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I was able to purchase a new office and do all infrastructure for my new practice using my own financial funds without taking a loan. Now I am planning to buy a new house. However, I don't have the financial funds to buy the house. I could take out a mortgage, however, my accountant advice me to take a loan on my business instead of on my home. This is to reduce liability on my own property. I would like to know how this should be done. |
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Generally it is done by going to a local bank or lender that extends loans to businesses, and taking out a mortgage on your office. Then you can distribute the cash as the return of equity on the account of the cash you've invested into purchasing that office. Your account will help you with the actual details of how to write this in your books and report properly. You need to remember, that most lenders require personal guarantees from business owners when lending to businesses, so you will probably not be able to reduce your own liability, you'll just shift it from one property to another. Depending on the jurisdiction, it may be safer to have a mortgage on your primary residence, than on a business asset (both cost wise, as the rates are likely to be lower, and liability-wise, because primary residences may be protected better in cases of bankruptcy or default). Ask a lawyer in your jurisdiction about that. Generally, in questions of liability, you should ask for a legal advice, that is something that accountants cannot give you. Talk to a lawyer before taking action. |
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