Recently, a friend was telling me about starting her new service company. She was enthusiastic about “being her own boss and making her own money.” So she was taken aback when I asked if she had calculated whether she would actually bring in enough to make a decent living… after taxes, contributions and other expenses.
She hadn’t really thought about it much.
This is one of the biggest sand traps an independent businessperson has to avoid. There’s no escaping it — the nitty-gritty is that while your turnover may be impressive, it’s not all yours. From business tax and VAT to social contributions, various insurance requirements, income tax, and retirement fund — the list of monies you must set aside is long and includes provisions for the firm’s operating costs. …