How to Pay Yourself a Steady Salary From Irregular Freelance Income

Freelance income arrives in bursts: a big project one month, almost nothing the next. The fix most money coaches suggest is the same one a small business uses. Send all income into one business account, then pay yourself a fixed amount on a fixed day.

1. Find your baseline number

Add up your essential monthly personal costs: housing, utilities, food, insurance, transport, debt minimums. That is the smallest paycheck you can live on.

2. Look at your trailing income

Total the last 6 to 12 months of business income after business expenses, then divide by the number of months. Using the lower of your 6-month and 12-month averages keeps you conservative.

3. Set money aside for taxes first

Self-employed people in the US owe self-employment tax (15.3% on most net earnings) on top of income tax, and usually pay quarterly estimates. Many freelancers park 25 to 30% of each payment in a separate tax account, then adjust once they know their real rate.

4. Build a buffer before raising your pay

Keep at least one to three months of your salary in the business account. In a slow month the buffer pays you. In a strong month the extra refills the buffer before you give yourself a raise.

5. Pay yourself on a schedule

Pick a day, such as the 1st and 15th, and move the same amount every time. Review the number once a quarter.

The free calculator below does steps 1 to 4 for you: enter your recent monthly income and expenses and it suggests a safe salary, tax set-aside, and buffer target.

General information only, not tax, legal, or financial advice. Check current rules with the IRS or a tax professional.