Money, pricing and income: what you keep as a founder
Your rate, starting capital, prices and own pay, worked out so that they fit together.
In this topic: Start a business 7
Money, pricing and income: what you charge, what you earn and what you keep
Your rate, your starting capital, your prices and your own pay, worked out so that they fit together.
Money, pricing and income: the questions behind every start
Plenty of founders send invoices all month and still wonder why so little reaches their private account. Usually the rate was set by gut feeling, the starting capital covered the equipment but not the owner's rent, and tax arrived as a surprise. Money, pricing and income are one system: what you ask determines what you earn, and what you earn minus tax and reserves is what you keep.
Price deserves particular attention. In a classic analysis of the average economics of 2,463 companies, a 1% price improvement at unchanged volume raised operating profit by 11.1% (source: Harvard Business Review, September 1992). Those were large companies, but the mechanism holds for a freelancer too: a small price change lands almost entirely in profit. The examples in this section use euros; the logic works in any currency.
The articles in this section
Freelance rate and income
Work back from the income you need to an hourly or day rate, with tax, pension, sick days and realistic billable hours, plus contractor rules by country.
How much money you need
Investments, start-up losses, your own living costs and a buffer in one calculation, worked out for a home-based dog grooming business.
Set your price
Cost price as the floor, customer value as the ceiling and the market as the check, with the maths of discounts and what competition law forbids.
Pay yourself
Drawings as a sole trader, salary and dividends as a company director, and what to set aside before money goes to your private account.
Ten financial tips
Ten habits that keep cash, tax and margin under control from the first invoice.
Sole trader or limited company: how you pay yourself
The principle is the same almost everywhere. As a sole trader or partner, you and the business are one taxpayer: you take drawings, which are not a business cost, and tax is charged on the whole profit, taken out or not. A limited company is a separate taxpayer. You are paid a salary as director and, from profit after company tax, dividends as shareholder. Some countries set rules for an owner-director's salary. See choosing a legal structure for the wider decision.
| Country | Sole trader | Company |
|---|---|---|
| United States | Profit goes on the owner's personal return; the owner draws money and pays estimated tax during the year. | An S corporation must pay a shareholder-employee reasonable compensation before non-wage distributions (source: IRS, March 2026). |
| United Kingdom | You take drawings; Income Tax is charged on your profit through Self Assessment. | Salary through PAYE plus dividends; dividends above the £500 allowance are taxed at 10.75% in the basic rate band for 2026 to 2027 (source: GOV.UK, October 2026). |
| Australia | A sole trader cannot pay themselves a salary or wage; a nominal payment counts as a distribution of profit (source: Australian Taxation Office, April 2026). | The company can generally claim a deduction for salaries and wages paid to you (source: Australian Taxation Office, April 2026). |
| Netherlands (example) | Drawings are not a cost; income tax is charged on the profit. | A director-major shareholder must take a customary salary of at least €58,000 in 2026, unless a lower amount is shown to be usual (source: Dutch Tax Administration, October 2026). |
- Check your country: how is a sole trader's profit taxed, and how are salary and dividends taxed in a company?
- Own pay: is there a reasonable or customary salary rule for owner-directors?
- Advance payments: does the tax authority expect estimated tax or instalments during the year?
Rates and thresholds change every tax year, so check the official portal. Pay yourself has the full picture.
Three numbers every founder must know
Work these out before you sign a lease or quote a client, and update them every quarter.
Monthly private need = rent or mortgage + household costs + private insurance + pension saving - other household income
Add the tax on your profit and you know the minimum profit the business must make.
Break-even revenue = (fixed costs + your own pay) / contribution margin per euro of revenue
The contribution margin is what remains of each euro after direct costs such as materials. The sales forecast and break-even article works this out step by step.
Rate floor or cost price = (fixed costs + your own pay) / realistic billable hours or units, plus direct costs per job or product
Below this floor, every sale costs you money. A cash buffer is the natural fourth number: the median small business in a large US bank sample held enough cash for 27 days of outflows (source: JPMorgan Chase Institute, September 2016). Aim higher in your first year.
Looking at what others charge is market research. Agreeing prices or discounts with competitors is a cartel, also for small firms and freelancers. Set your price explains where the line is.
This section is part of Start a business. Your rate and prices feed the business plan and financials, and your starting capital becomes part of the financing plan.
How much should I set aside for tax?
When is a limited company cheaper than a sole trader?
May I align my prices with competitors?
How much salary should I pay myself as a company director?
Sources
- Harvard Business Review: Marn and Rosiello, Managing Price, Gaining Profit (September 1992)
- IRS: S corporation compensation and medical insurance issues (March 2026)
- GOV.UK: Tax on dividends (October 2026)
- Australian Taxation Office: Deductions for salaries, wages and super contributions (April 2026)
- Dutch Tax Administration: Salary and substantial interest (in Dutch) (October 2026)
- JPMorgan Chase Institute: Cash is King, Flows, Balances, and Buffer Days (September 2016)
- European Commission: Competition law Treaty articles (October 2026)
Maak gebruik van onze ondernemerstools en de laatste branche-informatie
Verkrijg direct toegang tot alle stappen, downloads en tools voor ondernemers.
- Toegang tot de meest actuele bedrijfstakcijfers
- Ondernemingsplan online tool — schrijf en download naar MS Word
- Download tools en templates voor ondernemers
- Vergelijk en bewaar uw eigen cijfers met het branchegemiddelde