Self-employed people who need to provide income verification to a bank should provide the lending institution with copies of both their business and personal income taxes for the year. Income tax returns may not accurately reflect the actual income, however, due to the deductions owning a business provides.
Getting a loan when self-employed is often more difficult than it is for a borrower who can bring in pay stubs and tax returns that provide an accurate reflection of his income earned by working for a company. The self-employed borrower can improve his standing by taking some time to prepare before he applies for the loan. Skipping some of the tax deductions for which he qualifies and paying a few more dollars in taxes allows the borrower's tax forms to show a higher income. The amount of money the bank is willing to loan may increase as a result.
Self-employed applicants can also improve their standing by ensuring that personal and business finances are separate. For instance, when buying a computer for business, a self-employed person should use a business card and not a personal one. The credit card debt then belongs to the business and no longer counts in the borrower's debt-to-income ratio.