Where does your monthly net income come from and how is it calculated?
Whether you are a self-employed sole proprietor or operating through a company (in which case you hold the status of self-employed director), your tax return is only finalised approximately 6 months after the close of the financial year. That is a long time before knowing the actual tax you owe ⏳! In the meantime, you want to start paying yourself.
How do you determine your income? We answer that in 3 steps!
1. Estimate your income and expenses
What monthly amount is retroceded by the hospital or practice where you work? What monthly amount is invoiced to the firm for which you carry out your architectural services? What expenses do you incur each month for travel?
To help you with these estimates, a forecasting guide has been developed. Each category of income and expenses is analysed with the help of BILLY. Beyond the forecasts relating to your self-employed activity, other factors may affect your situation: dependent children, childcare costs, maintenance paid or received, donations, property rental income, other income… Once again, BILLY is here to make sure nothing is left to chance!
What is the purpose of the forecast? Anticipate your taxes and social contributions as accurately as possible. This way, you avoid unpleasant surprises.
2. Anticipate tax as much as possible
The State encourages the advance payment of tax each quarter. This takes the form of professional withholding tax (mandatory each quarter) on the remuneration granted by a company to its director. And of advance tax payments (not mandatory) on the result of a self-employed activity as a sole proprietor or through a company. The same principle applies to social contributions! You make advance quarterly payments (except for the company social contribution, which is annual). The table below details these elements:
| Sole proprietor | Company | Director |
Tax base | Result | Result | Remuneration |
Type of tax | PIT (see FPS website) | CIT (see FPS website) | PIT (see FPS website) |
Tax advance | Advance tax payment* | Professional withholding tax** | |
Social contributions | For self-employed** | For company** | For self-employed** |
(*) not mandatory (**) mandatory
Whether for taxes or social contributions, all payments must be made during the current year (by 20 and 31 December respectively for taxes and social contributions). Otherwise, tax surcharges apply in the absence of payment.
3. Determine your net take-home income
My income as a self-employed sole proprietor
The self-employed person's income is not an expense for the activity. The term "remuneration" is not even the most accurate here. Indeed, the net take-home income does not come from an established salary. It corresponds to the self-employed person's "net profit after tax", namely their result (income - expenses) from which social contributions and personal income tax are deducted. This balance corresponds to your net take-home income.
How do you anticipate this amount in order to pay yourself a monthly income? Thanks to your forecasts and with the help of your BILLY accountant, you estimate the amount you can transfer each month to your personal account!
My income through a company
If you are a company director, you have a structure that acts as a "buffer" between yourself as a natural person and your activity: the objective is to leave some profit within it (i.e. not to take all your income as remuneration). This profit can in the future be distributed to you in the form of a dividend, which is more tax-efficient than remuneration. You will find more details in the article Remuneration - Director.