Employment Verification for Self-Employment Applicants

Member since 2019 · 10 posts · 14 votes

I have a rental applicant that is self-employed. How do I conduct an employment/income verification for such an applicant? Do you amend you requirements for such applicants (I.e. higher security deposit, etc.)? What about asking for a co-signer?

3 Reply

478 views

12 Replies

Jump to latestLatest

Sort by

Sarah Jones
Specialist · Salt Lake City, UT · Member since 2026 · 15 posts · 2 votes
2mo
Great question, Daniel—self-employed verifications are common. I typically request two years of personal and business tax returns, plus a current P&L statement, then average the net income. Do you adjust your income calculation method for seasonal businesses, or stick with a 24-month average?
0 Reply
Daniel Curtin
OP
Member since 2019 · 10 posts · 14 votes
2mo
Hi Sarah,
This would be my first tenant on my first rental. I just finished rehabbing the property. I’m open to any and all suggestions.
Thanks

0 Reply
Marc Winter
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 3k+ votes
2mo
@Daniel Curtin, with self-employed applicants make sure to get 3 months bank statements--that will solidify whatever they put on their p&l.
0 Reply
Sarah Jones
Specialist · Salt Lake City, UT · Member since 2026 · 15 posts · 2 votes
2mo
Congrats on finishing your rehab—that's a huge milestone. For your first tenant, I'd suggest running a full credit/background check and calling every prior landlord, not just the most recent one. What's your current plan for handling maintenance requests and after-hours emergencies?
0 Reply
Daniel Curtin
OP
Member since 2019 · 10 posts · 14 votes
2mo
Thank you!
Someone also mentioned to me that it might be better to specifically ask for tax transcripts from the IRS website because the formatting is harder to falsify information. Have you heard of this before?
Thanks
0 Reply
Sarah Jones
Specialist · Salt Lake City, UT · Member since 2026 · 15 posts · 2 votes
2mo
Yes, that's excellent advice—IRS tax transcripts are much harder to alter than a standard tax return, so I always use them for self-employed applicants. I also cross-check the transcript totals against bank statements to catch any discrepancies. Do you typically request both the transcripts and the full return, or just the transcript alone?
0 Reply
Paul De Luca
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
2mo
@Daniel Curtin
Request bank statements and two years of tax returns. People can fake a P&L.
0 Reply
Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
2mo
Quote from @Daniel Curtin:

I have a rental applicant that is self-employed. How do I conduct an employment/income verification for such an applicant? Do you amend you requirements for such applicants (I.e. higher security deposit, etc.)? What about asking for a co-signer?
For self-employed applicants, I focus more on verifying consistent income than traditional employment. I’ll typically ask for recent bank statements, the last 1–2 years of tax returns, and sometimes a year-to-date profit and loss statement. I’d also verify that the business is legitimate and make sure the income shown actually supports your normal rent-to-income requirement. I personally wouldn’t automatically require a higher deposit just because someone is self-employed, and you’ll want to make sure whatever screening criteria you use are consistent and compliant with local laws. If they don’t meet your standard income requirement, a qualified co-signer or guarantor can be an option if your written screening policy allows it. The biggest thing is having clear criteria upfront and applying the same standards consistently rather than changing them applicant by applicant. Happy to connect and answer any questions you have!
[email protected]614-300-7535
Jimmy Lieu, Red 1 Realty4.9124 Reviews
Website View Page
0 Reply
Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
2mo
For "self employed" applicants, BE SURE you don't fall for the old "Here's my bank statement...see, I make $4K per month!"...but, what is the Cost of Goods Sold? It's NOT just about income!
I always requested prior year(s) tax return...completed by a legit, verifiable third party.
Also, be sure you they have personal liability for the agreement. Some will want it "in the company name, for tax purposes". BUT, when the "company" files bankruptcy, YOU end up losing months of income and legal expenses evicting them.
0 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
2mo
Quote from @Daniel Curtin:

I have a rental applicant that is self-employed. How do I conduct an employment/income verification for such an applicant? Do you amend you requirements for such applicants (I.e. higher security deposit, etc.)? What about asking for a co-signer?

Very few applicants are going to provide you with 2 years of tax returns and a current year P&L!
That's what a mortgage lender would ask for😁
The background check should dictate how much you ask for - the higher the SUPPORTED FICO score the less info you really need.
Supported FICO: a lot of applicants are using Chime & similar accounts to FLUFF their scores when they really aren't credit accounts.
You should be looking for a "deep" credit history to support the score. We recommend minimum:
- 2 accounts at least 24 months of history of on-time payments
- Another 2 at least 12 months
NOTE: they don't have to be active, but they do need to be within the last 12-24 months.
If score high enough, you can just ask for last year's 1040's, with Schedule C (self-employment income)
We always get a bank statement, but for self-employed we often ask for 3 months and study for consistent monthly deposit amounts.
COMMON CHALLENGES:
1) They haven't filed last year's tax returns yet => ask for at least 6 months of bank statements and average out the monthly deposits.
2) Tax returns show a lot of depreciation write-offs => add back as just a paper loss.
3) Tax returns show vehicle expenses => can usually add back as most filers exaggerate their auto write-offs.
4) They have business & personal bank accounts => get at least 3 months of both and look for signs they are stripping the company account to make their personal look better.
5) Google the business to confirm if it exists. Use Google Streetview to virtually drive by any office address and see if it "fits" the business.
- Once had an applicant that used a mobile home address for their "multi-million" dollar construction company.
6) To "scare" them from giving you "incorrect" tax returns, require them to sign an IRS From 4506 or 8821. Look them up to see what they are😎
[email protected]248-209-6824
Logical Property Management4.9462 Reviews
Website View Page
0 Reply
Adam S.
Member since 2026 · 72 posts · 30 votes
2mo
Quote from @Daniel Curtin:

I have a rental applicant that is self-employed. How do I conduct an employment/income verification for such an applicant? Do you amend you requirements for such applicants (I.e. higher security deposit, etc.)? What about asking for a co-signer?

We use RentSpree. For self-employed or gig works, we request 2 years of tax returns and copies of their 1099's.
0 Reply
Gladimir Lobo
Real Estate Broker · Cleveland, OH · Member since 2023 · 251 posts · 85 votes
2mo
Man, that’s some good stuff here.

Tax returns, if they’re available. I think the P&L is a stretch. Even real estate investors can furnish a P&L, so good luck getting a self-employed individual to provide one. It doesn’t mean squat.

But let’s focus on what this is really about: their ability to pay rent.

Once you get past the basic screening/background/credit check/rental history/evictions, it really boils down to this:

Can they afford the rent?
Do they have the income?

Is the income consistent enough?

Do they have the resources to make it happen?

That should be the main focus.

If there’s doubt about consistency, then you can lean into things like increasing the deposit. Another very good option is a co-signer. A solid co-signer can bypass a lot of the concerns you may have.

But you have to think of it this way: the co-signer has to be financially responsible where they live now, especially if they’re not occupying the property, and they also have to be able to financially support this property if the tenant can’t follow through.

And if everything falls apart, you now have two parties to pursue instead of one.

So the focus is really on the ability to pay.

Everything else is performative.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.