Free Self-Employment Verification Letter Templates

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

Following are some free downloadable templates for you:

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.

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.

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.

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.