Paid cash? If that’s the case, it’s probably hard to prove your income. To find out what you should know, click here today!
Many self-employed individuals are paid cash. Getting paid cash is beneficial in several ways, such as having your money handed to you right then and there, after completing a job. Although it’s nice to have cash in hand each day, there are a few drawbacks as well.
You could have a stable job with a steady income coming in each day or week. You could be paying off all your debt and paying your bills on time, but this doesn’t prove that you have income. When you decide you want that new car or want to purchase a home, you’ll need to show your lender proof of income.
This could be said for other scenarios as well, and the common way to show proof of income is to have your paystubs in hand. Without paystubs, though, how will you provide proof to lenders or others that you have a steady income?
Continue reading below for all the answers!
Create Your Own Receipts
You can purchase a receipt book and create your own receipts for each time you’re paid. When creating your own receipts, be sure to include all important information such as the payer’s name or business name, the date, the type of work done, and the amount paid.
Each time you’re paid, bring out your receipt book and create one. You can even ask the payer to provide a signature on the receipt for you, acknowledging that the correct amount is listed. Be sure to keep all of your receipts in a safe place like a binder where you can access them as needed.
Ask to Have Payments Written Down
Another way to prove income is to ask the payer to write down all of your payments. The payer can jot down the amount paid, their own name, your name, the date, and the type of work done.
When you decide you want that new car or want to purchase a home similar to apartments near Chicago, you’ll need to show your lender proof of income. The letter can state all the information needed and contact information for the payer as well.
If they refuse to do so, you can write down the information yourself in a notepad. Each time you’re paid, be sure to write the amount down for your own records.
Print out Bank Account Statements
Not everyone who’s paid in cash deposits their money into the bank. If you’re someone who does make these deposits, then you might be able to use your bank statements as proof. This method works best when you make consistent deposits into your account.
Depositing money every Friday, for example, would show that you’re paid every Friday and will show the amount as well. You can have your bank print out these statements for you. If you’re paid cash but through an online service such as PayPal, then you’ll have the option to print out a statement on there as well.
Use Your Tax Return Documents
Filing taxes as a self-employed individual is a more complicated process for you than it is for others, but it can still be done. Self-employed individuals should turn to an accountant to help them file their taxes. This ensures that everything is done correctly and no errors are made.
When you file your taxes, the IRS will give you tax forms. You can use your tax return documents to prove your income to others. Keep these documents for at least 3 years.
You should always have the past 3 years of tax documents in a safe place.
Build Your Own Pay Stub
When you’re not given a paystub by the person paying you, you can build your own pay stub template. Print the templates and then be sure to fill them out properly each time you’re paid. These pay stubs can be as detailed as you’d like, including all the important information about yourself, the person paying you, and the type of work done with the amount paid.
Do be sure to make copies of these pay stubs as well. You can then have a copy for your own records and a copy for anyone who might need your proof of income.
Fill out a Spreadsheet or Use Bookkeeping Software
Aside from creating your own pay stubs, you can also fill out your own spreadsheets or do paperwork in bookkeeping software. Choosing this route is sometimes more convenient because you’re able to record your payments through mobile apps.
You can choose a bookkeeping mobile app or a mobile app for creating spreadsheets. Each time you receive payment, be sure to open your apps and enter in all of the information that’s asked. These apps are made to make your record-keeping process as simple as possible.
When it comes time to show your proof, you’ll have everything there right in your hand.
Being Paid Cash Doesn’t Mean You Can’t Show Proof!
Getting paid cash rather than by check brings a bit more difficulties than you’d like, but there are ways to get around it. You can use all of these methods listed above to provide proof to someone who needs it.
Once you’ve been self-employed or have been paid cash for a few years, you’ll begin to get into the swing of things and have no problem providing proof of income!
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