Self-Employment Verification Letter (Free Templates & Guide)

A self-employment verification letter is a formally used document by self-employed individuals as proof of their earnings from self-employment.

A self-employment verification letter can be prepared by the self-employed individual or by a tax preparer.

It is primarily an official document to acknowledge your income, the profit you generate through your business and demonstrates your ability to repay any future loan.

Alternative names of a self-employment verification letter are:

  • Income Verification Letter for Self-Employment
  • Self-Employed Income Verification Letter

When Do You Need It?

The primary purpose of a self-employment verification letter is to prove to another party the self-employed individual’s financial ability when they are conducting transactions or entering into agreements that require periodic payments.

In that regard, a self-employment verification letter is used in the following situations:

  • Mortgage application
  • Proof of income to lenders (financial institution) when applying for loans
  • Verifying income and employment history to landlords when applying for a lease/tenancy
  • Job applications to illustrate employment history to potential employers
  • Visa Agency procedure
  • To prove your income when entering a hire purchase agreement.

A self-employment verification letter can also be used as proof of the employment history of an individual.

Key Components of the Letter

For a self-employment verification letter to effectively communicate the required information, certain components must be included.

These components are:

Business identity

The letter must identify the business venture of the individual through a detailed description. The description should contain information such as the official name of the business, nature/industry/sector of the business, jurisdiction, and the date of founding.

Valid business length

The letter should indicate the duration in which the subject has been operating the business. The length is a significant consideration of third parties and an indication of the sustainability of the business. 

Level of income

Annual and total gross income since the business initiated should be declared in the self-employment verification letter. This demonstrates the co-relationship of business stability and loan repayment conditions.

Tax obligations

The letter should clarify the tax obligation of the self-employed individual. Compliance with the IRS tax rules is crucial information to third-party lenders convincing them to believe in the credibility of your business venture.

Writing the Self-Employment Verification Letter

Coming up with an employment verification letter that effectively communicates one’s income and employment is usually a priority for individuals who intend to use it. This means careful preparation of the document is the key.

The steps given below can be employed in the writing process:

Choose the letterhead 

First and foremost, select the company/business letterhead and insert it in the document. A letterhead is an effective way to introduce the business to the reader officially. Letterheads create a more professional outlook which can be helpful for the intended purpose of the letter.

Begin with a strong introduction

A decent introduction can go a long way in the professional world. One should introduce themselves accordingly. Use a different introduction for each unique situation. Crafting an introduction that suits the situation and institution can facilitate the letter’s purpose in a great way. 

Name/address of business holder

Next, the self-employment verification letter should then indicate the name and the address of the business holder/service provider/employee. This is the individual whose income and self-employment status is being verified through the letter. Additionally, indicate the period for which the employment verification is meant. Finally, when indicating your business name, include information showing the type of business you are involved in.

Contact information 

Once the proprietor/business holder has been identified, contact information should be provided for communications purposes. The contact information given could be a phone number or email address. Contact information is essential in case the requestor would like to get in touch for further information. Note that the validity of a verification letter lasts for one or two months. Sometimes, this duration might involve contacting the individual to verify if the given information is still accurate or drastic changes occur in the person’s earnings. 

Name/address of business

Afterward, provide the business’ identification information. This includes the official name and address of the business/company.  

Address the requestor

The next step is to provide details about the requestor. The name and address of the requestor should be provided. One can address the direct recipient of the letter, such as the bank manager or landlord. An official salutation should then follow and the subject of the letter (optional).

Details of business venture/income

The next item on the letter is the main body where relevant details of the business are highlighted in an effort to prove one as the proprietor, and that one is earning enough income to be suitable for the transaction at hand. When discussing income, aspects such as sales, annual turnover, profit margins, and tax returns should be provided.

Break down the income into average earnings for the past six months since the exact figures are difficult to determine in self-employment. Most lenders will want to see a constant flow of income to be assured a self-employed individual can cater to monthly bills and loan repayments.

To further verify employment and support claims made in the letter, one can attach documents that prove the given information is valid.

Attached documents include:

  • Tax returns reports
  • Bank statements
  • The IRS Form 1099 Miscellaneous income – An IRS form meant for freelancers as a record of contractual jobs done for a given year.

Refer to quotations made in previously signed agreements and completed deals to further illustrate the earnings.

Signatures, date, stamp

Lastly, the verification letter should have the signature of the proprietor and the date of signing. In addition, an official stamp of the business venture should be provided. It presents the verification letter as an official document. A stamp is also taken as confirmation of the letter’s authenticity.

Self-Employment Verification Letter Template

[Company Letterhead]

[Name of proprietor/ business holder]

[Address of proprietor]

[Phone Number]

[Email]

[Business Name]

[Business Address]

[Date]

[Name of Requestor]

[Address of Requestor]

Dear [Mr/Mrs requestor’s last name or To Whom It May Concern]

RE: Self-Employment Verification Letter

I, name of business holder], the sole owner of [Name of Business venture], am writing this letter in response to your request. Kindly accept it as my employment verification letter.

I’ve been running the business for slightly over [Number of years/months] and have interacted with close to [market share/number of customers] in that period.

My yearly gross income is [Amount of annual revenue] with a profit margin of [Profit margin], which amounts to [Net profit].

I’ve attached relevant documentation such as bank statements and balance sheets as proof of the information provided in this letter. Also attached are my tax returns for the last three years.

My phone number is [phone number]. Do not hesitate to reach out.

Sincerely,

[Signature]

[Name of proprietor]

[Date]

Self-Employment Verification Letter Sample

RITCHIE AUTO MOTORS

Comfort and Class is a Priority

Matt Ritchie,

Proprietor – Ritchie Auto Motors

33rd Street.

Dallas, TX 45322

(+444) 777 2190

13th July 2021

Manager Harvey Wells,

Fairnet Microfinance,

320 Third Avenue.

Dallas, TX 33900

Dear Mr. Wells,

RE: Self-employment Verification

I, Matt Ritchie, owner of Ritchie Auto Motors, am writing this letter to verify my income to Fairnet microfinance as a request for a loan application.

I’ve been operating the business for 10 years and have served 10 000 satisfied customers during that period. I am the leader auto motors dealer in Dallas with a 30% market share.

I run the business venture with the help of 20 employees that result in a payroll amounting to $1 500 000. Last year alone, we made sales that generated over $9 000 000. Gross revenue we have managed to maintain for the last 5 years.

I have attached my payroll, bank statements, and tax file returns for the last 3 years.

Kindly do not hesitate to reach me at (+444) 777 291 for any queries.

Regards,

Matt Ritchie,

Proprietor – Ritchie Auto Motors

Free Downloads

Following are some free downloadable templates for you:

self-employment verification letter for unemployment

self employment verification letter template word

proof of income letter self-employed pdf

    Pro-tips

    To have a self-employment verification letter that addresses the requestor’s questions or concerns does not have to be intricate. There are several considerations, if taken into account when crafting the verification letter, that can help one to improve its efficiency.

    These include:

    • Honesty – Firstly, keep the letter as honest and factual as possible. Do not inflate or exaggerate figures. Information given in a verification letter has to be authenticated by the relevant authority; lying about earnings has severe legal consequences.
    • Attach supporting documentation – Providing supporting documentation/attachments such as bank statements and tax return forms goes a long way in proving the financial information provided is factual.
    • Remain relevant to the requestor’s requirements – Lastly, abide by the requestor’s requirements and provide information that is relevant to their request. Requestors will always be looking for specific information; ensure this is provided. 

    Frequently Asked Questions

    How do I get proof of self-employment?

    Tax returns, bank statements, wage statements, business accounts, and profit and loss statements are all documents that can be used as confirmation of self-employment and earnings of a self-employed individual.

    How do I know if I am self-employed?

    There are different ways one can become self-employed. For example, one can start their own business (entrepreneurship), be registered as a business owner, or inherit a business.

    What does a hard copy of an employment verification letter look like?

    An employment verification letter can be crafted in physical or soft copy. In hard copy, it is typically a printed document that shows the company’s letterhead and relevant earnings of a self-employed individual.

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