It can take much work to show proof of income examples as a freelancer or self-employed worker. Your income may come from different places and may be different from month to month, unlike traditional employees who get a paycheck every two weeks.
But you need proof of income when you want to get a loan, rent an apartment, or even buy a car. In this blog post, we’ll discuss the top 10 proof of income examples for freelancers and people who work for themselves.
- Bank Statements
- Tax Returns
- Profit and Loss Statements
- PayPal Statements
- Written Statements
- Business Licenses
- Accounts Receivable
- Financial Statements
1. Bank Statements
Freelancers and people who work for themselves often use bank statements as proof of income. These statements show how much money went into and out of your bank account over a certain period, usually a month or a quarter. Lenders or landlords can check your income and see if you can repay a loan or rent by looking at your bank statements.
Also, bank statements are easy to get and often found online. By logging into your online banking account, you can easily download and print your bank statements to show proof of income.
Invoices are an important part of the business process for freelancers and people who work for themselves because they are a formal payment record for services. When you apply for a loan or a place to rent, you can also use these documents to show proof of income.
When using invoices as proof of income examples, ensuring they have all the information needed is important. Your client’s name, the amount you were paid, and the date you were paid should all be on your invoices. They should also describe their services and list any applicable taxes or fees.
3. Tax Returns
As a freelancer or self-employed worker, you can also show proof of income by giving copies of your tax returns. Your income, expenses, and deductions for a given year are all listed in detail on your tax return. Looking at your tax returns, lenders or landlords can check how much money you make and see if you can repay a loan or rent.
It’s important to ensure that the tax returns you use as proof of income are correct and up-to-date. If you have more than one source of income or claim business expenses on your tax returns, you should explain these things clearly so lenders or landlords can understand your financial situation.
4. Profit and Loss Statements
A profit and loss statement is a type of financial statement that shows how much money you made and how much you spent over a certain time. Small business owners, freelancers, and people who work for themselves often use it to keep track of their finances. Giving a lender or landlord a profit and loss statement can help them understand your financial situation and determine if you can repay a loan or rent.
You can show proof of income if you have long-term contracts with clients. Contracts should include the name of your client, how long the contract will last, how much you were paid, and when you will be paid. Lenders or landlords can determine if they can trust you to pay back a loan or rent based on how well you’ve paid your bills in the past.
6. PayPal Statements
Freelancers and people who work for themselves often use PayPal to get paid, and PayPal statements can be a good way to show proof of income. These statements give you a detailed list of the payments you’ve receive. So, including the name of the person who pay you, the date the payment was made, and the amount. PayPal statements can also have extra information, like how much each transaction cost in fees.
When you use PayPal statements as proof of income, you should remove any fees that went along with each transaction. So, PayPal charges fees for each transaction, and these fees are considered a business expense that should be taken out of your income. So, if you don’t consider PayPal fees, your income could be overstated.
7. Written Statements
As a freelancer or self-employed worker, written statements from clients can be a simple and effective way to prove income. The client’s name, the amount paid, and the date of payment should all be on these statements. The client should also sign and date the statement to show it is true.
Even though not all lenders or landlords will accept written statements, they can still be useful when formal paperwork is unavailable. For example, if you just started freelancing or have a new client who still needs to give you a formal invoice or contract, a written statement from that client can help show your income.
8. Business Licenses
As a freelancer or self-employed worker, having a business license can be helpful when showing proof of income. A business license is a legal document that proves you are a real business owner. It can also show lenders and landlords that you have a steady source of income.
Lenders and landlords often ask for proof of income when you apply for a loan or a place to rent. So, they can determine if you can repay the loan or rent. By showing your business license, you can show that you have a steady source of income and a real business that makes money.
9. Accounts Receivable
You can use your accounts receivable as proof of income if you have invoices that still need to be paid. Accounts receivable are the payments clients owe you for work you’ve already done. By showing proof of your accounts receivable, lenders or landlords can see how you’ve paid in the past and determine if you can repay a loan or rent.
Financial statements are a complete record of how much money you have and how it is being used. They include the balance sheet, income statement, cash flow statement, and statement of retained earnings.
The balance sheet shows a business or person’s assets, debts, and equity at a certain time. Assets are things a person or business owns, like money, property, or investments. Liabilities are things that you owe to other people, like loans or credit card balances. Equity is the difference between the value of a person or business’s assets and liabilities.
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In conclusion, it can be hard to show proof of income as a freelancer or self-employed worker. But there are a few options. Bank statements, invoices, tax returns, profit-and-loss statements, contracts, PayPal statements, written statements, business licenses, accounts receivable, and financial statements are all proof of income examples. So, it can use to show that you are financially stable.