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“How much do you actually make?”
If you’re self-employed in the United States, you probably won’t blurt out an answer to this question right away. Not because you don’t know your business. And not because you suddenly forgot how math works.
You probably hesitate because your income doesn’t show up the way the question expects it to.
After all, there’s always a chance that you’ll finish a project in March, only to get a first glimpse at the money in April. You might send an invoice and wait thirty days. Or sixty.
Some months, a few payments hit your account all at once, and it feels busy. Other months are quieter, even though you’re still working just as much.
So when someone asks for a monthly number, it’s not obvious what they actually want you to say. Are you supposed to describe the last month? An average? A guess that sounds reasonable?
In today’s blog post, we’ll make monthly income calculations start to make sense for you if you work for yourself.
What People in the U.S. Usually Mean When They Ask
According to US Bank, when a bank, landlord, or government office asks about your monthly income, they’re not expecting an exact number. They know self-employed income doesn’t come in neat, even chunks.
What they really want to know is whether things generally work.
Can you pay rent or a mortgage without scrambling every month? Does money come in often enough to keep up with normal expenses? Even if some months are better than others, is there a steady rhythm to it overall?
Most lenders and landlords already understand that 1099 or freelance income goes up and down. That part usually isn’t a big deal. What they care about is whether it stays within a reasonable range and doesn’t swing all over the place for no clear reason.
Once you look at it that way, figuring out what to put down as your monthly income feels a lot less stressful. And a lot more manageable.
Start by Choosing a Time Frame
Before you touch a calculator, you have to decide exactly how far back you’re going to look at your income.
If your income has been pretty steady recently, six months is usually enough. However, if your work comes in waves or runs in longer projects, looking at a full year is better.
Whatever window you choose, don’t change it partway through. Once you start moving the range, the number you end up with gets harder to trust for a third party who needs to believe that you have a steady income stream. Especially if you’re using it for something serious, like an apartment application or a loan.
Gather All Gross Income First
Now look at your gross income. Gross income is just all the money your work brought in before taxes and other deductions happened to it. If you’re self-employed in the States, gross income usually means:
- ➡ client payments
- ➡ freelance or contract work
- ➡ consulting fees
- ➡ retainers
- ➡ whatever other business income landed under your name (often on a 1099)
Please don’t start subtracting expenses or taxes yet. That’s where people tend to overthink it and end up confusing themselves. At the end of the blog post, we’ll talk about the best ways to calculate taxes, so stay tuned!
Why One Month is Never Enough
It’s easy to look at last month and think, ‘That’s my income.’ But one month rarely gives the full picture. A busy month can make you seem like you’re earning more than usual, while slower months bring down the total. That’s why banks and lenders usually look at your income over several months, not just one. This helps smooth out the highs and lows, giving a more accurate view of your earnings.
Payment Timing Can Distort Income if You’re Not Careful
Payments don’t always line up with when you did the work. If you’re self-employed, you’ve probably noticed this. For example, you might finish a project in March, but the payment doesn’t show up until April. Or you get paid upfront for work spread across several weeks. Sometimes an old invoice gets paid just as you’re sending out new ones, making one month look bigger than it actually is.
If you only look at deposits, things can seem confusing. One month may look unusually high, while another looks unusually low. But neither really reflects the full picture.
You don’t need complicated accounting to sort this out. It’s mostly about how you think about your income. Instead of focusing only on when payments hit your account, try to connect them to when the work actually took place. Once you do that, things will usually make more sense.
Expenses Are Part of Earning Income
Gross income sounds great (it’s the number people love to talk about). But expenses, which often get ignored, are what make earning money possible.
If you run a business in the U.S., you know how quickly these costs add up. They’re the day-to-day things that keep your business running, like:
- ➡ software and subscriptions
- ➡ internet and phone bills
- ➡ tools or equipment
- ➡ insurance
- ➡ marketing or advertising
- ➡ professional services
- ➡ travel or mileage
Taxes Change the Picture Again, Especially in the U.S.
When you’ve had a W-2 job, taxes are taken care of automatically. You get paid, and taxes are already deducted before the money hits your account. But when you work for yourself, that safety net is gone.
A simple way to calculate taxes is by using a Paystub Generator. It’s a great tool for handling your income and taxes without needing to dig through forums for advice.
Since nothing is taken out automatically, it’s easy to think all the money in your account is yours, but it’s not. Many freelancers and small business owners set aside a portion of each payment (usually around 25-30%) to avoid tax surprises later.
It’s helpful to think of your income in two parts: the pre-tax amount, which shows how your business is doing, and the after-tax amount, which is what you actually get to live on. Only the after-tax number covers your bills.
Why Documentation Matters in the U.S.
At some point this month, someone will likely ask you to show your income. That’s when having clear documentation becomes much more important than just having a good explanation.
In practice, this usually means having things like:
- ➡ Invoices you’ve sent and been paid for
- ➡ Income summaries showing what you’ve earned over time
- ➡ Records of your expenses to explain your net income
- ➡ Payroll-style records, even if you don’t technically have a payroll
This is why many self-employed people use PaystubsCity. It helps turn uneven income into clear, payroll-style documents that landlords and lenders are familiar with. It makes things simpler and smoother when you need to show your income.
If you want to learn more, our blog breaks down income documentation in an easy-to-understand way for freelancers and small business owners in the U.S.
Final Thought
Trying to make self-employed income act like a regular paycheck only adds stress. Once you step back, stop fighting the numbers, and look at how the money actually comes in, things get easier. Start viewing your income as a whole – considering the good months, the slow months, and everything in between. This makes it much easier to manage.
