Calculate freelance profit after expenses.
Profit is revenue minus the cost of running the business, and the useful version is measured after tax because that is the money available to you. Net margin makes years with different revenue comparable, while the surplus over your target draw answers the question that matters for reinvestment: whether the business can fund new equipment, training or a pension after paying you.
Freelance profit
Gross profit = revenue - business expenses; net profit = gross profit x (1 - tax rate/100); net margin = net profit / revenue x 100
Effective tax rates depend on your jurisdiction, entity type and allowable deductions. This calculation is an estimate for planning and does not replace advice from a qualified accountant.
Only after tax and after leaving working capital in the business. The surplus over your target draw is the figure that is genuinely discretionary.
Service practices with low overheads often run 60-80% before owner compensation. The margin here is after tax, so it will look lower than headline service-business benchmarks.
No. Use collected revenue; billings that never arrive inflate profit and the tax estimate along with it.