Self employment has unique rewards not found in any other career. It also has unique challenges. For example, if you are newly self-employed, you may have difficulty obtaining credit if you’re unable to prove your income. It’s not enough to have money in the bank. You have to prove where it came from and that it will continue to come in every month in an amount sufficient to make the payment on whatever it is you’re obtaining credit on.
The best way to do this is to keep impeccable records especially if your business is conducted online. For example, if you are paid through Paypal print out your monthly statements and any qualifying information. You’ll need to keep good records anyway for the IRS. However, the IRS is interested more in how much money you made and potential creditors are not only interested in the amount, but the source as well.
If you have already filed your income taxes since you’ve been self-employed, potential creditors will most likely take this into account. However, if much time has passed since the tax return was filed, they will still most likely request proof of the source of your income.
Even when you work for someone else and have check stubs to present, most potential creditors still verify your income by contacting your employer so if the information on your tax return is no longer correct, you’ll want to provide proof of the correct figures.
With so many people being self-employed today, it really isn’t very difficult to obtain credit unless your self-employment is very new. Keeping flawless records from the very beginning will save a lot of time and frustration when it is time to apply for a loan or credit.