Simple bookkeeping comes down to four lists kept up to date: what you invoiced and when it was paid, what you spent and on what, the business miles you drove, and a monthly total of all three. This page walks through January and February for an example freelance designer. The numbers are examples, and this is record-keeping, not tax advice.
1. Income: count it when it is paid
| Invoice | Paid on | Amount |
|---|---|---|
| Harbor Bakery, logo (Jan 8) | Jan 15 | $650 |
| Kim Dental, website (Jan 20) | Feb 3 | $1,200 |
| Harbor Bakery, menu (Feb 10) | Feb 12 | $380 |
| Lane Realty, brochure (Feb 25) | Not yet | $900 |
Received: January $650, February $1,200 + $380 = $1,580. Still owed: $900.
The Kim Dental invoice was sent in January but paid in February, so it counts as February income. Keeping the paid date separate from the invoice date is what makes the "still owed" number possible.
2. Expenses: one row per receipt, with a category
| Receipt | Category | Amount |
|---|---|---|
| Jan 3, Adobe | Software and subscriptions | $59.99 |
| Jan 9, Staples | Office expense | $42.18 |
| Jan 15, Stripe fees | Bank and payment fees | $19.15 |
| Jan 28, Meta ads | Advertising | $120.00 |
| Feb 2, Next Insurance | Insurance | $38.00 |
| Feb 12, Stripe fees | Bank and payment fees | $11.32 |
January $241.32, February $49.32.
Each category in our spreadsheet is matched to a line on Schedule C (for example Advertising is Line 8 and Office expense is Line 18), so the year's totals line up with the form when you or your accountant fill it in.
3. Mileage
Two business trips: 18.4 miles in January and 9.6 miles in February. At the 2026 IRS standard rate of 72.5 cents a mile, that is 18.4 × $0.725 = $13.34 and 9.6 × $0.725 = $6.96. Check the current rate each year, and use either mileage or actual car costs for a vehicle, not both.
4. The monthly total and what to set aside
| Month | Received | Expenses | Mileage | Profit |
|---|---|---|---|---|
| January | $650.00 | $241.32 | $13.34 | $395.34 |
| February | $1,580.00 | $49.32 | $6.96 | $1,523.72 |
If you choose to set aside 25% of profit: January $98.84, February $380.93.
The 25% is the example share this business chose, not a tax calculation. What you owe depends on your situation; ask a tax professional what share makes sense for you.
Do it in a spreadsheet
Our Small Business Bookkeeping Spreadsheet does these steps in Google Sheets or Excel: income with Paid or Owed, expenses in 20 categories each matched to a Schedule C line, a mileage log, the monthly profit and set-aside, and a year summary. The example on this page is its sample copy.
See the Small Business Bookkeeping Spreadsheet, $7Record-keeping tool, not tax, legal or accounting advice.
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