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Net worth Certificate by Chartered Accountant
Net worth refers to the difference between total assets and total liabilities of a person/entity. Net worth is considered as the most accurate & good indicator of the financial position of an entity/individual. Positive net worth is considered a good financial position whereas negative net worth is an indicator of bad financial position. Net worth certificate by Chartered Accountant can be prepared for Individual , Firm , LLP , Private Company etc. CA issue net worth certificate after verification of documents , records , invoices , bank statement etc. Increase in net worth is indication that person Assets over liabilities are increasing. Major use of Net worth certificate issued by Chartered Accountant is for Visa , Loan processing , Business proposal etc.
What is a “Networth Certificate”?
Networth certificate is a document popularly used to show individuals/business/firms financial position in the form of “Net worth”.Networth certificate is a consolidated document prepared by taking into consideration all assets and liabilities of a concerned individual/business.
Need of/ Reasons for Networth certificate by CA:
Net worth certificate by Chartered Accountant helps to ascertain financial status of applicants. It is commonly required in below cases –
Franchisee application: Franchisor may ask franchisee to submit Net worth certificate by CA so that franchisee can get idea about financial position of franchisee.
Bank Loan Application: Bank bears credit and default risk while giving loan so, net worth certificate helps to calculate risk and financial position. Hence it is asked to submit a Net worth certificate by CA along with an application form to the bank.
Visa application: Net worth certificate is required to submit when you apply for a visa.
Checklist for Documents required for Net worth certificate by CA:
Net worth certificate is generally prepared chartered accountants. Person/business whose certificate is required should need to provide below list of documents for certificate-
- Personal KYC documents:
- Identity proof – PAN card, aadhar card, driving license or election card (any one)
- Address proof- PAN card, aadhar card, election card, bank statement or any utility name in name of concerned person (any one)
- Valid mobile number and email ID
- Company/firm/business registration certificate copy and details
- Movable assets document checklist:
- Bank balance of saving/current and fixed deposit accounts
- PPF or PF account balance (if any)
- Details and balance of mutual fund investment , investment in shares ,gold ,etc.
- Life insurance details
- Car, bike or other vehicle details
- Furniture/electronic items details
- Cash in hand
- Other movable assets details if any
- Immovable property details:
- Land, plot or residential building owned
- Commercial or business place/shop details
- Agricultural land
- Any other immovable property details
- Capital of business and application
- Loans and Liabilities details:
- Details of personal, home, vehicle or any other loan taken- loan statement or certificate is necessary
- Finance by any other mode
- Details of securities pledged against secured loans
Process to apply for Networth certificate :
Steps involved in obtaining Networth certificate by CA can be described as below-
- Pre-consultation: preparation of Networth certificate requires professional knowledge and qualification. So it is necessary to consult knowledgeable professionals and get idea about documents required, time and fees ,etc.
- Connecting with CA: Networth certificate is required to be submitted by CA. So you must reach CA or use different online facilities available.
- Submission of required documents to CA
- Verification of documents by CA: All the details furnished and documents are checked by CA and CA needs to assure that everything is true and fairly presented in the certificate.
- Sharing draft copy of Networth certificate: On the basis of details and verification done by CA, draft certificate is shared with client .
- Issuance of final Networth certificate by CA: On approval of draft Networth certificate, CA will issue final Networth certificate with his signature and UDIN.
Role of CA in Networth certificate:
Generally, Chartered accountants issue Networth certificates as they have authority to certify Networth certificates for any individual/business. CA is required to issue a net worth certificate after assessing and verifying books, records and documents of assets and liabilities.
Networth certificate format for individual/ partnership firm:
Note: This is an illustrative format. Format can get changed based on requirements of banks or use of certificate and entity status,etc.
NET WORTH CERTIFICATE (on the Letter head of Registered Chartered Accountant)
This is to certify that the Net worth of M/s. / Mr. / Ms. ……………………… as on …………… is Rupees ………………. only as per the statement of computation of even date annexed hereto. It is further certified that the computation of Net worth, based on my/ our scrutiny of the books of accounts, records and documents, is true and correct to the best of my / our knowledge and as per information provided to my / our satisfaction.
Place: For (Name of Accounting Firm)
Date:
Name of Partner Chartered Accountant Membership Number
(Rubber Stamp)
Frequently Asked Questions :
1. Is it compulsory to have a net worth certificate for everyone ?
No, it is not compulsory to have net worth certificates for all. It is only mandatory if you are applying for a visa, bank loan,etc.
2.How to calculate Net worth?
Basically, it is a difference between total assets and total liabilities. Net worth= Total assets- Total liabilities
3.How much does net worth certificate cost in India?
Generally cost for obtaining a net worth certificate by CA in India will range from Rs. 2500 to Rs.5000 for net worth up to Rs. 1 crore.
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