If you run your own business, your financial story lives in tax returns, bank statements, and year-to-date financial statements—not neat pay stubs. When a lender, landlord, or claims adjuster asks for proof of income, a clean, credible letter from your CPA can save everyone time. This guide includes a ready-to-use Sample CPA letter for self-employed clients, plus a practical checklist and formatting tips so your submission lands right the first time.
Why a CPA Letter Matters
A short, trusted verification
A CPA letter is a concise, third-party verification of your self-employment status, time in business, and income figures derived from objective sources: filed tax return data, YTD financial statements (P&L, balance sheets, cash flow statements), and supporting bank statements. Decision-makers lean on it to assess creditworthiness and basic compliance with tax law and standard accounting practices.
Who typically requests it
- Lenders evaluating a loan, home loan, home mortgage, or refinancing
- Landlords seeking income proof when tenants don’t have W-2 payroll
- Insurers reviewing lost-income insurance claims
- Programs or partners performing background and document checks in lending contexts
Quick note: A CPA letter is not audited financials and doesn’t guarantee approval. It’s a carefully scoped summary in plain English.
What Underwriters and Reviewers Look For
The three C’s: credibility, consistency, clarity
- Credibility: Issued by a licensed Certified Public Accountant on firm letterhead with a dated signature (wet or qualified digital).
- Consistency: Figures reconcile to filed IRS returns and current financial reporting; cash activity aligns with bank statements.
- Clarity: The purpose, period covered, and scope limitations are unmistakable.
Frameworks and terminology
Most U.S. small businesses report under GAAP. If your books reference International Financial Reporting Standards, have your CPA say so. Clear labeling reduces questions during underwriting.
Essential Elements: CPA Letter Format for Self-Employed
A well-structured CPA letter format for self-employed clients generally includes:
1) Identity & Letterhead
- CPA firm name, address, license/registration, contact info
- Date issued, recipient’s name and organization (or “To Whom It May Concern”)
Tip
Export to PDF with embedded fonts; avoid editable formats for official submissions.
2) Client & Business Details
- Legal name, entity type (e.g., sole proprietors, LLC), ownership percentage
- Years in operation and nature of services/products
3) Basis of Verification
- Documents reviewed: last two tax returns, YTD financial statements (P&L, balance sheets, cash flow statements), and recent bank statements
- Notes on bookkeeping assumptions (e.g., compiled from client records)
4) Income Summary & Context
- Approximate net income by year and year-to-date
- Context for big swings (seasonality, deductible expenses, depreciation, unusual business expenses)
5) Purpose, Scope & Limitations
- The letter is for lending, leasing, or claims review; it is not an audit, review, or examination
- No assurance beyond the stated information; references to GAAP/International Financial Reporting Standards as applicable
- Optional: firm carries professional liability/errors and omissions coverage
6) Signature Block
- CPA’s printed name, credential, firm name, license number, and signature
Free Template: Copy, Paste, Customize
Share this exact wording with your CPA as a starting point. They’ll tailor it to your engagement, documents, and recipient requirements.
Self-Employed Income Verification — CPA Letter
[CPA FIRM LETTERHEAD]
[Street Address • City, State ZIP • Phone • Email • License/Registration No.]
Date: [Month Day, Year]
To: [Recipient Name / Organization]
Re: Self-Employed Income Verification — [Client Full Name / Entity Legal Name]
I am a Certified Public Accountant licensed in [State/Jurisdiction]. Our firm has provided accounting and tax services to
[Entity Legal Name], a [entity type; e.g., sole proprietorship/LLC] owned by [Owner Name], since [Year].
Basis of Verification
We reviewed the following in connection with this letter:
- Filed federal and state tax returns for [Tax Years: 20XX–20XY] (including relevant schedules),
- Year-to-date financial statements (profit and loss, balance sheet, and cash flow statement) through [As-of Date], and
- Selected bank statements for [Months/Periods] to corroborate activity.
Figures are presented in accordance with [U.S. GAAP / International Financial Reporting Standards], as applicable.
Income Summary (Historical and YTD)
Based on the documents noted above, [Entity/Client] reported approximate net income of $[X] in [20XX] and $[Y] in [20XY].
Year-to-date results through [As-of Date] are generally consistent with prior periods, subject to normal business fluctuations,
timing of receivables, deductible expenses (including depreciation), and other ordinary business expenses.
Purpose, Scope, and Limitations
This letter is provided at the request of [Client Name] solely to assist [Recipient] in evaluating [purpose: loan application,
home loan/home mortgage, refinancing, leasing decision, insurance claim, or other]. This is not an audit, review, or examination,
and we express no opinion or assurance beyond the information presented herein. Our professional services are subject to applicable
ethical and professional standards, and our firm maintains errors and omissions (professional liability) insurance.
Sincerely,
[CPA Name], CPA
[CPA Firm Name]
License/Registration: [####]
[Address] • [Email] • [Phone]
Landlord-friendly caption
If the recipient is a property manager, ask your CPA to add a subject line such as: “Income Verification for Residential Tenancy (Self-Employed Applicant).” Many landlords accept a one-page CPA letter in lieu of extensive document packets.
Preparing Your File: What to Send Your CPA
Core documentation checklist
- Two most recent tax returns (include all schedules)
- YTD financial statements: P&L, balance sheets, cash flow statements (export to PDF)
- Recent bank statements (2–6 months)
- Notes on major expenses, deductions, or one-time items (e.g., significant depreciation)
- If applicable: proof of entity setup, EIN, and ownership
Accuracy first
Confirm totals reconcile to filed returns with the IRS. If anything is pending (amendments or timing adjustments), tell your CPA before they draft.
Common Pitfalls
1) Mismatch between returns, books, and banks
Problem: Underwriters spot inconsistencies and slow the file.
Fix: Reconcile first; have your CPA briefly explain timing differences (e.g., late receivables).
2) Over-promising language
Problem: Wording reads like a guarantee or an attestation of future repayment.
Fix: Keep the scope tight; avoid “assurance” terms unless the engagement truly supports them.
3) Incomplete periods & unclear as-of dates
Problem: Reviewers can’t tell what timeframe numbers cover.
Fix: State “YTD through [As-of Date]” and list the tax years summarized.
4) Ignoring how deductions affect visible income
Problem: Heavy deductible expenses (e.g., accelerated depreciation) reduce taxable income that lenders see.
Fix: Ask your CPA to add context so reviewers understand normalized earnings vs. tax-minimizing strategies.
Fees, Timelines, and Delivery
What to expect
- Fees: Vary by complexity; if bookkeeping cleanup is needed, expect additional time and cost.
- Delivery: Most recipients accept a signed PDF. Some still prefer a wet-ink signature—confirm instructions.
- Follow-ups: Be ready for clarifying questions, especially in mortgage or refinancing reviews.
Keep your audit trail tidy
Save a dated copy of the letter, the packet you provided, and the exact PDF you sent. It speeds up re-requests during lending cycles.