The gig economy, also known as access or sharing economy, is now booming in Maryland. It lets you earn income from on-demand work and services. Usually, this work is available on websites or digital apps.
However, demonstrating proof of income, especially when you want to take out a loan, can be difficult. If you wish to establish proof of income for gig work in Maryland, here are a few simple ways.
- Locate Your Tax Returns
Start by locating your tax returns. Your gig work is legitimized if you can provide proof of having submitted your tax returns. It acts as proof that you earned some profit from your gig. If you have been working independently for a while, it is essential to demonstrate a pattern of increasing income.
When trying to take out a loan, your lender will probably want to see your tax returns from the past two years. They may need to see more depending on the size of your loan request.
- Track Your Income With Online Accounting Service
Consider using an online accounting service to keep track of your expenses and income. There are plenty of inexpensive cloud-based services that you can use to track your expenses in real-time.
With these services, you can easily print reports to show your income, profits, and losses. Some, like ThePaystubs, come with pay stub generators that can help you generate pay stubs quickly. You can easily verify income.
- Bring Out Valid Bank Statements
Bank statements may help you demonstrate the flow of cash in and out of your bank account. With a year’s worth of bank statements, you can prove your income and establish yourself as creditworthy.
However, bank statements are unlikely to work well for you if your business and personal finances are mixed up. If you get most of your income from independent contract work, you’d be wise to use a separate account.
It makes it easier to keep track of your income and expenses. You can prove your income by simply providing lenders with your statements.
- Proof of Income for Self-Employed Workers
Historically, self-employed people have always had a hard time showing proof of income. Whether you are a freelance writer, photographer, or graphic designer, understanding the finance aspect of your job can be complicated.
The gig economy is filled with self-employed workers, and they all work in different sectors. Unlike in the past, self-employment has become more accepted. Lenders and property owners no longer discriminate against such workers. However, providing proof of income is still a challenge.
Documents to Verify Proof of Income for Self-Employed Workers
Plenty of documents may be used to verify proof of income if you are a freelancer or gig worker. They include:
- W-2 forms
- Paycheck stubs
- Statements that include the name and address of people your business has partnered with
- Invoices with your company name and name
- Business permit
- Your written business plan
- Your 1099 tax form. However, this may not work if you take too many deductions or don’t claim all your income. Keep this in mind whenever you file your taxes
- The annual profit/loss statements of your business. While this isn’t a requirement, it plays a major role in legitimizing your business.
Did you know that the freelancing career has improved by more than 41 percent in the last year? Many people are now choosing self-employment over traditional forms of employment because of its flexibility and increased potential to manage income.
However, proving income has always been a challenge. However, with the above listed solutions, it is possible to prove income and obtain a loan with minimal complications.