Approximately 16 million people in the U.S. are self-employed. If you own and operate your own business, you might fall into this category, too.
Being self-employed provides many excellent advantages and benefits, but it makes it hard for some people to prove their income.
Throughout life, you’ll likely need proof of income from time to time. If you’re self-employed, how can you prove that you earn money, though?
This article offers a guide to help you learn how you can prove your income when you’re self-employed.
Provide Bank Statements
One of the best ways to show proof of income is through your bank statements.
A bank statement details all your deposits and expenditures. If you have regular deposits on your statements, you can use these documents to prove your income.
Lenders might ask to see three or four statements or more. Providing the last twelve statements to them can instantly show evidence of your income from self-employment.
Offer Your Tax Returns
As you look for tips for showing proof of income, you’ll come across the next one – use your tax returns.
A tax return is a document you prepare once a year for the IRS. This document illustrates your yearly income and expenses. The IRS requires it to ensure that you paid enough taxes on your income.
If you provide your tax returns to a lender or apartment manager, they can see evidence of your income.
A tax return is nice to use also because it shows a history of your company. It represents the income for the entire year, which is proof that you have a steady income coming in each month.
Create Financial Statements
The next option you have is to create financial statements. If you run a business, you can easily create financial statements by gathering two things:
- Your income
- Your expenses
If you want to make monthly financial statements, add up the income you earned for the month of the statement. Next, add up the expenses. Finally, subtract your expenses from the income.
The answer will show your net income, which is the money you earned through your business operations.
The last way to prove your income is by learning how to make fake paystubs at home.
A paystub is a document you receive from your employer. If you are the employer, you probably don’t receive these, but you can make them yourself.
Making paystubs is not a complicated process, but it will require using a paystub generator. You can find companies that offer this service online. Once you choose one, you can begin creating your own paystubs.
Using these documents is the best way to prove income, as they show your income for a particular period in time, as well as all your deductions.
Proof of Income Is Essential
Proof of income is essential for so many reasons, so you’ll need to find a way to prove yours when asked.
If you have questions about this subject, browse through our blog for more helpful articles.