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Proof of income for self-employed people

proof of income for self-employed people

Learn about how a self-employed person may prove their income

Being self-employed gives you the freedom to work on your own schedule, set your own fees, and do work you enjoy. More and more, people are choosing to turn their gigs and side hustles into full-time jobs. Although self-employment can be fulfilling, it can also pose challenges when you need to provide proof of income to banks or other creditors.

There are several reasons you may need to provide proof of your income:

  • Taking out a car loan
  • Applying for a mortgage loan
  • Applying for a new credit card
  • Requesting an increased credit limit on an existing card
  • House, condo, or apartment rental application
  • Co-signing a loan
  • Personal loans
  • Refinancing a mortgage

Even if you’re self-employed, you can still provide proof of income to qualify for loans, leases, or other types of credit. In fact, there are many ways to prove your income!

While every person’s situation is different, here are a few things to keep in mind about providing proof of income when you’re self-employed.

Challenges with self-employed proof of income

Self-employed individuals may run into challenges when it comes to providing proof of income. Most employees receive a regular paycheck and paystub that they can use as proof of income. However, self-employed individuals often have a variety of income sources and business expenses, which can impact their proof of self-employment.

Without a paystub from an employer, proving your income can seem challenging for those who are self-employed. But proof of income can come from a variety of sources, even if you don’t have a “regular” job.

How do I calculate my self-employed income?

Calculating self-employment income can be a straightforward process, as long as you keep track of your finances. First, you need to know your total self-employed income for the year. Make sure you include all your sources of income! Next, subtract any related business expenses for the year. Generally, this doesn’t include any taxes you’ve paid but could include any other business expenses. The number remaining –your net pay, or your self-employed income – is generally what banks require.

How do I show proof of income when I’m employed?

Providing proof of income when you’re employed is straightforward. You should receive regular pay stubs from your employer when you get your paycheck. These may come via email if you’re paid through direct deposit or be attached to your physical paycheck. At the end of the year, you’ll also be issued a W-2 so that you can file your taxes. If you add up all your pay stubs for the year, the income total should be the same amount reflected on your W-2.

The process for those who are self-employed is not quite as straightforward, but self-employment income is easier to prove the longer you are self-employed.

What can be used as proof of income?

Since you don’t have a pay stub from your regular employer, you’ll have to prove your income another way. But don’t fret — there are several ways self-employed individuals may be able to use to  show proof of their income.

Many people use tax returns as proof of your income. Once you’ve been self-employed for more than a year, your previous years’ self-employed tax returns are a reliable proof of income. This is one reason it’s important to make sure that you’re filing taxes correctly and including all your income on your federal tax return.

Your bank statements show all your income and expenses, so many creditors will accept your most recent bank statements as proof of your income. You can also use profit and loss statements from your business as proof of income. You can create this yourself using a spreadsheet program, use your accounting software, or have an accountant create it for you.

While this isn’t an exhaustive list, here are a few of the ways you can prove your income if you’re self-employed.

Annual tax returns

Even if you don’t get a pay stub or a W-2 from an employer anymore, you still must file annual tax returns. Annual tax returns are excellent proof of your income, so make sure you account for all your income when you file your taxes.

Since you won’t receive a W-2 from an employer, you need to keep track of all of your income on your own so you can correctly report it on your tax return. Sources of income could include payments through payment processors like PayPal, payments through gig-working apps, or even cash. Inaccurately reporting your income could impact your ability to qualify for loans in the future, and it could cause you to pay tax penalties as well.

Once you have several years of experience working as a self-employed individual, your tax returns are a reliable proof of your income.

Wage and tax statement 1099 Form

Businesses that pay a contractor or self-employed individual issue Form 1099s. However, this requirement only applies to workers who have paid at least $600 in the calendar year. These forms can be a good way to prove your income, as long as your work for your clients is over $600 over the course of the year.

If your work involves smaller jobs and you rarely do $600 worth of work for any one company, you may need to find another way to prove your income.

Online payment records

As a gig worker, freelancer, or self-employed individual, chances are that you accept online payments through vendors like PayPal, Venmo, Zelle, or other similar payment processors. You may be able to use records of the payments you’ve received as proof of your income. This can be tricky, though. If you receive personal payments as well as business payments into the same account, you may have a hard time sorting through them unless you’ve kept excellent records. To help simplify the process, consider having separate accounts for business and personal use, or use an account like indi where you can easily categorize business and personal income and expenses.

Self-employed pay stubs

Though self-employed individuals may not receive a pay stub from their boss, they may be issued paychecks from someone else — themselves! Depending on how your business is set up, some self-employed individuals still issue themselves paychecks. This can help keep your banking information a little neater for tax purposes, and you can still provide pay stubs as proof of employment. If this seems like it could be a good fit for your business, check with an accountant for recommendations on how to move forward.

Bank statements

Bank statements can be an excellent way to prove your income, even when you’re self-employed.

If your transactions are clearly labeled as business or personal, you can pull these documents easily when needed.

What is the best way to prove your income?

While there are many ways to prove your income when you’re self-employed, the best proof may be your federal tax return. There are a few reasons your tax return is the best.

First of all, it’s a standard and accepted document. You’ve signed it and sworn that it’s correct to the best of your knowledge. Second, it should include all your sources of income, so it is a complete record of your income and expenses. And third, it’s a form you’ll file every year. Potential creditors can review your previous tax returns and quickly see if your income has stayed steady over the previous years.

How do you prove income for self-employed mortgage loans?

For most of us, a mortgage is the largest loan we will ever take out in our lives. So, it’s understandable that qualifying for a mortgage may require a higher standard for proof of income than other types of loans.

Banks often require a record two years of self-employment before they’ll issue a mortgage. They typically need to see two years of tax returns showing your self-employment income. They may require additional paperwork from self-employed individuals, including:

  • Bank statements
  • A letter from a CPA confirming the nature of your business
  • Proof of business insurance

A bank may need more than just proof of your total income to issue a mortgage because they need to make sure your business will remain profitable. These extra steps help them make sure they’re issuing a good loan. And while it might seem like a little bit of extra work, it shouldn’t be too much trouble as long as you’ve kept good records.

If you haven’t yet been in business for two years, you may need to put your mortgage plans on hold until you meet the two-year mark. However, it’s always worth calling around to see if you can find a bank willing to work with your situation.


There are a lot of reasons you may need to provide proof of income. Being self-employed doesn’t mean you can’t provide the proof; it just means your proof may look a little different from those who are typically employed. Self-employment is becoming more and more common, so lenders and creditors are used to working with people who need to prove their income in alternate ways.

With all the digital tools available, tracking your income, expenses, and taxes is easier than ever. indi has features to help you track your income and expenses, so you can categorize each transaction and plan for your future. Tools like these make providing proof of income even easier, no matter how you’re employed. Apply today and start banking smarter.

This article is not intended to provide financial, tax or legal advice and the information provided may not address your individual circumstances.