Self-Employed, Gig and Seller Math

Working for yourself changes what a dollar of revenue is worth. Nobody withholds tax from it, platform fees and costs come off before you see a profit, and the price you set has to cover your time as well as your materials. The mistakes that hurt most are arithmetic ones: setting aside a percentage of receipts instead of net profit, adding a margin target to cost as if it were a markup, or counting a discount as a small thing.

The guides in this topic work those problems with stated inputs. One shows how much federal tax a US 1099 worker should set aside at every level from $20,000 to $150,000 of net profit, with the self-employment tax, the qualified business income deduction and the estimated-tax due dates. Another gives the full markup and margin conversion tables, the effect of discounts and fees, and the spreadsheet formulas for pricing.

A practical order of work: estimate the net profit for the year first, because every percentage in these guides applies to profit and not to receipts. Then price from landed cost and a target margin that already includes fees, check what a planned discount does to that margin, and set aside tax at the share that matches your profit level. Revisit the estimate each quarter, since both the tax share and the margin move with volume.

The calculators listed below handle the specific platforms and cases: freelance rates, Etsy and eBay fees, rideshare take-home, Amazon FBA and break-even. Each states its assumptions. Tax figures in the guides come from the IRS and the CRA and are dated where they are used.

More guides are planned for this topic, including a Canadian version of the tax set-aside question. Tell us which seller or self-employment question you want worked through next using the suggestion form.

All guides are educational estimates, not personal advice. How figures are checked and dated is explained in the methodology, and the full list of guides is on the guides and hubs page.