Yesterday I spoke with a mortgage broker. A client has a limited liability company that is treated like a corporation for tax purposes. The broker wouldn’t allow the profit from the business to be counted as part of the client’s personal income.
I don’t know if that is a regulation or if the broker didn’t understand. He seemed to know how to handle a sole proprietorship. He understood that revenue minus expenses equals profit for a sole proprietorship. He wanted a similar Profit and Loss statement for the corporation. When told that the owner paid himself W2 wages, the broker didn’t really seem to understand that profit after paying W2 wages was still income for the owner.
A mortgage broker now has to have a license in the State of Washington. I’m not sure what training is required, but if a broker is qualifying people for loans by looking at business income, then knowing the differences between various forms according to the business structure would seem to be important.
It amazes me how often people THINK they know about business, but really don’t. That is why I created the Business Basics course. I took nothing for granted. If you already know it, you’ll get a nice review. What you learn will help get you up to speed for more advanced courses.
The Business Basics apply to nearly everyone. A good understanding of the fundamentals will help you whether you are a business owner or not.