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. In essence, this document gives you proof of the income that you make regularly. 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. You will learn that even if you are self-employed, having proof of income will truly affect different facets of your life.
Before understanding how proof of income benefits you, you have to first understand 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. Several entities like lenders and landlords will be needing this document from you so that they can check how much money you make and if you are able to pay them back.
Some of these people or organizations may even need to receive a proof of income letter. This letter functions as proof of your income as well as current status of employment. When it comes to this letter, it can be written by you, a social worker, an employer, or an accountant, depending on what the situation calls for. For you to give a better picture of your earnings, you have to include all possible income information you can provide. In this letter, you can include your hourly wage, yearly salary, or average work week hours. You may also incorporate how you foresee your income and if you can sustain it in the coming years.
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. To know what other documents you require, take the time to ask the lender or landlord you are dealing with.
Now, there are many uses for your proof of income document. From the various documents that you have to prove your income, it is important that you understand that some may be more important than others depending on your lender. One such example is the scenario where some lenders will be accepting only your pay stub from you and others requiring you to submit your federal tax return last year in addition to your pay stub. When it comes to your proof of income documents, always bear in mind that they vary and can be used for an array of purposes. It is important to note that you can get these documents from various 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.