What is necessary to evidence self-employment for a borrower?

To evidence self-employment for a borrower, providing tax returns for the past two years is essential. Tax returns serve as a formal record of income generated by the borrower's business activities. They typically include documentation of income, profit and loss statements, and other financial details that reflect the borrower's self-employment status. Lenders use tax returns to assess not only the stability and consistency of the borrower's income but also their overall ability to repay the loan.

While other documents like a social security card or a letter from an employer may provide some identification or confirm a job, they do not substantiate self-employment specifically. A utility bill in the borrower's name can demonstrate residency or identity, but it lacks any information about the borrower's earnings or business operations. Thus, tax returns are the definitive means of proving self-employment for lending purposes.