A lot of freelancers, entrepreneurs, and online business owners always talk about the magical “six-figure” number. It seems like all over the internet everyone is striving to make six-figures. In this article, we’re going to take an in-depth look at a freelancer’s monthly income report.
Since we’re straight shooters over here at HTAF, we thought we’d show you an honest income report of what six-figures actually looks like. So, I decided to audit my business and pull my financial records so I could show you what my first six-figure month looked like. And although this was in early 2017, it’s still extremely relevant today.
It’s a little weird publishing an income report, but that’s the tradeoff we accept for the transparency that it provides to our audience. We never publish numbers to brag, but instead to show our readers what is real and possible.
There are three things to keep in mind throughout this income report:
- It’s not as hard as you think to reach six-figures as a freelancer
- It’s an extremely attainable goal to reach in under a year
- The glorious “six-figure” number is not as much money as you actually think it is
How much does six-figures equal per month?
Okay, let’s do some math because I always realize people “overestimate” what six-figures actually looks like on paper.
$100,000 divided by 12 = $8,333/month
And listen, six-figures is an amazing accomplishment and a great income. I’m not taking away from it. The first month I made over $8,333/month I was exhilarated. It made me realize how possible this whole freelancing thing really was.
But what I didn’t realize was $8,333 is not your profit as a six-figure freelancer. Not even close. As promised, I’m going to pull an income report from my first “six-figure” month and show you the difference between income, profit, and expenses.
As mentioned above, the first time I reached the oh-so-talked-about $8,333/month mark I was obviously thrilled. I witnessed first-hand my little freelance dream become a true reality. My first $8,000+ month was approximately six months after I started freelancing.
The moral of the story: it doesn’t take nearly as long as you think.
But what so many online gurus and freelancers won’t tell you is what their actual profits were….
You hear so much about “$20,000 launches” and “six-figure” businesses. But do you ever see an income report that breaks down expenses vs. profits?
Nope. There’s a total lack of transparency on the internet.
At HTAF, we preach transparency. We want aspiring freelancers to know what to expect financially. We want you to understand what each milestone looks like from a profit and expense standpoint.
So, here goes nothing….
Let’s break down what my first $8,333/month looked like profit wise.
Sprout Social: $150.00
Email Domains: $20.00
Lead Pages: $37.00
Facebook Ads: $250.00
Business Events: $90.00
Marketing Material: $90.00
Business Expenses: $2,118.99
Income – Expenses = Profit before taxes = $6,214.01
Okay, so my “profit” was $6,214.01, but these expenses don’t account for taxes. As a freelancer (and 1099 employee), you’re responsible for paying your own taxes. Depending on the tax bracket you’re in, you’ll be taxed somewhere between 12-35%. I always take an average of 25% of my final profit number and put it away for taxes. This keeps me on track and makes sure I’m not scrambling at the end of the year. New freelancers have a bad habit of forgetting that they have to put money away for taxes, so always take a percent of your earnings and set them aside for taxes. Realistically, my actual monthly profits after taxes were somewhere between $4,000-$5,000.
In order for a business to thrive, even a freelance one, you need to invest in it. I work in the social media marketing space, so I need a lot of software for analytics and reporting purposes. You might look at this expense list and say “I bet I could cut a lot of this out” so I’m going to go through each expense and show you the role it plays in my business.
Monthly expenses debunked
Sprout Social: I use this for scheduling social media content for clients. It also helps me formulate client reports and has great analytical tools. It’s a must-have for any social media marketer. My business simply wouldn’t operate without it.
Email Domains: This is self-explanatory. I have a few emails I use for different sectors of my business. They each cost around $5/month through Google Suite.
Lead Pages: I use this occasionally to create aesthetic landing pages for clients and my own products. I could probably use something cheaper, but it’s capabilities surpass any free options.
Teachable: This platform hosts my online course about LinkedIn. It’s expensive, however, the free version takes too high of a percentage of my sales, so it’s worth it to me.
Dropbox: A lot of clients share photos and content with me through Dropbox folders. I need a lot of storage to hold it all.
Toggl: My contractors track their time using this platform. It’s approximately $10/month per user.
ConvertKit: This is my email marketing software. It allows me to create automations and send out monthly newsletters. It’s a must-have for me. It’s a little pricier than some other platforms due to its abilities.
Canva: The free version works just fine, but I need to be able to have multiple brand templates for clients which requires the premium version.
Upwork: Believe it or not, I still have a profile on Upwork and will occasionally take on small projects if I’m having a slower month.
LinkedIn: I currently pay for the highest level of premium because it allows me to send the most inMail messages and I do 90% of my prospecting on LinkedIn.
Facebook Ads: This isn’t always a recurring expense. It depends what’s going on that month and what I’m promoting.
Quickbooks: This is the accounting software I use which is extremely important for my taxes.
Co-working: Working from home alone can get boring and lonely at times, so I pay for a co-working space and have unlimited monthly access.
Business Events: Sometimes I’ll attend a networking happy-hour or brunch. These aren’t always recurring fees, but I try to network here and there to meet new people.
Marketing Material: When I go to networking events or attend things in-person I like to have business cards and some other materials with me. I restock every few months so occasionally this is a monthly business expense.
Contractors: When you start to scale your business, you’re going to have to find quality talent that you can outsource work to. I have a few contractors that each work on different projects for me, so this number changes often.
Income is great, but stay focused on your profits.
Now that you can see what a six-figure income report looks like, you’ll be able to plan more accordingly when you reach this milestone. Keep in mind, my overhead is still fairly low. But these are simply business expenses and don’t account for any of my personal expenses such as rent, car payments, groceries, etc. As a self-employed freelancer, business expenses are tax write-offs, which is a big advantage come tax season.
As my income scaled to $9,000/month, $10,000/month and so on and so forth my business expenses also increased. Income and expenses are both relative. One does not exist without the other, but as long as you maintain a high-profit margin, you’ll be successful.
In relation to other businesses, freelance businesses still have some of the highest profit margins because they don’t take a lot of money to operate. We’ll release income reports every so often on different amounts that we’ve each earned. Would you be interested in looking at an expense report from a $10,000 month? Let us know in the comments below!