In case you are not organized, it can prove to be a daunting task in analyzing drawers filled with unfamiliar receipts, slips and documents. It can prove to be a difficult task in sorting these documents out. It is a long and tiring process that includes going through each document with proper care to establish the figures which are worth keeping.
Through the process of sorting the documents, it is common for people to get rid of important documents. In case you are planning to handle large purchases in the future, this is not a recommended means of handling business. These papers are important as proof of employment and income to the lender.
Still wondering why you should be up to date with these documents? Here are some reasons as to why you should keep up to day your pay stubs.
1. Proof of Income
When applying for a personal loan, there is the verification process which includes presentation of the relevant documents. Proof of income forms part of these requirements. In order to establish the extent to which the borrower can repay the loan, there is the need for presentation of all the formal documents that show proof of employment. The documents act as proof of income and are different dependent on the lender. Lenders have different requirements pertaining to showcasing proof of incomes. Other lenders require one pay stub which showcases your incomes while other needs several pay stubs.
2. Evidence of Employment
The proof of income is an essential element in establishing the trustworthiness of the borrower especially regarding in repayment of the loan. To establish a solid stream of income and a steady job, you need these documents as proof. For self-employed borrowers without a steady job, it is part of the requirements criteria to showcase the amount in the bank and salary earned each year.
3. Filing Income Tax
Paychecks for pay stubs are essential especially when filing for your annual income tax. The stubs can be used by the lender to establish the borrower’s total income and the payable amount of taxes and the related health benefits. Itemizing the taxes becomes far less easier when filing for returns.
4. Work Reference
There are other additional uses for the pay stubs apart from showing proof of income and employment. This can act as proof of the hours put in at work and the pay per period thus establishing the length of employment.