5 Tips for Showing Self-Employment Documentation
www.www.worldexecutivesdigest.com | 5 Tips for Showing Self-Employment Documentation | Are you trying to get a loan or is there some other reason you have to show proof of self-employment? Read this to learn about self-employment documentation.
There are over 14 million self-employed workers in the United States. All of these people need places to live or loans.
Providing self-employment documentation is normally required to satisfy lenders, renters, and other institutions.
If you have never done this before, you are probably wondering where you can find this proof since you don’t receive normal pay stubs from an employer.
Check out these five tips to prove your self-employment.
Contractors perform work for a company but are not considered employees. Because of their status as non-employees, whenever payment for services exceeds $600 for the year a 1099 form is given to document the pay.
Contractors or vendors may collect many 1099 forms throughout the year if they have multiple clients.
The 1099 forms act as a great back-up for the checks accumulated. It’s wise to save copies of both.
- Bank Deposits
A landlord, music artist, or author will have revenue streams counted as passive. Passive income means the worker is not actively involved in generating the revenue stream.
Landlords make rent money but are generally not actively working throughout the day to earn it. Their tenants are not obligated to give 1099 forms to the landlord.
The apartment owner will have to provide bank statements proving the deposits from the rent checks they receive.
A book author will make residual income from each book that is sold. If they self-publish, then they will also have to use bank deposits.
- Schedule C Tax Form
The schedule C tax form is primarily for business owners. As business owners close their year, they will need to fill out Schedule C tax forms with the IRS.
The tax form contains all financial information from the fiscal year. Gross revenue, profit, expenses, it’s all included.
All this information on that document is proof to any bank or landlord inquiring that you are self-employed. Other more readily available documents for business owners include profit & loss statements and balance sheets.
A great option for your small business is to use a pay stub creator and write your own checks. You will create the option of providing pay stubs for anyone who needs it.
- Receipts Can Work as Self- Employment Documentation
When a client or organization goes bankrupt, stops correspondence, or passes away, getting 1099 forms becomes increasingly difficult.
Banking institutions will accept vendor copies of receipts you wrote for receiving the money. Clients almost always ask for a receipt for large purchases from a small business or private individual.
Paid invoices work the same way as receipts do. As you receive money for the invoices, keep track of your own records to use in the future.
- Tax Returns
If all the other options fail, you can always request your previous year’s tax returns from the IRS. Some organizations require it.
You are at the mercy of the speed of the IRS and the US postal service if you choose this one. But it might be the only way to prove you are self-employed.
This not a viable option for someone who is in their first year working for themselves.
Save All Records
Be smart, organized, and save all your records. Your digital files should have paper back-up files in a safe location.
You will know exactly what and where to reach the next time you are asked to provide self-employment documentation.