Over 14.6 million people in the US are self-employed and that number is only rising as more people look for employment on their own terms.
With the flexibility and fulfillment of working for yourself comes a few trickier situations such as needing to show proof of income for self-employed individuals.
We’re going to cover the best way to prove your income for loans, landlords or insurance purposes.
The Easy Way to Show Proof of Income for Self-Employed Individuals
Let’s take a look at all of the options you have available to prove your earnings from bank statements to paystubs.
Locate All of Your Annual Tax Returns
Whilst tax-returns are not necessarily the most accurate representation of your true earnings, they are a great starting point. You might not necessarily include off-the-books projects which reduce your full earnings but tax-returns should be your go-to.
The tax returns from each year will include your stated income so make sure you locate all previous tax-returns.
Keep Organised and Separate Bank Statements
You will find that bank statements can be a really useful tool in monitoring and proving your income. However, you do need to make sure that you keep a separate account for your business transactions so that they don’t get mixed up with any personal transactions.
It is a really valuable way to prove income down the line when you have clear and organized statements.
Make Use of Online Accounting Services
Especially if your business is conducted online then you should use an online service such as PayPal that tracks all expenditures and income or go further and utilize accounting software.
These days there are plenty of affordable if not completely free options to use. They allow you to create invoices, request payments, send reminders and monitor your income and expenditures professional by yourself.
Maintain Profit and Loss Statements
Any self-employed workers can create a detailed profit and loss statement and you can actually do this on your own. Your profit and loss statement should include all income, expenditures, and business-related deposits. It also needs to include relevant dates that correspond with your banking statements.
Create Pay Stubs
Pay stubs are among the most accurate way to show proof of income if you’re self-employed.
Pay stubs show a workers’ full name, employer’s name, and contact information. They also show how much gross income an applicant earns and how often they receive paychecks.
You can actually create paystubs as a self-employed individual by using PayStubCreator. This will be the most reliable proof of income you can provide.
Put It into Practice
By 2020 there will be an estimated 25 million self-employed workers in the United States. if you’re one of the growing numbers of people forging their own path and building a business then it pays to keep detailed accounts in order.
By learning how to show proof of income for self-employed workers, you can always be ready to show accurate and reliable income statements.
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