A Guide to Showing Proof of Income for Freelancers
Proof of income is a requirement most people are going to come across as freelancers.
How to show proof of income is not something that comes to mind in first starting to strike out on your own.
Yet when the time comes to file income taxes, proof of income statements is paramount.
This article will explore the documents you need to start proving your income and staying on top of taxes in freelance.
What is Proof of Income?
Proof of income is a document, a statement that you show to a lender, a bank, a homeowner, or the IRS to show you’ve been earning some money for a given period of time.
As such, proof of income shows that you’re capable of paying off a loan or an amount you wish to withdraw or for proving your good credit history.
Proof of Income Documents for Freelancers
In freelance, it can get challenging to prove your income if you receive cash under the table, metaphorically speaking.
Since you don’t get a pay stub, it might be more tedious to track your gross and net pay but it need not be that hard.
1. Screenshots of your payments
If you’ve been paid online, you can simply screenshot the payments which make it into your bank account.
Often, these can be authenticated if you also want to show proof of billing and that you’ve been paying for your own home and other amenities.
2. Bank Statements
If you want a superbly reliable source for proving your income, then bank statements are some of the most ideal.
This is because they show your balances and spending over time. And how much money you’ve put into your bank.
3. Income tax returns for Freelancers
You can also use your tax statements to prove your income.
If you’ve been on the freelancing gig for a long time now you can use your income taxes to prove that you have earned but you’ve also paid your taxes like a legitimate citizen.
4. Pay stubs
Pay stubs are a real-time record of proof of income.
Use our online pay stub generator to create your own check stubs, and print and preview them as many times as you like.
What is the Purpose of Proving Income Anyway?
1. Taking out a loan
If you’re a freelancer it’s a great package since you choose your own time and your own pace.
However, things can be challenging when you want to take out a loan.
Your proof of income documents shows you can pay on time.
2. Purchasing a home
Mortgages or purchasing a home are really tough challenges, banks won’t easily be swayed unless the customer is someone who has a track record of making payments or at least has a credible way to produce the money on time.
3. Staying on top of taxes
Recording your income has value in that you can track your gross pay from your net pay much easier.
Since you’ve made it a habit to create your own pay stubs or at least keep screenshots or invoices of your earnings, then you can navigate tax season so easily.
4. Purchasing a car
Getting an automobile or anything equally expensive requires you to have a great track record.
This is why proof of income for freelancers can help when you want to show that you can afford the vehicle, and you can progressively pay for it’s installments reliably.
Prove Income with PaystubDirect
Freelance is a fun and rewarding way to grow your career.
You can make tax filing just as rewarding too by speeding up the process.
A paystub generator is a great way to start watching over your gross pay and net pay. It makes reporting your earnings fast and convenient.