Self-employed workers are often the target of discrimination when applying for rental properties. Landlords and real estate agents may require proof of income, which can be challenging for freelancers, contractors, and other independent workers who don’t receive a traditional payslip every time they work. If you are also struggling to find a way to prove your income as a self-employed worker then this blog post is just what you need. In it, we will cover everything from what proof of income is to tips on how you can provide your new prospective landlord with an alternative that will convince them that you can afford their property.
What is Payslip Proof of Income?
A payslip is a document that shows your income and employment details. Typically, the payslip is issued by an employer and given to the employee every time they are paid. If you are working in a full-time job then you will be issued a payslip regularly. It is a common practice when renting property to request a payslip as proof of your income. It is considered to be one of the most reliable methods of proving that you can afford your rent payments every month. When applying for a home loan, mortgage lenders usually require a copy of a payslip as proof of your employment and income. However, when applying for a rental property, a payslip is often not enough. It is important to note that all of your earnings might not go into your salary. You may receive a portion of your income as a contractor or freelancer. Therefore, a payslip is often not adequate proof of your income.
When You Need to Prove Your Income as a Self-Employed Worker
As we have already discussed above, the most common reason that you will be required to prove your income as a self-employed worker is when you are applying for a rental property. Other situations where you may need to show proof of income as a self-employed worker include: Applying for a mortgage, receiving government benefits, and applying for a job. If you are self-employed and applying for a new credit line or loan, you may be required to prove your income. If you are receiving government benefits, you will be required to show proof of income. And if you are applying for a job, your employer may require a copy of your income tax documents, especially if you will be earning a higher salary. If you are self-employed, you may need to provide proof of income in one or more of these situations.
3 Alternatives for Self-employed workers to Prove Income
If you are self-employed, your income is not easy to prove. However, there are a few alternatives that you can use for proof of income.
- Contracts - If you are working as a contractor, you can use a contract between you and your client as proof of income. If you are self-employed, you can use a contract between you and a prospective landlord to prove that you can afford their rent. A contract provides a detailed breakdown of the agreed-upon terms of the deal. It also includes signatures from both parties involved in the transaction.
- W-2 Forms - If you receive a W-2 form, you will receive a copy of the form from your employer and another copy from the IRS. You can use the form to prove your income when applying for a rental property or a home loan.
- Audited Financial Statement - If your self-employment income is derived from a business, you may be able to provide an audited statement instead of a payslip or W-2 form. With an audited financial statement, a certified public accountant will examine your books and confirm the amount of money that you are earning. You can use the statement to prove your income when applying for a rental property or a home loan.
How to provide payslip and income proof with a contract
A contractor’s contract is a legally binding agreement between you and your client. It details the project that you are working on, the amount of time it will take you to complete the project, and your rate of pay for the work. If you are self-employed and working as a contractor, you can use your contract as proof of income for a rental property. Contracts are not only used for construction projects like building a new house or installing new kitchen cabinets. Contractors work in many different industries and fields. You may be a contractor in the field of marketing and advertising if you are working on a project for a client and being paid a set rate per project. Alternatively, you may be a contractor in the field of freelance writing if you are working on a project-to-project basis, being paid per article.
How to provide payslip and income proof with a letter from your accountant
If you are self-employed, you may be able to provide a letter from your accountant instead of a W-2 form or a contractor’s contract. The letter should include the amount of money that you are earning and verify your employment status. If your accountant is auditing your books and conducting a financial review and audit of your business, they may be able to include the information in the audit report. A letter from your accountant is not as formal as an audited financial statement. However, it does provide a statement from an independent third party that your accountant is earning money from your business. If your accountant is auditing your books and conducting a financial review and audit of your business, they may be able to include the information in the audit report.
How to provide payslip and income proof with an audited financial statement
An audited financial statement is the most formal and detailed type of proof of income for self-employed workers. The audited financial statement is prepared by an accountant who examines the books of your business, confirms your income, and verifies that you are making the amount of money that you claim. If you are self-employed and working in a business, you can use an audited financial statement as proof of income when applying for a rental property. The financial statement will show all of the money that your business is making and all of the money that you are receiving from your clients. Your accountant will include a detailed breakdown of your expenses and show that you have the money available to make your rent payments every month. This is the most detailed and comprehensive way for self-employed workers to prove their income.
Conclusion
If you are self-employed and having a hard time providing proof of income, don’t panic. A contractor’s contract, W-2 form, or an audited financial statement all provide detailed information that a landlord can use to verify the amount of money that you are earning. With any of these documents, you can show your prospective landlord that you can afford their rental properties. If you want to receive better rental offers and increase your chances of being approved, you need to be able to prove that you can afford the monthly payments. These documents will help you do just that.