The Value of Proof of Income for the Self-Employed
If there is one thing that a landlord or lender requires from you as well as similar entities, it will have to be your proof of income. This piece of document provides facts about your income and relevant information. Your income is a determinant of many things like the amount you can receive for a personal loan or your health insurance plan. Knowing your income is important not only for you but also for others and what areas in your life you can use it for. If you are self-employed and want to know the impact of having proof of income, then you’ve come to the right place.
For you to appreciate how having proof of income helps you in different areas of your life, you have to first know what it is. Now, if you say proof of income, you are referring to a piece of paper or set of documents that is requested from you. Landlords, lenders, and similar entities look for this document so that they can gauge your income and if you are capable of paying them money.
For some of these entities, they may even requires a proof of income letter. This letter is where you can find proof of y our income as well as employment. Depending on the situation, this letter may be written by you, an accountant, an employer, or a social worker. The best way to use this letter to provide a clear picture of your earnings is to make sure that all relevant income information is included in it. Inside this letter often includes your hourly wage or yearly salary as well as the average hours per work that you work. You may also include in the letter how you foresee your income, whether you can sustain it in the years that will follow.
Most of the time, the letter of proof of income may not be enough, you may still need to provide more supporting documents of proof with the likes of your paystub. For you to know any additional documents that you need to submit as proof, you can always ask your potential landlord or lender directly.
Now, there are many uses for your proof of income document. Depending on your lender, other documents that prove your income may be more important than others. For example, some lenders may only demand your pay stub from you while some may need more than just your pay stub like your federal tax return the previous year. There are different types of proof of income documents that you can use for whatever you see fit. You have to always remember that you can get varying documents from different sources. Expect other documents to also be more authoritative than others. For those who are working as self-employed individuals, take the time to know what requirements for proof of income for self-employed you will be needing from the lender or landlord you are considering.