Income verification of self-employed applicants

[Don Leggett]

Good afternoon,

We are looking for advice about how to go about verifying the income of possible tenants who are self-employed (they are a photographer and a painter).

Since they don`t have an "employer" in the traditional sense how would you verify their past (and chances for future) income?

Past clients would perhaps verify integrity and character but I wouldn`t think of them as possible sources for verification.

Do you ask for something from Revenue Canada?

Kind of stumped on this one so we`d appreciate any ideas.

Thanks a lot,
Don

 

[cberezowski]

Anyone who is self-employed should have, or could get, a letter from their accountant stating their income and circumstances; you could always request this letter.

 

[RedlineBrett]

QUOTE (DonLeggett @ Jan 30 2008, 04:54 PM) Good afternoon,

We are looking for advice about how to go about verifying the income of possible tenants who are self-employed (they are a photographer and a painter).

Since they don`t have an "employer" in the traditional sense how would you verify their past (and chances for future) income?

Past clients would perhaps verify integrity and character but I wouldn`t think of them as possible sources for verification.

Do you ask for something from Revenue Canada?

Kind of stumped on this one so we`d appreciate any ideas.

Thanks a lot,
Don

Ask for their NOAs (notice of assesment) from the CCRA- you wanna know if they`ve filed for taxes and if they owe any $ to the government. This will show how much income they reported the last time they filed.

 

[RobMacdonald]

Brett`s correct on this one. The Notice of Assessments will show you the Taxable Income and taxes payable. The income may not be relevant due to `creative acounting`, but the important things, which all the banks want to confirm is that the taxes are paid and up to date.

If you want to know the level of income, then you could ask for the Statement of Business Activities for sole propietorships or a copy of the financial statements if the are incorporated.

 

[markl]

For our rent to own people we sometimes ask for 12 months bank statements to verify deposits have been made.

Regards,

 

[Don Leggett]

Excellent advice. Thanks a lot.

We`ve in fact asked for their NOAs and/or a letter from their accountant stating income. The NOA is packed up in boxes and their uncle does their accounting.
And an added tidbit of info we learned as we asked them a few more questions was they won`t have much of a credit record because they are trying to live on cash.
The more we ask the more we learn!

Thanks again,
Don

 

[DennisEpp]

Hi Don and Julie. I live on cash too...I do not use that as an excuse to defend or alianate a potential business transaction, because that may all it is, an excuse. Even if they do not use a banking institution they may use a Payday loan company and have some sort of records as to income. Even income verification is not the real issue, credit history is. Maybe they may be able to produce paid receipts from a utility service provider. If you pay your utilities by cash, which is generally not done unless they physically go to their business address, they would mail a money order or draft. That is what I do and so have a receipt. Shows that I pay my bills. Pay your utilites and you generally show a good credit attitude.

Dennis Epp