Top Tips on How to Show Proof of Income When Self-Employed

by Susan Paige on August 27, 2019 · 0 comments

If you’ve ever put in an application to rent a home, applied for a loan, or tried to make other big financial moves, you’ve likely been asked for proof of income.

For people who are traditionally employed by a company or another organization, that’s not a problem: they can just show a paystub and move on with their day. What about for those of us who work independently or are self-employed?

There are easy ways to provide proof of income for you or your business. Read on to learn what could work best for you.

Tax Statements

Digging up your taxes from last year isn’t the most ideal method since it doesn’t prove without a doubt that you’re employed this year. However, it will work in a pinch.

If you’re a freelancer, you should be receiving a 1099 form from every company you worked for throughout the year. Keep track of all of those so that they can be your collective proof of income. Since these are legal documents, they’ll be widely accepted.

Bank Statements

What if you don’t have your tax documents readily available? If that’s the case, bank statements will work, too.

Your bank statements can provide a picture of the cash flow coming in and out of your bank account each month. However, it’s important to note that this really only works if you have a separate bank account just for business expenses. If your personal and business expenses are mixed together, your records won’t be as clear.

Gross Revenue

For people who own their own small businesses, providing the gross revenue numbers for the year before can also help to prove your income. Showing other people your business’ profits will help them to understand what you make.

You can also make yourself a paystub to make it even clearer what your cut of the profits was, especially if you have employees. Resources like this site make creating your own paystub easy, even if you’ve never done it before.

Track Everything

No matter what method you choose, you should always make sure that you’re tracking everything money-related.

When you’re self-employed, being extra vigilant about your expenses is even more important. If you have to explain why you spent a certain amount of money on a professional development expense, or prove that a certain client really did pay you in three different installments, you need to have a record of all of that.

Being organized early is going to save you a lot of time and headaches down the road.

Proof of Income Doesn’t Have to be Stressful

If thinking about having to prove your income makes you want to bury your head in a hole, take a deep breath. The proof of income question doesn’t have to be stressful.

Use the tips in this post to make sure that you’re prepared. After your proof of income is verified, you’ll be well on your way to your next financial goal. Be ready for anything by checking out more of our budget tips!

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