Vocations · Professional Development · Freelancing

Billed is not
earned.

Type what came in and what went out. The calculator separates job costs from running costs, estimates self-employment tax and shows what your hours really paid.

The freelance profit margin calculator

The worked example is six months of freelance illustration. Nothing you type leaves this browser.

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What you get

Vocations · Professional DevelopmentFree

What you finish with
Gross and net profit margin, a self-employment tax estimate, an income tax set-aside, take-home pay and the hourly figure, with a table from revenue to take-home. It prints as a summary for your records.
Who it is for
Freelancers and independent contractors checking whether their prices work, and adults with a side business who want to see the profit, not just the sales.
Format
Browser calculator for a phone, tablet or computer, by touch or keyboard. Prints a summary; downloads a spreadsheet (.csv); export and import a file.
Access
Free. No account, no sign-in and nothing to install. Everything you type stays in this browser; nothing is sent to Caveat.
Where it lives
The Professional Development space in Caveat Vocations.
Support
Questions, a correction or a request: team@caveatacademic.com.

How to use it

  1. Pick one period for every figure.
  2. Type the revenue collected.
  3. Count every hour, billed or not.
  4. Mark each cost direct or overhead.
  5. Set aside the tax figure.

Work out my margin

How the margins and tax are worked out

Two margins, then the federal self-employment tax on what is left.

The worked example: illustration work, January to JuneRevenue$38,400six monthsGross profit$35,350less direct costsNet profit$32,610less overheadTake-home$24,741less SE tax, set-asideThe worked example: illustration work, January to JuneRevenue$38,400six monthsGross profit$35,350less direct costsNet profit$32,610less overheadTake-home$24,741less SE tax, set-aside
Each step takes off one layer of cost; the margins are each line divided by revenue.

Gross and net

Gross margin shows whether each job is priced well: revenue less the costs that job caused. Net margin shows whether the business is: it also subtracts the costs you pay whatever the work, such as software, a website and a share of home rent.

Self-employment tax

A freelancer pays both halves of Social Security and Medicare. The IRS figure is 15.3 percent of 92.35 percent of net earnings: 12.4 percent for Social Security up to the year’s wage base and 2.9 percent for Medicare on all of it. Under $400 of net earnings there is none. High earners also owe a 0.9 percent Additional Medicare Tax, which this page does not add.

Sources

  1. Internal Revenue Service. Schedule SE (Form 1040), Self-Employment Tax, and its instructions (irs.gov).
  2. Internal Revenue Service. Publication 334, Tax Guide for Small Business (irs.gov).
  3. Social Security Administration. Contribution and benefit base (ssa.gov/oact/cola/cbb.html).
  4. Internal Revenue Service. Estimated taxes and Form 1040-ES (irs.gov).

This is an estimate for planning, not tax advice; it leaves out the Additional Medicare Tax, credits and state rules. Your entries stay in this browser. Support: team@caveatacademic.com.