Business For Self Categories
Business-for-self - or BFS - includes a diverse group of business owners, sole proprietors, partnerships, and other self-employed people. They can often find it frustrating to get a mortgage, with income qualification in particular being a hurdle. In our BFS spotlight, we've dug into some of the challenges past BFS clients have faced, and how we were able to help them. You can find the table of contents here.
In this article, we review what it means to be self-employed. Often called business-for-self by mortgage lenders, they typically fall into one of these categories:
Sole proprietors
An unincorporated business that is owned and operated by only one person
Sole proprietors pay personal income tax on any income their business generates
The owner receives all profits, claims all losses, and assumes all risks of the business personally
More info from the CRA on sole proprietors
Partnership
Two or more individuals who carry on a business together
Each partner files any business income (or loss) on their own tax return, the partnership itself does not pay any income tax
More info from the CRA on partnerships
Incorporated business
The business is a distinct legal entity: it can enter into contracts and own property in its own name, separate and distinct from the owners.
Corporations files their own taxes, distinct from the owners.
Owners are shareholders (controlling the direction of the company) and can also be employees (paid a salary by the company e.g. may be issued a T4 tax slip)
More info from the CRA on corporations
You will need to declare that you are self-employed as part of the mortgage application process. This is usually clear-cut for sole proprietors, but may be less obvious for partnerships and incorporated business owners. Regardless of the situation, it is best to fully describe your situation to your mortgage agent, so that they can properly build the strongest case for you.
Whether you are self-employed or not, we give the same level of diligence, attention to detail and support to all of our clients. Contact us for a no-obligation review your mortgage and financing options, or Apply Now through the button at the top right of the page.
