to be prepared in order to raise a considerable amount of finance I would advise the client to have the financial statements required by the bank / building society to be prepared by a qualified accountant.
As I say, my appologies for a negative response,
kind regards,
Shaun.
-- Edited by Shamus on Tuesday 28th of May 2013 10:00:14 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I am used to cashbooks for housing associations and I am currently doing the bookkeeping for a friend who intends to take the accounts to a building society who have asked to see them in making a mortgage decision. Sole-trader cashbooks are a bit different from housing associations.
If a husband or friend gives money to the business is it classed as an earned income and taxable? Or unearned income and untaxable? Not sure what to do with it as I am using a cashbook and realised you could inflate the turnover considerably by family donations making the business look far more successful. The mortgage lender will see what is happening and not look favorably. So what do I do?
6th April Tax year. How does this work with a cashbook that functions on full months? Do I just not split the month up and not account for it next year making it even out. Eg accounts april 2012-march2013 and then april2013-march 2014?
Can a pension be classed as a business cost for self employed?
Can business network groups be written off?
Hopefully you can answer my questions!
I am starting to wonder if using a cashbook has been overkill for her accounts as I am at about 30 hours of work! That has been sorting, recording, reconciling etc.
You should also be aware that the mortgage company have the right to go to HMRC to be obtain details of the applicants income. So the accounts prepared for the mortgage company have to be the same that you base the Self assessment Return on!
I work for (one day a week) at a Financial Advisor's who deal with mortgages. MOST mortgage companies now ask for what they call an SA302; you only be able to get these from HMRC and you have to be registered with them to get them. Financial records can easily be made up/over inflated which is why they ask for these SA302's as these are the figures submitted to HMRC.
And I agree with the guys above, you shouldn't do work that your not sure of. Sorry.
