What income to report to banks

[core]

List whatever income you can reasonably justify.

Funny how the answers change on this forum depending on the poster's situation:

Situation #1:  Applicant (now in 2016) is now working a job.  It's only January.  So most say to list last year's gross income.

Situation #2:  Applicant is self-employed. Do we  list last year's income, or what we expect to make?  I think most folks here would say last year's actual income.  But why can't we supply the increased income if we're doing better?

Situation #3: Applicant has recently lost job:  Now the avalanche of people are going to say "no no, even though we all made you use last year's income before, now suddenly that's not right".  It was fine before, now suddenly it's not.  Now you must put down what you are making at that precise week. (?) But it wasn't fine to use that precise week when you got a new contract as a self-employed person?  Makes no sense.

Just put down whatever you want, because although people can argue with it, those people aren't the ones making the decision to prosecute.  If you can reasonably justify it, put it down.

[Officer737]

If I may add, run your company like a company. Perosnally, I would draw up a salary or comission based pay system and report that. Keep any excess that you make into a seperate business account to cover the business side of it and keep the personal and business credit/finances 100% seperate so if one goes under for some reason, the other doesnt. I see owner operator businesses go under all the time and most times it is because they do not keep things seperate. 

[core]

---

@Officer737 wrote:

If I may add, run your company like a company. Perosnally, I would draw up a salary or comission based pay system and report that. Keep any excess that you make into a seperate business account to cover the business side of it and keep the personal and business credit/finances 100% seperate so if one goes under for some reason, the other doesnt. I see owner operator businesses go under all the time and most times it is because they do not keep things seperate. 

---

Sorry, but a business never goes under _because_ the owner didn't keep things separate.  If the finances were _not_ separate and the business failed, it would be no different from if the finances _were_ separate and it failed.  Maybe you are confusing things with running a failing business and getting off scott-free?  That's a whole different matter.  Mixing things up gives you "flexibility" when it comes time to stand before the man.   Whereas if everything is separate, you are screwed because it's all in black and white.

P.S.  I haven't heard the term "owner operator" except from truckers.  Did you go from seat 0A or 0B to OTR?  Interesting nick you have.

[bada_bing]

If you are self employed, it might be a good plan to get a business card or two.

If you have a Chase personal card or established relationship, they can be pretty

generous with SL on an additional business card. An Ink card app will result in a HP on your

reports (most likely a double pull) , but after that the account will not report on

your personal reports as long as the account is in good standing. The combination

of a relatively high limit and no worries about reported utilization is handy when

you run quite  bit of business expenses monthly. It also helps to keep expenses segregated.

I don't have an Amex business card, but I understand they are equally generous and useful.

I personally only have a small sideline business, my primary income is as a W2 employee.

I've had absolutely no problems justifying my business account, so you should be golden.

As an aside, If you are getting that involved in business ownership, it is useful to have a

consultation with a small business oriented attorney. A LLC can be a liability lifesaver and

tax strategy becomes complicated quickly when you're in business.

[Imperfectfuture]

---

@Officer737 wrote:

If I may add, run your company like a company. Perosnally, I would draw up a salary or comission based pay system and report that. Keep any excess that you make into a seperate business account to cover the business side of it and keep the personal and business credit/finances 100% seperate so if one goes under for some reason, the other doesnt. I see owner operator businesses go under all the time and most times it is because they do not keep things seperate. 

---

Huh, I do not see that.  Good warning for those making money in business banking.

[Anonymous]

---

@Imperfectfuture wrote:

---

@Officer737 wrote:

If I may add, run your company like a company. Perosnally, I would draw up a salary or comission based pay system and report that. Keep any excess that you make into a seperate business account to cover the business side of it and keep the personal and business credit/finances 100% seperate so if one goes under for some reason, the other doesnt. I see owner operator businesses go under all the time and most times it is because they do not keep things seperate. 

---

Huh, I do not see that.  Good warning for those making money in business banking.

---

I'm going to assume OP means "owner operator" as in a sole proprietorship or self employed. 

It doesn't matter if you keep things separate or not if its a sole proprietorship (which is what the actual business entity is called). 

If you or your business goes under, none of them are protected, which is why many sole proprietors opt for some form of insurance to cover them. 

This is the reason why corporations exist, because they have limited liability, and are treated as two completely different entities. So if your corporation goes down somehow (debt/lawsuit), they cannot touch your personal assets. 

[Anonymous]

Typically, you can either provide last year's 1040 or your last two pay stubs. If the pay stub method is more accurate, perhaps because you only worked part of the year, then I would use that method.

[takeshi74]

---

@Anonymous wrote:
I reported to banks on every app 45k.
But I am getting limits up to 5k on my approvals, I guess because my reported income

It's not just your income but your credit profile as well.  Even without details I'd be willing to guess that your credit profile is limiting you.

---

@Anonymous wrote:
and that's just not enough for me

You can always make multiple payments until you qualify for higher limits.  It's not what's enough for you that determines your limits.  It's what your credit profile and income compared to a product's underwriting criteria that determine that.  Plenty would consider $5K to be a high limit.  Work with what you have and work on improving your credit profile.

---

@Anonymous wrote:
Can I report to banks approximately my gross for 2016 or I have to wait to do taxes on beginning of the next year when I will have proof for gross income?

---

Provide your current income and consider what a creditor will require for income verification.  While some may accept pay stubs, AmEx, for example, uses the 4506-T.  At this time of year the 4506-T will not include info from 2015 and will only consider prior years.

[Anonymous]

It's Sole proprietorship. Inc. Self employed.
Owner Operator means that I am paying for every expense when I have my own truck.
As a driver I am paid 50 cents per mile, so if I drive 1000 miles, I will get 500$ and I am not gonna have any expenses.
As a Owner Operator, I will get paid let's just say 2$ Per miles. So for 1000 miles I will get paid 2000$ but I am gonna pay Fuel, Tolls, 12% dispatch, cargo insurance, trailer rent, and all truck expenses. So from 2000$ I will get 1000$ on my pay stub.
So my gross is 2000 but I got 1000$ net.
So at the end of year my 1099 will show let's say 200.000k but I earned only 120.000k

[Anonymous]

---

@Anonymous wrote:
It's Sole proprietorship. Inc. Self employed.
Owner Operator means that I am paying for every expense when I have my own truck.
As a driver I am paid 50 cents per mile, so if I drive 1000 miles, I will get 500$ and I am not gonna have any expenses.
As a Owner Operator, I will get paid let's just say 2$ Per miles. So for 1000 miles I will get paid 2000$ but I am gonna pay Fuel, Tolls, 12% dispatch, cargo insurance, trailer rent, and all truck expenses. So from 2000$ I will get 1000$ on my pay stub.
So my gross is 2000 but I got 1000$ net.
So at the end of year my 1099 will show let's say 200.000k but I earned only 120.000k

---

Good luck!! As someone who formerly owned businesses for 10 years and now works in banking I can tell you that businesses fail not neccessarily because they didnt keep things separate--although it iIS a good idea. They fail because they dont stay organized and keep track of profit and loss. The first two years you should live like you still make 45k a year and build up a cushion in case you have unexpected expenses or fall on hard times at any point in the future. All owner operators I have dealt with in trucking start out as sole prop but end up becoming corporation s-types down the line. 

On a side note my brother was an owner operator last year when he got out of the army and decided its easier to work for a company and not deal with all the paperwork. He also says he makes more money that way so I would evaluate that yourself for you the first year and see how it goes. Wishing you the best of luck and good fortune!!