How the tax set-aside calculator works
When you work for yourself, nobody takes tax out of your pay, so the bill arrives later in one go. The calculator works out a monthly amount to save so it never catches you out:
Set aside each month = (income − business expenses) × your tax rate ÷ 12
- Use profit, not income. Tax is usually charged on what's left after allowable business expenses.
- Your tax rate should include income tax and any social contributions where you live. Many self-employed people set aside 20–30%.
- Save as you earn. Moving a fixed percentage of every payment into a separate savings account the day it arrives is the easiest way to stick to it.
A worked example
These are the numbers already in the calculator above:
| Item | Amount |
|---|---|
| Expected income this year | 30,000 |
| Business expenses | 5,000 |
| Taxable profit | 25,000 |
| Set aside for the year (25%) | 6,250 |
| Set aside each month | about 521 |
Tax rules are different in every country, so treat this as a savings target and confirm the real figure with your tax office or an accountant. This is not tax advice.
Keep your numbers in one place
The Small Business Starter Kit gives you invoice, quote and receipt templates plus an income tracker that totals your earnings, expenses and tax for you.
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