We are Self employed and have 2 years of tax returns,business bank statements look great. However our personal bank statements don’t look great as we just spend money from the business account and only put money in the personal account to pay the rent. They are both in the overdraft. Will this affect the referencing when it comes back? The business bank statements show we can more than afford the property,aren’t in the overdraft and everything else will come back fine. Ultimately we just don’t really use our own accounts
You may be committing tax fraud if you are covering personal expenses from your business account.
Personal spending from a company account is fine. Assuming its being declared as ‘Directors Drawings’ its all legit… although perhaps not ideal from an accounting perspective. I prefer to keep business / personal seperate,
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for 50 years or so I have only had one bank account . A personal one with no bank charges . I use it for everything , goods and services ,rent income, You name it. Never a problem. On bank statements I mark what everything is. Never had a problem thru the accountant
As an accountant, you would be a nightmare client (and I have a few like you!!). You may as well not have a business account if you’re going to pay personal expenses through it.
Especially with MTD coming, I would recommend you start to use your business account for business and personal for personal and transfer lump sums from your business to personal. You’ll find your business accounts much easier to do that way!
Having said that, I guess the referencing will depend on how good the referencing company is. In my experience, they want a quick tick box exercise, in which case it might be a problem.
Or, they might just ask for the SA302 (or equivalents) to prove what you’ve declared as income is what you put on your tax return, or an accountant’s reference.
My accountant is very good at his job. .Provided I keep all my bills , mark all payments as personal , rents, repairs, tools , home electrics and so on . All goes smooth, and has done for 50 ish years.
What does “they are both in the overdraft” mean? An overdraft will def affect the referencing!