Experts expect that by the end of this year, there will be 42 million self-employed workers in the US. That means around one-third of the population are considered non-traditional workers.
Self-employment comes with a lot of benefits including the ability to work from home, make your own money, and have a flexible schedule. But, one of the main drawbacks is that many financial lenders don’t look at self-employment the same way as traditional employment. This can make financing your business and personal life difficult.
There are ways to still prove your income with non-traditional employment. Keep reading to discover what counts as proof of income.
Wondering how to provide proof of income? The first things you should consider as proof are your tax documents.
Each year you file documents to the IRS documenting how much money you made. You can provide them with copies of your W-2 or 1099-Misc from employers or contractors. Or, just give them a copy of your Filing Form 1041, which includes your total combined income throughout the year.
If you’re new to self-employment and are not sure how to create your own tax documents, visit www.paystubs.net. Here you can create your own official W-2s for both filing and proof of income purposes.
Self-Employed Pay Stubs
Even if you don’t work a traditional job, you can still create pay stubs for your own work. Self-employed pay stubs are proof of your income and fairly easy to make using various online resources.
Each pay stub should include:
- The wages received
- Your name and address
- Client info
- Date of payment
While a traditional pay stub also includes things like benefit deductions and withheld taxes, you won’t need to include these. Instead, you are using these to prove your income and all that extra information won’t help in this situation.
If you don’t want to create your own pay stubs, you can also consider making copies of your client invoices. These should contain very similar information to what you’d include on your self-employment pay stub.
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In some situations, tax documents don’t represent your current income and you don’t want to create self-employment pay stubs. If this is the case, consider printing out bank statements form the last six months.
Depending on how you handle your income, you can choose to provide documentation from your personal, business, or both accounts. Either way, these should be able to show a steady flow of income into the accounts.
By having several months’ worth of statements, you show that the income is stable and ongoing.
Now You Know What Counts as Proof of Income
Now that you know what counts as proof of income, you’ve solved one of the main headaches of self-employment.
The next time you need a financial lender to consider your income, make sure to supply them with your tax documents, pay stubs, or bank statements.
Looking for more ways to navigate the money-side of self-employment? Head to the Finance section of this site for articles on everything from tax services to business loans.