Verifying Proof of Income: How to Generate a Self Employed Pay Stub
The freedom of self-employment is drawing more and more people across the world to ditch the typical nine-to-five for a new kind of career.
In fact, it’s estimated that nearly 15 million Americans are currently self-employed.
There are countless benefits that come along with this kind of work. However, there are some drawbacks as well. One of those things is proving income when it comes to applying for loans, mortgages, or housing.
Luckily, there are ways to generate a self-employed pay stub to help you move forward in the future. Let’s jump right in and show you how you can get started!
Why Do I Need a Pay Stub?
You may be wondering why you would need to create a pay stub for your self-employed income. The answer is that there are many reasons.
One of the biggest, which we mentioned before, is to prove income when applying for loans and mortgages. When you go to apply to purchase a home, the bank is going to require pay stubs from the last couple of years.
The goal of this is to provide concrete evidence that you have carried a job for a while and that you receive a regular and sufficient income.
Without this, the bank is unlikely to loan to you because they have no reason to believe you will pay them.
Another important reason to use pay stubs for your business is to keep yourself compliant with taxes. As a self-employed worker, you are responsible for keeping track of and paying your income tax throughout the year.
Taking the taxes out in your pay and proving that via pay stubs is a great way to do that properly.
Creating quality pay stubs are super important for many of life’s big steps and getting started as soon as possible is necessary for this.
How to Generate a Self-Employed Pay Stub
There are a few different ways that you can get pay stubs.
You could create them yourself, work through a payroll company, or use a paystub generator. Whichever you choose will determine how the process works.
Regardless of your method, there are a few steps you need to take in order to get the ball rolling:
- Determine your pay periods- are you going to pay yourself weekly? Monthly? Bi-weekly? This needs to be established beforehand.
- Define your rate of pay- will you be earning a salary or an hourly rate?
- Estimate your tax withholding- you need to determine what bracket you are in and how much taxes need to be withheld each paycheck.
Once you have figured these things out, you can either give this information to your payroll professional or enter the data into your pay stub generation software.
What you will receive is an official form detailing that you are paying taxes and receiving at least a somewhat regular paycheck. This will open the door for financial decisions in the future.
Get Started Today
Being your own boss is a rewarding way to earn a living, and being able to prove your income with a self-employed pay stub is an important step.
For more great information to help you on your financial journey, whether you are self-employed or not, check out our toolkit! We’ll see you there.