Anyone working in the gig economy or as a contractor might not have a constant, predictable paycheck. How can you show lenders and landlords that you’re able to make consistent payments?
Fortunately, it is possible to prove your reliability with a few documents. In the article that follows, we’ll walk you through six income proof options for self-employed talent!
1. Present Your 1099 Forms
When you’re working with different customers, you’re likely receiving different payments throughout the year. As a result, you’ll get 1099 forms that spell out those payment amounts from every customer. Unfortunately, however, these forms won’t reflect expenses that impact your bottom line. Even so, they can help show that you’re receiving steady business.
2. Turn to Your Bank Statements
When you’re a freelancer or contractor, you’ll want to have your bank statements handy. With these statements, you can paint a more accurate picture of your cash flow through the past year or two. Most lenders will want to see at least a year’s worth of bank statements to establish your reliability. Lenders, such as Griffin Funding, offer bank statement loans that can help self-employed individuals obtain funding more easily.
Your bank statements can reveal what your savings look like. They’ll also reflect your spending habits and investment work. But while bank statements can be helpful, they also can be confusing if you’re using the same account for personal and business dealings as a self-employed worker. Aim to keep separate accounts so lenders can review your finances more easily.
3. Show Signed Contracts and Invoices
Contracts and invoices can be another helpful way to show that your money situation is favorable. You’ll be able to show lenders or landlords a steady stream of income and other projects on the horizon. Include your bank account deposits, too, to verify that you have indeed been paid for the work outlined in the invoices.
4. Share a Letter from Your CPA
Endorsements from reputable authorities matter when it comes to securing loans. And getting a letter from a certified public accountant (CPA) can help boost your case. They’ll be able to articulate the status of your business’s finances clearly, especially when the letter accompanies your bank statements. It’s wise to check with lenders before going to the trouble of securing a letter from a CPA, however. The lender may require other documentation, as well.
5. Add Profit and Loss Statements
With a profit and loss (P&L) statement, you can give lenders a transparent look at all costs and gains within your business. In short, you can provide a sense of your business’s performance over the course of the year. Just be aware that some lenders may not give as much weight to P&L statements since third-party reviewers do not generate them.
6. Share Your Assets
Are you an avid investor or saver? If you’ve amassed savings over the years and strong investment returns, those assets can help your case. You may have a more erratic income, but solid assets can help ease any concerns.
Choose the Right Proof Options
Being self-employed can be highly rewarding, but it can make it more challenging to find funding or to seek housing. Thankfully, more options have emerged to help freelancers and contractors demonstrate their financial stability. Choose the best documents for your needs and always ask lenders what they expect to see.
