You can have so much about per hour as a self -employed person (and why that is often disappointing) – The Happy Financial

You finally dragged in your first self-employed assignment. You agree an hourly rate of € 60 and you quickly calculate how much that is per week, per month. Nice amount! But as soon as you have to make your first VAT return or income tax, it appears that you have much less left than expected. What about that? In this article I explain how much you really have left per hour, including taxes, reservations and business costs.

Why your gross hourly rate is not your net profit

Many starting freelancers make the same mistake in the beginning: your hourly rate is just what you earn? Unfortunately. Your hourly rate is your turnover, not a profit. You still have to do that amount pay VAT” income tax pay, business costs pay and put money aside for disability and retirement.

What do you have from an hourly rate of € 60?

Let’s take a calculation example of an hourly rate of € 60 including VAT. Suppose you make an average of 20 declarable hours per week, that is € 1,200 sales per week or € 4,800 per month.

• Step 1: pay VAT
  You charge 21% VAT, but you pay it completely. Net then € 60 / 1.21 = € 49.59 remains.
• Step 2: Business costs
  Think of laptop, software, insurance, office. Suppose you spend an average of 15% of your turnover in costs: € 49.59 x 0.85 = € 42.15.
• Step 3: Set money for tax
  You pay income tax on your profit. Depending on your deductible items (such as self-employed allowance and SME profit exemption) you pay around 25-30%. Suppose you put 30% aside: € 42.15 x 0.7 = € 29.50.

Conclusion: Of an hourly rate of € 60, keep your net net € 29.50 per hour over.

Why starters often underestimate this

If you just start as an entrepreneur, you often look at the hourly rate of your last paid -upside job. For example, you received € 30 gross per hour there, so € 60 as a self -employed person seems like a logical doubling. But in paid employment, your taxes, pension, holiday pay and insurance were arranged. As a self -employed person you have to arrange and pay all this yourself.

How much do you have to ask as an hourly rate?

For example, if you want to have a net € 3,000 per month, you have to calculate that. If you want to have a net € 30 per hour, and take into account VAT, costs and taxes, then you quickly need an hourly rate of around € 60-65. But that is based on sufficient declarable hours. Many self -employed people declare less than 25 hours a week, because the rest are spent on administration, marketing or acquisition.

The power of a good reservation

The biggest mistake I see at starters? Don’t put money aside for taxes. As a result, they get a lot in the cross at the first attack. By automatically reserving money every month on a separate account, you prevent stress and you know exactly what you really have left per hour.

Tip: Use the template ‘Set aside for your tax’ to arrange this automatically and smartly. You enter your expected turnover and immediately see what percentage you have to put aside – tailored to your situation.

Checklist: This influences your net hourly rate

• Number of declarable hours per week
• Height of your hourly rate
• Your business costs (subscriptions, insurance, tools)
• Use of tax deductions (such as self -employed deduction)
• Whether you put money aside for taxes and other reservations

Make a realistic plan per hour

If you start as a self -employed person, it is tempting to keep your hourly rate low to get assignments. But if you finally only have € 25 per hour, you won’t last long. Calculate what you need in advance and build your rate from there.

With a tool such as the template ‘Set aside for your tax’ you know exactly how much you have to reserve every month and therefore how much you have net left per month and per hour.

In summary: what do you really have about per hour?

Your hourly rate may sound attractive, but after deduction of VAT, costs and taxes, less than half of them often remains. By calculating in advance, consciously reserving and adjusting your rate to this, you prevent surprises. This way you not only have more money left, but also more peace in your head.