How much should I set aside for taxes if I am self-employed?

A practical way to pick your number:

1. Estimate your profit, meaning income minus business expenses, not total sales.
2. Work out the self-employment tax part: profit x 92.35% x 15.3%. On a $40,000 profit that is $5,651.82 (example numbers only).
3. Add income tax. Your rate depends on your filing status, tax bracket, deductions and any wages from a job. Last year's return, or a tax professional, gives the best starting point.
4. Add state income tax if your state has one.
5. Enter a share in the calculator and check that the amount left for income tax looks realistic.

Then move that share into a separate savings account each time a client pays, and review it every quarter. If you expect to owe $1,000 or more, pay it as quarterly estimated tax. Paying at least 100% of last year's tax, or 90% of this year's, generally avoids the underpayment penalty.

The 12.4% Social Security part stops above a yearly earnings limit, and a 0.9% additional Medicare tax can apply at higher incomes. General information, not tax advice.