Proving Your Income
There are certain times in life when you will need to prove that you make the amount of income you claim to. One example is when applying for a line of credit (car or mortgage, etc.) Landlords also often request proof of your stated income. This process or request is called Income Verification.
Income Verification – Reliable Proof
In some instances, you may be able to rent a home or apartment by simply stating your income, but more and more these days, you will need to prove it. Landlords or lenders will want some level of confidence that you can pay your monthly payments on time every month. For individuals who work for someone else, this is pretty easy to provide. Pay stubs, W2s, and tax transcripts are reliable forms of proof of your income. But for those who are self-employed, there may be no pay stubs or W2s and tax transcripts are not always the best indicators of a business’s health. Here is where a CPA can help.
Information received from an accountant is considered more reliable and trustworthy than information received from an individual about himself or herself. Accountants know the full picture of their clients’ finances, which is usually more than meets the eye or the tax return.
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How We Provide Verification
As income verification, we at CPA Accounting and Tax Services, can provide, on our letterhead, details of profit and loss and how many years you have been in business/self-employed. Further, we can list any industry memberships that you carry to show your level of activity in your area of business. If you have a bad debt in your past, it can loom on a credit report or Better Business Bureau report for years. This is a red flag to mortgage lenders or other financial institutions. If this was a one-off event, we can provide a statement that addresses the details of that situation. If the rest of your business history is clean, we can provide a comparison of that year versus the entirety of your time in business to show that it was an unusual situation that should not be expected to occur again.
Other times that we can strengthen your income verification are when there has been a change in your income due to start-up expenses or equipment purchases in one particular year. It is common for a bank or other lender to review two or more years of income history. We can help explain big differences. For people who are new in business, but have a history of working in the industry, it lends credibility for a CPA like CPA Accounting and Tax Services, to create a letter stating that while this is a new business, the owner has years of experience in the industry working for someone else.
As you can see, there are many ways that a CPA can provide income verification. This is just one of the many services that we are honored to provide our clients. Call us to learn more about how we can be a true partner with you: 407-382-6658.