Proof of Income is documentation or other evidence that is used to prove the income of an individual or business.
Examples of Proof of Income:
A business owner applies for a business loan and is approved.
One of the closing stipulations is to show evidence of income. The following is a list of the most accepted forms of proof for businesses and individuals:
Pay Stubs or W-2 Statement
Financial Statements such as Profit and Loss and Balance sheets.
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Proof of your income is required for larger loans, such as a large business loan or personal loan.
If a business owner cannot show documentation of income, they can consider other types of business loans that may not require it, such as certain asset based loans.
Customers cannot always show the type of documentation of income that is being requested.
What if you cannot provide documentation of your income? Then see our FAQ Frequently asked questions below.
FAQ Frequently asked questions on proof of income
I am being asked for proof of income. What is proof of income?
Proof of income is documentation like a pay stub, copy of a paycheck, tax returns or business or personal bank statements that show your personal income or business income
Our proof of income was not accepted because we filed an extension for the current year. Why would an extension not be accepted for proof of income?
Some lenders do not accept an extension as part of their proof of income request. If you filed an extension then the lender does not have current or recent proof of what you have been making. For example, if you filed an extension for your business or personal taxes by April 15, 2019 for the tax year 2018, then your most recent complete tax return is for 2017. If you apply for a personal or business loan or need to provide proof of income for anything then your income information is 2 years old. That may be unacceptable to lenders and others, which is why they may reject your tax extension filing.
Are bank statements proof of income?
Bank statements are not the best proof of income. They do not take into account business or personal deductions from your gross income. Some lenders may accept personal bank statements and add back an estimate for taxes paid. Business bank statements will show gross receipts for a business but not net income. For a business loan the lender wants to consider if your business has the disposable income to service the new debt. They will look at what the disposable monthly income is for your business and if it is more than the new payment you have to make on a loan.
Isn’t my good credit proof of income? If I am paying my bills then what does it matter how much my business makes?
Even if you have an excellent credit score, proof of income shows that you have income now. If you were recently laid off or are not working now then a good credit score is not enough. Lenders are not repaid from good credit scores. They are repaid from income and the ability of the borrower to pay based on their income less their debts.
There are other funding Options. Call us to discuss these options.
Evidence of Income is requested for many reasons. Most often they are completed when someone is requesting a product or service, or entering into a Contract or Relationship with someone else. They are not always looked at the same way. What is looked for is totally up to the party that is pulling the report and also what they decide about the information.
The following are frequent requests and statements:
– I do not have Proof of Income. What can I do to provide what is needed? Other ways to show evidence of income sending Bank Statements. If all of a person’s income goes into 1 Account, then the most recent bank statements for that account may be used to prove income. This can be done for a business or an individual.
In summary: Questions and issues addressed:
What is proof of income? How can I prove my income? Give your pay stub, copy of paycheck, tax return, or bank statements and other ways to prove income.
Recent examples from the Web:
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