Self-Employed Income Calculator
Calculate your net income, taxes, and expenses as a self-employed professional
Office & Equipment
Professional Services
Income Summary
Tax Breakdown
Monthly Breakdown
Effective Hourly Rate
Understanding Self-Employed Income
How Self-Employed Income is Calculated
As a self-employed professional, your income calculation involves several components:
1. Gross Income
This is your total revenue before any deductions. It includes all payments from clients, projects, and services rendered.
2. Business Expenses
Deductible expenses that are necessary for running your business:
- Office Expenses: Rent, utilities, equipment, supplies
- Professional Fees: Accounting, legal, software subscriptions
- Marketing Costs: Advertising, website, business cards
- Travel & Meals: Business-related travel and client meetings
- Insurance: Professional liability, health insurance
3. Taxable Income
Calculated as: Gross Income - Business Expenses - Tax Deductions
4. Income Tax
Calculated based on the applicable tax slab rates in your country. Self-employed individuals typically pay:
- Income tax on profits
- Self-employment tax (if applicable)
- Quarterly estimated taxes
5. Net Income
Your take-home pay after all expenses and taxes: Gross Income - Expenses - Taxes
Key Considerations for Self-Employed Professionals
Tax Planning
Set aside 25-30% of income for taxes
Expense Tracking
Keep detailed records of all business expenses
Retirement Planning
Consider SEP IRA or Solo 401(k)
Health Insurance
Budget for self-paid health coverage
Frequently Asked Questions
You can deduct all ordinary and necessary business expenses, including:
- Home office expenses (if used exclusively for business)
- Equipment and software purchases
- Marketing and advertising costs
- Professional development and training
- Business travel and vehicle expenses
- Health insurance premiums
- Retirement plan contributions
To calculate your hourly rate:
- Determine your desired annual salary
- Add business expenses (25-40% of revenue)
- Add taxes (25-30% for self-employment)
- Divide by billable hours per year (usually 1000-1500)
Formula: (Desired Salary + Expenses + Taxes) ÷ Billable Hours = Hourly Rate
Self-employed individuals typically pay:
- Income Tax: On business profits at graduated rates
- Self-Employment Tax: Social Security and Medicare (15.3%)
- Estimated Taxes: Paid quarterly based on projected income
- State/Local Taxes: Varies by location
- Sales Tax: If selling products in certain states
As a general guideline:
- Beginner freelancers: Save 30-35% of income
- Established professionals: Save 25-30% of income
- High earners: Save 30-40% of income
Tip: Open a separate bank account for tax savings and transfer a percentage of each payment received.
Maintain these records for at least 3-7 years:
- Income Records: Invoices, payment receipts, bank statements
- Expense Receipts: All business purchase receipts
- Mileage Logs: Business travel records
- Home Office Records: Utility bills, rent/mortgage statements
- Asset Records: Equipment purchases and depreciation
- Tax Returns: Copies of filed returns