Filed under → The Hustle Wage
Your price is not your pay. Take out supplies, your time and the tax nobody mentions, and see what you actually earn an hour.
An hour of your hustle next to the federal minimum wage and a $20 an hour job.
A $30 order feels like $30 in your pocket. It isn't. The flour, the boxes and the gas came out first.
Then there's time. The hour you spent texting, shopping and driving counts, even if nobody paid you for it directly.
And the IRS wants its share. Side hustle profit owes self-employment tax, about 14 cents of every dollar you clear, before income tax.
Start a timer when you shop and stop it when the customer has the order. Most people guess low by half.
Use the price above that pays you $20 an hour. If customers won't pay it, make orders bigger or faster, not cheaper.
Move about 25% of your profit to a separate savings account as it comes in. That covers self-employment tax with room for income tax.
Profit per order is your price minus what the order costs you. What it feels like is your price divided by your hours, the number most people have in their head.
Self-employment tax is 15.3% (Social Security and Medicare) on 92.35% of your profit, about 14.1%. It applies once your side hustle clears $400 in a year. Income tax is not included because it depends on everything else you earn.
It's a yardstick, not your tax return. Business expenses you track can lower what you owe. Nothing you type leaves your browser.