I have a sole proprietorship and I'm helping out a friend. We have an agreement where I told him what I needed to net each month and I can invoice for that.
If I need to net $6000 each month, how do I calculate the gross amount that needs to be invoiced so I can end up netting $6000?
I've seen a lot of calculators on line for the self employment portion, but also need to factor in state (CA)/fed income taxes, as well as anything else I might be missing. This doesn't need to be exact, I just want to be able to generate an invoice for more than $6k so that by the time I pay taxes on 2019, I will have taken home the $6k that month.
Here's what I've tried so far:
- FICA percentage: 15.3%
- Employer Equivalent Portion (which I can subtract): 7.65%
- Marginal Tax Rate (on $72k): 12%
Calculate Self Employment Tax
(6,000 * .9235) * .153 = $847.77
Calculate Income Tax
(6,000 + 847.77) * 100/(100-12) = $7,781.56
I would need to invoice for $7,781.56
Am I getting close with this line of thought?