How to show proof of income when you’re self-employed

You worked hard, chased your passion, and built a freelance career. Congratulations! There are lots of awesome things about being your own boss, namely designing your ideal work-life balance. But there are some drawbacks, including dealing with situations where proof of income is required to secure a lease or financing. 

Most institutions are comfortable with the relatively predictable finances of people who earn a fixed salary from a single employer. They are less comfortable with the finances of self-employed individuals, because self-employed income is considered to be less stable. 

Applying to rent a house, subsidized health insurance, or getting pre-approved for a mortgage can be complicated when you're doing so as a freelancer. Proving your income through extra documentation is key in these cases.

Sign that reads "self employed" in the shape of an arrow.

Table of contents

What is proof of income?3 Types of documents that can be used as proof of income

What is proof of income?

Proof of income is documentation that shows your earnings during a set period of time—usually a year. These documents verify that you make as much as you say you make. 

Landlords, utility providers, insurers, banks, and credit card companies require this documentation to determine your qualifications to make payments over time.

3 Types of documents that can be used as proof of income

It’s easy for people with full time jobs to prove their income—all they need is a pay stub, W2, or offer letter from their employer (if it’s a new job). 

Self-employed individuals can produce some or all of the following documentation types to prove their income. 

Pro tip: It’s always a good idea to keep a current and accurate record of your income as a self-employed person, so you’re prepared not just for life events like renting a new apartment, but to alleviate stress at tax time.

1. Annual tax returns

Your federal tax return is solid proof of what you’ve made over the course of a year. It’s a legal document that is officially recognized by the Internal Revenue Service that shows your total income and expenses for that year. 

One caveat: Self-employed people aren’t always required to report income below a certain amount, and therefore tax returns may underestimate total earnings. If this is the case, make sure to acknowledge it and provide additional documentation for any income that wasn’t recorded. You can do this by supplementing your tax return with annotated bank statements.

If you don’t have your annual returns on hand, you could also provide your 1099 forms from freelance employers instead.

2. Bank statements

Your bank statements should show all your incoming payments from clients or sales. To avoid having to present your personal finances in minute detail to landlords or lenders, consider setting up a business bank account for your income. Doing so will streamline the transactions a landlord or lender has to review. 

If you present personal bank statements, you’ll want to go through and clearly identify your incoming payments and business expenses before presenting these records as proof of income. 

3. Profit and loss statements

A profit and loss statement tracks your revenue, costs, and business-related expenses over the course of a set amount of time, like a fiscal year. Self-employed people who operate as a business entity more commonly generate these statements, but that’s no reason freelancers can’t keep them, too. Your accountant can help you get started on a profit and loss statement, or you can look into software that helps you set up the document yourself. 

Spending responsibly on rent can help keep your personal finances on track. Shared housing is one of the best ways to lower your rent cost. Bungalow’s homes are designed for roommates, located in the best neighborhoods, and set up for seamless living. Whether you already have roommates or are looking for new ones, there’s a Bungalow with your name on it. Find your Bungalow.

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