A Freelancer Budget That Sets Aside Taxes First

A salary arrives with the taxes already taken out. A client payment arrives whole, and part of it belongs to the tax office from the moment it lands. If that part sits in the same account as your rent money, it looks spendable until the tax bill shows up months later.

This tutorial builds a freelancer budget in BudgetFlow that handles this in a fixed order: the tax share leaves first, business costs come next, and whatever is left becomes your personal salary. You can follow along in your own account.

The 28% tax rate in this example is only an example. Your rate depends on your country, your income and your deductions, so use the rate your accountant or your last tax return gives you.

Step 1: Client Payments and the Tax Reserve

Create a new budget from the budgets list and open it. Click + Flow and fill in the first flow:

• From: Clients
• To: Business Account
• Type: Fixed amount, 6350, monthly

Both names are new, so BudgetFlow creates them as you type. Use your expected monthly income here. If it changes a lot from month to month, a careful average of the last few months works well.

Now add the tax reserve. Click + Flow again, set From to Business Account and To to Tax Reserve, and enter the amount as 6350 * 0.28. BudgetFlow calculates the result (1778) and keeps the formula, so you can still see later where the number came from.

The Tax Reserve should be a separate bank account (or at least a separate sub-account). Money that is physically somewhere else does not get spent by accident, and when the tax bill arrives you can pay it from that account without checking how much of your main balance is really yours.

Step 2: Business Costs

Next come the costs of running the business. Add two flows from Business Account:

• Software and Tools: 186, monthly
• Accountant: 1140, yearly

The accountant is paid once a year, so pick yearly as the interval. In the monthly view BudgetFlow shows it as 95 a month (1140 / 12), which is the amount you should set aside each month to have the full fee ready when the invoice comes.

At this point the ⚠ next to the budget title will show an issue: the Business Account receives 6350 but only passes on 2059, so most of the money is left lying in it. That warning disappears with the next step.

Step 3: Pay Yourself the Rest

This is the step that makes the budget work on its own. Click + Flow, set From to Business Account and To to Main Account, and choose the type Send excess cash. A smart flow has no amount of its own: it takes whatever is left in the Business Account after all other flows and sends it on.

Here that is 6350 − 1778 − 186 − 95 = 4291, which is your personal salary for the month.

The arrow on the band to Main Account marks it as a smart flow. Because the salary is calculated rather than typed in, it follows every change you make to the business side: a new software subscription or a higher accountant fee lowers it automatically.

Step 4: Your Personal Budget

The Main Account now works like the account of an employee who receives a salary. Add your personal costs from Main Account:

• Rent: 1420, monthly
• Groceries: 520, monthly
• Health Insurance: 385, monthly

Finally, add one more smart flow: From Main Account, To Savings, type Send excess cash. It moves everything you do not spend into savings, which here is 4291 − 1420 − 520 − 385 = 1966 a month.

Switch the interval at the top to yearly to see the same budget over twelve months: about 21,336 in the tax reserve and 23,592 in savings, if the income stays at this level.

Updating the Budget When Income Changes

Freelance income rarely stays the same. When a month comes in higher or lower, click the band between Clients and Business Account (or the Clients name) to open the flow and change the amount.

The tax reserve uses the formula 6350 * 0.28, so change the income number there as well. Everything after it follows on its own: the smart flow recalculates your salary, and the second smart flow recalculates what goes to savings. Two edits are enough to bring the whole budget up to date.

If you prefer to plan with a steady salary, you can also do the opposite: keep the income at a conservative average and let any extra money stay in the Business Account as a buffer for slower months.

When Costs Are Higher Than Income

Smart flows can only pass on money that is there. If a slow month brings in less than your taxes and business costs together, the Business Account has nothing left over, the salary flow carries nothing, and the Main Account cannot cover the rent.

The ⚠ next to the budget title points this out. Click it to see a list of names that pay out more than they receive and smart flows that carry no cash. For a freelancer this is an early warning: you see in the plan that a month will be tight before it shows up in your bank account, and you can decide whether to take money from savings, cut a cost, or send another invoice.

Try It With Your Own Numbers

Build it in your account with your own income, tax rate and costs, and the two smart flows take care of the rest.