The Importance of Proof of Income for Those Who Are Self-Employed
Proof of income provides an important number to landlords, lenders, and other entities that require it. As the name implies, this document is where you can find the income that a person makes. Your income is a determinant of many things like the amount you can receive for a personal loan or your health insurance plan. It is vital that you know about your income and how it impacts various aspects of your life and other people. There are many things that you need to know about proof of income and how it impacts your life, especially if you are self-employed.
One of the best ways to understand the value of proof of income is to know what it truly entails. The first thing that you need to understand about proof of income is that it is a document or a set of documents that someone or an entity requests from you. Landlords, lenders, and similar entities look for this document so that they can gauge your income and if you are capable of paying them money.
A proof of income letter is even requested by certain entities and organizations. This letter is where you can find proof of y our income as well as 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. 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. In this letter, you can include your hourly wage, yearly salary, or average work week hours. You may also include in the letter how you foresee your income, whether you can sustain it in the years that will follow.
Besides the letter of proof of income, you will also be asked to provide more supporting documents from the lender or renter you choose like your paystub. For you to know any additional documents that you need to submit as proof, you can always ask your potential landlord or lender directly.
There are a lot of purposes 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. No matter your purpose for proving your income, always know that you have a variety of documents of proof of income to choose from. It is important to note that you can get these documents from various sources. You can also expect that some of these documents will be more useful than the others. If you are self-employed, make sure that you know the proof of income for self-employed that is required from you.