The Value of Proof of Income for the Self-Employed
Proof of income provides a number that is essential for various entities like landlords and lenders. As the name implies, this document is where you can find the income that a person makes. Your income is a crucial component when it comes to determining a number of things like the amount you can get when you apply for a personal loan or how much you will pay for your health insurance plan. Knowing your income and understanding how it impacts several aspects of your life are very much essential in this day and age. You will learn that even if you are self-employed, having proof of income will truly affect different facets of your life.
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. 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 will serve as a summary of your income and employment status. 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. 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 can also include how you think of your income and if you can sustain it in the future.
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.
There are a lot of purposes for your proof of income document. Any document that proves your income will depend on the lender if you want to know which one is preferred over the other. 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. 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. There are also some documents that are going to be more useful than others. It is a must to know the proof of income for self-employed if you plan to embark on any plans in the future as a self-employed person.