Small business is a very important part of our economy here in the Okanagan. The Thompson-Okanagan region recorded the fastest net growth in the number of small businesses between 2007 and 2012 and about 82% of these small businesses were micro-businesses with fewer than five employees.
You have no doubt become reliant on your accountant’s expertise for tax advice and their ability to minimize your taxes. Keeping your taxes as low as possible makes you a smart business person and you in turn are very happy with your accountant.
As a small business owner you no doubt value the freedom and independence that it provides but when the time comes for you to seek mortgage financing you could be penalized.
As of August 1, 2015 and as a result of the B-21 guidelines made in November 2014 by OSFI, lenders are making changes to adhere to the principles outlined in this document to support sound underwriting practices and prudent risk management so lenders will be implementing more changes to their Business for Self programs.
Lenders will be more closely reviewing the difference between your gross and net income on your tax returns. The expectation will be that you are declaring a ‘reasonable’ net income for the nature of your business and how long you have been in business. They will be looking for an established history of self-employment and a strong credit profile. It is also very important that you do not owe any taxes to CRA.
If you are planning to apply for a mortgage make sure you let your accountant know. You will want to ensure that your income reporting is current and will support your financing request. Having your accountant work with your mortgage broker can definitely assist to ensure that you are in the very best position to qualify for the mortgage financing you require.
Doing some planning will now be more critical than ever in order to obtain mortgage financing. You may have to work a little harder and provide more documentation as lenders will now be looking for ‘third-party verification’ of income or you may need to make a larger down payment but there are still many options available to the self-employed.
If you are self-employed please give me a call 250-826-3543 or email [email protected] to ensure that you are in the very best position when it comes time to arrange your mortgage financing.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.