Self-employed I made $82,000 but how much did I really make?

Self-employed I made $82,455.35 last year, does it mean I made that too? TL;DR: No, much less (with an LLC filing as a sole proprietor).

Perhaps I’m just a very nosy person, but I’m always wondering how much other self-employed people make.

And after searching for several years with not a lot of luck, I’m writing the piece I wish I found with as many details as I wish others would share. Things like, how do self-employed people make money? Is it just one revenue stream or more? How much do people pay for taxes? What percentage of the money moves from the business account to a personal account?

Why? Because perhaps there are others like me curious (and nosy) about what it means financially to be self-employed. There are other meanings to self-employment like creativity, freedom, partnerships, networking and so forth but for this blog, we’re looking at it financially.

And hopefully, as I reflect on my process, it helps you in some ways. Whether you’re deciding on working for yourself or already do, this resource is for you.

Take your time reading it. It’s long. Perhaps save it for later, read a section, and then come back to it as you reflect on your own.

The Self-Employed Journey like a Spiritual Practice

Working for myself has shown me a type of discipline that I’ve only experienced in my yoga and mindfulness practice. Showing up consistently without instant gratification. The reality of owning a business or doing your own thing is, oftentimes, reaped years later.

Every year of my self-employed journey I’ve learned so much not only about running a business but also about myself.

I’ve been self-employed for about 5 years and I didn’t immediately make this amount of money in year 1. Or know any what it means to “run a business” or “pay myself.”

While my financial growth over the years isn’t astronomical amounts, I still see growth. But it’s not like those other articles I read that say things like, I grew my business to $10k months overnight.

Perhaps I wish I knew how to do that, but I just haven’t found that golden solution and don’t feel like paying those people to show me.

I’m incredibly proud of what I’ve created. Most of what I’ve learned about running my own business is self-taught, through various books, videos, and kinda being around other freelancers like joining Freelancing Females 2 years ago. It also allowed me to live an entire year nomadically while I lived in Mexico City and other places, you can read more about that here and here.  And while my undergraduate degree is in Business Management, I don’t recall learning anything practical for my day-to-day.

What does it mean to work for yourself?

Again there are many but for this blog, I’m thinking of the financial and business element. With that in mind I see two sides to working for yourself: on the one side, there’s business development. And on the other side, it’s the actual work itself.

This is personally one of the most challenging — to toggle between growing a business versus managing the projects/clients I’m working on. I’m not only running the sales, closing deals, and providing financial stability for myself but also outputting what needs to be done. And while there is a version of me that asks, “should I grow my business to hire more people?” I don’t have this big drive to hire people or to be accountable for other people’s income. I never want to say never, but at this point on my journey, that’s not where I’m going.

What is business development?

This is important, especially for some of us that create from a space of passion, you need to sustain yourself somehow. Unless you have an income source from something or someone else — how are you going to make money and thrive?

Business development is that part of growing your business, even marketing your business, learning new skills, gaining new clients, bringing in more revenue, developing your pricing strategy, invoicing, and any other administrative things.

The actual work is just that, whatever your services are. In my case, it’s consulting, coaching, and teaching.

Revenue Streams

When you work for yourself or own a business, you actually need various ways you bring in money.

Unlike when you work for a company and receive one paycheck, from my experience that’s actually not possible as a self-employed person. But creating different streams of income is also the most fun and freeing about working for yourself!

Below is a snapshot of my current business model and how I break up my revenue streams.

Revenue streams DOES NOT mean spreading yourself thin and just making money in any possible way. Revenue streams should be related in some ways. Keep in mind that these aren’t my “packages” or offerings. Within each category, there’s a structure to what I offer.

I see a lot of opportunity for improvement, and every year I say I want to create something that doesn’t involve me exchanging time for money like a book or a product — maybe I’ll finally get to that this year but for now all of my streams of income require me to “be there” or “do the thing.”

My revenue streams (aka my business model)

From highest to lowest revenue generators. For most of my offerings, I do not charge an hourly rate anymore. The hourly rate always ends up being too low. Even when I tried moving my hourly rate to the $100s. I’ve had more success with fixed project rates in the $1000s

  • Retainer: This is a monthly service I offer where I serve as Interim Marketing Director/Strategist for businesses.
  • Consulting: This is a service I offer where I consult and advise on my expertise. Sometimes I’m consulting as an expert on yoga and meditation, other times it’s business and marketing. Within this, I also categorize one-off projects like copywriting or roadmap development as consulting.
  • Teaching: I can’t really picture my life without teaching yoga/meditation. I always find a way but it’s not a huge revenue generator. Perhaps another time I’ll write a blog when I was self-employed and teaching full time, I think the last time I did that I only made $20k or $30k and I worked my a** off — that was a really tough year. This year this revenue came from partnerships like filming video content, a virtual writing mindfulness class, and teaching in person this summer at Pier 52 in collab with Friends of the Waterfront. Teaching often leads people to other avenues of my work, so for me, this revenue stream is like “marketing” in some ways.
  • Coaching: This is a service I offer to people new to marketing or new to their business idea. My clients sometimes say it’s like therapy for your business. We can go deep like venting sessions and we can also go tactical like putting in marketing, tech, and action into people’s vision.


Here’s a breakdown of what this looked like financially

These numbers look pretty good for my small business. But even as I crunch these numbers, I have to remind myself that this isn’t what I “take home.”

Why? What is the 15.3% of Self-Employment Tax!?

I am not an accountant so this is just me sharing my own discovery and knowledge, please talk to an accountant for actual accounting advice. As a self-employed business, you actually pay twice as much if you weren’t self-employed because essentially you pay taxes for your business and yourself. What this ends up looking like, according to the IRS, is 12.4% for social security (older folks, and disability insurance) and 2.9% for Medicare (hospital insurance).

While there are other methods to file your taxes differently as a self-employed person (like an S-Corp), from my experience most accountants don’t recommend those routes until you make over $85,000 in business revenue.

And on top of that, from my experience, most accountants aren’t very helpful in answering questions or guiding small businesses. At least as a freelance small business. I imagine they need higher-paying clients whom they want to devote their time to. I’ve recently switched to new accountants, Singletrack Accounting, and so far they’ve been so much more helpful than all my others. While I couldn’t file as an S-Corp in 2022 because of some methods I was doing incorrectly, we’re going down this route for 2023.

If I were not self-employed and had a salary of $82,000— how much is that?

Again, I’m not an expert of any of this. Just someone actually living it and doing my own research. Depending on which state you live in, an annual salary of $82,000 as a full-time employee is about $60,000 – $65,000 after-tax. I found this website helpful to find those ranges. That doesn’t include things like employer-based health insurance, retirement 401k accounts, or anything else that are the norm to receive from employer-based salaries.

So, how much did I really take home?

Around $50,000.

Not terrible but also when I think about how much I worked and how much I had to do to receive that, it doesn’t feel balanced. I feel exhausted, to be honest. I know this feeling is nudging me to make some changes and that’s good feedback. I share openly because this is my reality, and if it’s yours too — you’re not alone.

I know it’s not everyone’s reality so this isn’t me trying to be a dream-crusher. Not at all. Just grounded in the realities of our institutional systems that don’t always support the freelance way.

On my side, I see now that supporting businesses in marketing is often more exhausting than other types of self-employment options.

I have a limited amount of creative energy. Implementation and tasks can be more draining because I need to switch contexts so much. Most businesses want full-time execution but only have a fraction of a budget. All to say is that I’m still learning what works and what doesn’t work. And what worked a few years ago, doesn’t necessarily work for me anymore!

How do I know what to pay myself?

I learned a very helpful method from The Money Book for Freelancers, Part-Timers, and the Self-Employed: The only personal finance system for people with not-so-regular jobs. I still use so much of what they teach in this book.

Essentially you have one business bank account (I personally use Novo, this is a referral link with a referral bonus) and your regular personal bank account. All of the money you’re making goes into that business bank account. After every invoice (yes, even if that invoice is a teaching invoice that’s $200 or less), I keep a percentage for taxes/business expenses, and the other percentage I transfer to my personal bank account (i.e. pay myself).

Most of the time I did a 30:70 split (30% save for taxes and other expenses, 70% to myself). And every quarter, I paid quarterly estimated taxes with that saved money. But also generally had to pay taxes during tax season so I always kept a little buffer.

This only applies if you’re running your business as a sole proprietor and/or single-member LLC. What this is means is that you’re not paying yourself like a W2 employee. For 4 years I used this method and it worked. I see other self-employed creators use this method too, like Anja Dang (love her finance videos) and Paco de Leon also speaks about something similar.

Calling in Support

This year my word or theme for the year is “support.” While I wrote down a few things about what support looks like and means this year in my journal, in sum, support feels like a weight has been lifted off my shoulders. The way systems and structures are put in place, don’t always support creatively doing your own thing. That as self-employed people we need to pay an enormous amount of money for health insurance. That we have to do more research on how to thrive or find people that actually want to support us too. Like, it took me 4 years to find some actual helpful accountants.

I’m excited about the year of support for me and how that will play out. Stay tuned for more! And if you found this helpful, want to keep talking, or need support or mentorship with your own journey in marketing and business – don’t hesitate to reach out or look at my coaching program.


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