When Freelancers Need Proof of Income, and How to Prove It

Working for yourself has many benefits. For instance, you get to choose your own work-life balance and have control over your business operations. However, when times arise in which you need to prove your income, it’s a little less easy to do that as a freelancer.

Many business and personal situations can arise in which you need to prove your income. You could be applying to rent a property, get a mortgage, or get subsidized health insurance. Alternatively, you could be opening a business account or applying for a credit loan.

Anyone applying for such things must prove what his or her income is, but things are more complicated for freelancers due to the fact that self-employed income is less stable than income from employment. For instance, when you have a stable source of income, it’s easier to be approved for different types of credit. Qualifying for any type of loan is more challenging in your first year of freelancing, too. That’s because if you haven’t yet completed your first year’s tax return or you are at a pre-revenue stage, you won’t be able to prove you earn enough as a freelancer to not be a risk to the lender. After all, you won’t be able to simply show a W-2 form from your employer.

Thankfully, there are several ways to prove your income as a freelancer. So, for whatever reason you need to show proof of income, be prepared by having access to up-to-date financial figures on acceptable documents.

While you won’t be able to provide lenders and others with a W-2 form, there are other options for proving your income. Here are the primary methods.

One of the simplest methods to prove your income is to use an online paystub maker to prove your past earnings or monthly income. All you have to do is go online, fill out the required details, and download the pay stub. The document will show your pay in detail, including things like the taxes you have paid and owed, as well as your salary information.

If you are an independent contractor, you can submit a 1099 form for things like loan applications, to prove your income, instead of needing a W-2 form.

Sometimes, your business receipts can be used to prove your income. So, make sure you keep documentary proof of every dollar you make and accompany it with the relevant receipt. If you can show your total annual income and back it up with all of the receipts, many lenders and other organizations will be satisfied.

If you have been freelancing for more than a year, you can use your income taxes as a way of proving your income. Your income tax documents will show every dollar you have made and every expense you have paid for throughout the year and will include other details such as tax payments and deductions. You could consider hiring a professional accountant to ensure your income tax records are always entirely accurate.

If all of your yearly freelancing income goes into your bank account, a simple way of proving your income is to use your bank account statements. Each deposit will be detailed in your bank statements, so when lenders see recurring payments, they will be able to see that you pose less risk than they may have suspected. But when you use bank statements as a method for proving your income, make sure you are knowledgeable about each deposit shown on the statement, so that you can give further explanation to lenders or others about the source of that income, if required.