If you’re self-employed—whether a freelancer, contractor, or one of many sole proprietors—you’ve probably been asked to “prove” your income. That’s straightforward for W-2 employees, but trickier when your revenue fluctuates and your tax returns are packed with business expenses. This is where a CPA letter for self-employment proof shines. It translates your records into a short, credible statement a lender, landlord, or underwriter can trust.
What Is a CPA Letter and Why It Matters
A precise third-party verification from a licensed professional
A CPA (Certified Public Accountant) prepares a signed statement—on firm letterhead—confirming aspects of your self employment: how long you’ve operated, what you do, and what your income looks like based on verifiable documents such as financial statements, cash flow statements, balance sheets, bank statements, and filed tax returns with the IRS.
What it isn’t
A CPA letter is not an audit or a guarantee of repayment. It’s a targeted verification document. The CPA discloses the scope and limitations to maintain compliance, accuracy, and professional ethics.
Who Asks for a CPA Letter—and When?
Common requestors and scenarios
- Mortgage lenders and underwriters for a home loan, mortgage loans, or refinancing
- Landlords screening applicants without conventional pay stubs
- Banks and a money lender reviewing a small-business loan or line of credit
- Credit committees checking credibility, assets, and income consistency
Why they want it
Underwriting teams need to reconcile the story your numbers tell: reported income vs. cash activity, debts vs. capacity, and whether your financial reporting supports what you put on the loan application. A CPA letter gives them a concise, standardized view.
How a CPA Letter Supports Mortgage Approval
The bridge for self-employed borrowers
For a CPA letter for self-employed mortgage, lenders care about durability of earnings, not just one big year. Expect them to review:
- Two years of tax returns (business and personal if pass-through)
- Year-to-date profit and loss accounts, balance sheets, and cash flow statements
- Several months of bank statements to show inflows/outflows and reserves
- Evidence of assets for reserves and down payment requirements
- Your credit profile and existing debts
Standards and frameworks matter
CPAs reference U.S. GAAP by default. If relevant—for cross-border groups or certain consolidations—your letter may reference International Financial Reporting Standards. Clear accounting context improves lender comfort.
What Underwriters Look For (and How to Meet It)
The underwriting lens
- Continuity of operations: Time in business and steady client base.
- Consistency: Do financial statements align with bank statements and the IRS?
- Capacity: Post-expense cash flow that supports the proposed payment plus reserves.
- Character & credibility: Professional presentation, responsive documentation, and a reputable CPA firm.
Make their job easy
- Label documents clearly and match entity legal names to your application.
- Explain seasonality or one-time items (e.g., equipment sales, unusual expenses).
- Provide the recipient’s exact name and address to your CPA for the letter.
Documents to Gather Before You Ask Your CPA
Your core package
- Two most recent filed tax returns (with all schedules)
- YTD profit and loss accounts, balance sheets, and cash flow statements
- Most recent 2–6 months of bank statements (operating and savings)
- Ownership evidence (articles, EIN letter, partnership or LLC agreement)
- A short summary of major clients, recurring contracts, or pipeline
Pro tips for smooth review
- Consistency first: Reconcile books to returns before requesting the letter.
- Context helps: Briefly note seasonality or contract renewals your CPA can reference.
- Right recipient: Specify the lenders or landlords (and the mortgage program if applicable).
How to Request the Letter (Step by Step)
A simple process that saves time
- Engage a licensed CPA experienced with mortgage documentation.
- State the purpose clearly—e.g., “CPA letter for self-employment proof,” or “CPA letter for self-employed mortgage (purchase/refi).”
- Send the full package up front: returns, YTD financial statements, and bank statements.
- Confirm the period to verify (last two tax years + YTD through a specific month).
- Align on framework (GAAP; International Financial Reporting Standards if pertinent).
- Review the draft for names, numbers, and recipient details.
- Deliver securely—often directly from the CPA to the lender or landlord.
Fees and timelines
Costs depend on complexity. If bookkeeping cleanup is needed to ensure accuracy and compliance, expect additional work before the CPA will sign.
What the Letter Should Include
Essential components
- CPA identity & credentials on firm letterhead (license, address, contacts)
- Borrower and business details (legal names, nature of operations, ownership)
- Income basis: The documents reviewed (returns, YTD financial statements, bank statements)
- Time in business and any significant changes
- Purpose and recipient (purchase, refinancing, lease)
- Scope & limitations to avoid implying assurance beyond the engagement
Helpful clarifications
- Notes on revenue consistency, client concentration, or seasonality
- Explanations of large, non-recurring items
- Statement referencing GAAP or International Financial Reporting Standards, as applicable
Sample Outline: CPA Letter for Self-Employment Proof
Draft language you can hand to your CPA
[CPA Firm Letterhead]
Date: [Month Day, Year]
To: [Mortgage Lender / Underwriter / Landlord Name and Address]
Re: CPA letter for self-employment proof — [Borrower’s Full Name, Business Name]
I am a Certified Public Accountant licensed in [State]. Our firm provides accounting and tax services to [Business Name], owned by [Borrower’s Name], since [Year].
Based on our preparation/review of tax returns for [Years], and our review of year-to-date financial statements (profit and loss accounts, balance sheets, and cash flow statements) through [As-of Date], as well as recent bank statements, the business reported approximate net income of $[X] (20XX) and $[Y] (20XX). Year-to-date results are generally consistent with prior periods, subject to normal business fluctuations.
This letter is provided at the request of [Borrower’s Name] to assist [Recipient] in evaluating a mortgage/mortgage loans/home loan (or lease/credit) application. It is not an audit, review, or examination, and we express no opinion or assurance beyond the information presented. Figures are presented in accordance with [GAAP/International Financial Reporting Standards], as applicable.
[CPA Name], CPA
[CPA Firm Name] | License [####] | [Address] | [Email/Phone]
For mortgage use
If the purpose is a home purchase or refinancing, ask your CPA to title or reference: “CPA letter for self-employed mortgage” to match lender conditions.
Common Pitfalls and How to Avoid Them
Inconsistent data across documents
Underwriters will match your letter to IRS filings and bank statements. Mismatches cause delays.
Fix
Reconcile books first; let your CPA explain any timing differences or one-time items.
Over-promising in the letter
A CPA letter that implies a guarantee can backfire and jeopardize credibility.
Fix
Ensure a clear “scope and limitations” section. The letter supports verification, not approval.
Thin reserves or high debts
Even strong income can be offset by debts or insufficient reserves.
Fix
Document liquid assets and expected down payment. Ask your lender about program-specific reserve rules.