At Cashtrak, we pride ourselves on guiding self-employed individuals through the complexities of bookkeeping and tax returns. One of our clients recently learned the hard way that managing finances without expert support can lead to unexpected consequences.
This client initially relied on our services for his tax return and bookkeeping, ensuring his accounts were in order and his tax liabilities were carefully planned. However, in an effort to save money, he decided to handle his finances himself. His goal? To show a large profit in hopes of securing what he believed would be a more favourable mortgage offer.
To achieve this, he cut costs wherever possible and pushed himself to take on as much work as he could. While this strategy did result in a larger profit on paper, he didn’t anticipate the downside—a significantly higher tax bill.
Many self-employed individuals assume that showing a large profit will only benefit them in securing loans or mortgages, but they often overlook that higher profits mean higher tax liabilities. When he saw the size of his tax bill, he was shocked and quickly realised that his decision to go solo had cost him more than he had expected.
Understanding that expert financial guidance is crucial, he has since returned to Cashtrak for support. Now, we are helping him strategise his income, expenses, and tax planning properly so that he can achieve his financial goals without facing another unexpected tax burden.
Key Takeaways:
A higher declared profit may help with a mortgage application, but it also increases your tax bill.
Proper bookkeeping and tax planning can help balance financial goals with tax efficiency.
Seeking professional support can save money in the long run by avoiding costly mistakes.
If you’re self-employed and want to ensure you’re managing your finances effectively, get in touch with Cashtrak today—we’ll help you avoid the pitfalls and keep your tax bills under control!