Being a freelancer has it’s joys, sure, but it also comes with a fair share of challenges, such as proving your income. Here’s how to provide proof of income.
It’s estimated that by 2027, 50% of the workforce will be freelancers by profession. For those who already freelance full time, it makes sense. There are a lot of perks to freelancing, like the ability to work from anywhere and choose your hours.
But there’s also a huge hurdle: proof of income. Your pay likely comes from more than one client or more than one income stream. In some cases, you can have ten or more different income streams that make up your income.
So what happens when you’re applying for a loan, apartment, or mortgage? How can you provide proof of income as a freelancer?
Use a Paystub Maker
One of the easiest ways to provide proof of income is with a paystub maker. You start with simple information like whether you’re hourly or salaried. The form will ask you what state you work in, and whether you’re an employee or a contractor.
While there are usually fees, they’re small, and online programs streamline the process. You can have paystubs ready to print and download in just a few minutes.
While this may not always work, it’s worth looking into. Your bank statement will show how much money went in, how much came out, and the current balance.
Keep the past several months worth of statements. This can show your lender that you have regular income from freelance work.
Last Year’s Taxes
If you’ve been freelancing for several years, last year’s tax documents may work as a proof of income. You could also use your 1099 tax form.
Since the 1099 tax form shows how much you need to pay in taxes, it also shows your income. Most lenders and apartments will accept a 1099 tax form.
A Profit and Loss Statement
If you don’t already keep a profit and loss statement, now’s a good time to start. This is a vital document for your accountant and tax advisor. But you can use it to provide proof of income to your creditors.
You can make a profit and loss statement. It needs to show income, expenses, and business-related deposits. But there are plenty of options online to help you make one too.
Ask Your Creditor
More and more people are accepting freelancing as a viable career option. Your lender might have their own list of acceptable documents to prove your income.
These Tricks Provide Proof of Income for Freelancers
It doesn’t have to be hard to provide proof of income as a freelancer. You can use old tax documents, bank statements, or a profit and loss statement.
And when in doubt, always ask your creditor. They probably already have a list of documents you can use.
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