A payment of €3,000 lands and for a moment you feel fine. Then you think about taxes, about the costs still to come, and the feeling drains away. That is normal: the number you see in your account is not what you keep. Understanding that gap is the single most useful thing you can do to sleep well while working for yourself.
In this guide we walk the chain from revenue to take-home, with a simple example. You will not find exact tax percentages here, and there is a reason: the rules differ from country to country and change over time. What you get instead is the method for estimating, so you always know how much to put away.
Revenue, costs, what you owe: the chain to take-home
Picture four steps. At the top sits revenue: everything you collect from clients. It looks like your wealth, but it is only the starting point. From there you go down.
- Revenue — everything you collect from clients.
- Minus costs — everything you spend to do the work: tools, materials, software, travel, help from other people.
- Minus taxes and mandatory contributions — the share that leaves for the state and for whatever retirement or social scheme you are required to pay into.
- Equals take-home — what is genuinely yours, to spend or to save.
People who confuse the first step with the last one get hurt: they spend as if the whole revenue were theirs, and then the bill arrives with no money set aside to cover it. If you want to go deeper on that step, we cover it here: the difference between revenue and profit.
Gross vs take-home: why your bank balance misleads you
Gross is the full figure, before anything comes off. Your take-home is what remains at the end. The problem is psychological: you watch the gross figure arrive and your brain files it as yours. But part of that money is already promised elsewhere — to a supplier, to the state, to a contribution scheme.
The practical rule is simple: treat your main account as a transit account, not as your piggy bank. Every time you get paid, a slice goes aside immediately, before you even start thinking about how to spend it.
An example with simple numbers
Let us make it concrete. In one month you collect €4,000 in revenue. To do the work you spent €1,000 across software, materials and a bit of outside help. So your profit, before anything you owe, is:
- €4,000 of revenue minus €1,000 of costs = €3,000 of gross profit.
On that €3,000 you still owe taxes and contributions. The exact percentages depend on where you are and how you are set up, so I am not going to invent them: you settle those with an accountant. But to show the method, assume prudently that you need to set aside one third of your profit. One third of €3,000 is €1,000 to put away. That would leave you €2,000 of take-home.
Careful: one third is only an example number to show the reasoning, not your real rate. The right share for you may be quite different. What matters is the mechanism: first you take out costs, then you set aside a share for what you owe, and only the rest is yours.
The tax pot: setting money aside before you need it
Here is the habit that separates people who work for themselves calmly from people who panic at every deadline: the tax pot. It works like this: you open a second account, used for nothing but what you owe. Every time you get paid, you move a fixed share there the same day, before you touch the rest.
- One account for what you owe, separate from the one you live on and the one you run the business from.
- A fixed percentage of every payment, agreed with your accountant.
- Move it immediately: you set it aside the moment the client pays, not at the end of the year.
That way, when the deadline arrives, the money is already there. You are not taking anything away from your standard of living: you are simply not spending money that was never yours.
How much to set aside without inventing percentages
The right question is not what the exact rate is, but what prudent share to put away until you have the official figure. The practical method is this:
- Start from a prudent estimate agreed with an accountant who knows the rules where you are.
- Always set aside a little more than the minimum: if it is too much, it is a cushion; if it is too little, it is trouble.
- After your first full filing, recalibrate: look at what you actually paid and adjust the percentage for the year ahead.
Tax rules and thresholds change over time and differ by country, so the precise figures always need checking with whoever handles your books. The method, on the other hand, holds anywhere: estimate prudently, set aside immediately, recalibrate with real data.
Your take-home also depends on the price you charge
One last point many people forget: if your take-home is too low, the problem may sit further upstream, in the price you charge. If you price as though revenue were all profit, you end up working a lot to keep very little. A good price already carries your costs, what you owe, and your margin on top. We cover it here: how to set the right price.
Knowing what you actually keep is not a once-a-year calculation: it is a number to keep an eye on month after month. That is where an advisor who stays with you over time makes the difference. Vanteo keeps count with you: it tracks what you take in and what you spend, tells you what you are really earning and how much is worth setting aside, and reminds you of the habits that stop the nasty surprises. The precise tax figures you confirm with an accountant where you are; the method and the consistency to apply them, Vanteo holds for you. And if you want to start from the basics, read the difference between revenue and profit and how to set the right price.