According to SENTIER Research, the average annual household income is around $62000. Many are the times when you will be required to provide proof of income when doing business. It is usual for a person or institution to ask for proof of income before getting into any actions.
Besides, proof of income can be beneficial in many ways.
What Is Proof of Income?
These are documents used to verify and determine your ability to pay or settle bills. Proof of income can be requested by the bank, lender, or landlord or client. Mostly, the proof of income is used to weigh your financial muscles.
In many instances, the proof of income may be required in a letter form to summarize your employment or income. In addition to the letter, you can attach supporting documents that show your earnings.
What Can You Use As Proof of Income?
There are many acceptable forms of the proof of income, depending on the lender or whoever you are dealing with. Some may ask for the income statements or pay slip while others can demand a comprehensive report.
Below are some acceptable proofs of income;
- Pay stubs for a particular period
- Proof of income letter from employer
- Income tax documents (Form 1040 and W-2)
- Annuity statements
- Workers compensation letter
- Bank statements
- Ledger documentation
- Profit and loss statements (for businesses and self-employment)
All these documents are valid and acceptable for proof of income.
Why Do I Need the Proof of Income for Big Businesses?
When doing some big businesses, proof of income is essential. You can lose good deals for failing to produce such documents. You can also click here to get a pay stub online if you need it urgently.
You need a proof of income for the following activities;
1. Renting a House or Business Building
When renting some big business houses, you might have to submit a proof of income. Many big renters require the proof of income to determine whether you can afford to pay rent or not. If you are about to lend a house or business premises, the landlord may ask you to submit proof on income.
Besides determining the ability to pay, the proof of income is essential to detect fraud or forgery. If you are employed or engage in clean business, submitting the proof of income makes things easier.
2. Securing Contracts or Tenders
When securing some big tenders or contracts, you might need to submit a proof of income. Your client will then determine if you can meet the obligations or not. It is mandatory to prove your financial capability before getting into any agreement.
3. Buying Goods on Credit
When purchasing goods on credit, your lender can require you to prove your ability to pay. The proof of income can convince the lender that you are capable of settling any payments.
4. Securing a Loan
Looking for a loan from a back or creditors? You may be required to submit a proof of income to determine how much you can acquire. The lender can look through your income statements and consider whether to lend you or not.
The Bottom Line
The proof of income can be helpful in many ways. Providing it can help significantly when doing big business. Never underestimate the importance of proofing your income because it can be the game changer in your business.
If you have any thoughts, be sure to leave a reply below.