Banking & Tax Decision Hub
Financial infrastructure for your freelance business
Your Rate Sets the Foundation
Once you've calculated your freelance rate, the next step is building the financial infrastructure to support it. This hub helps you make key decisions about banking, taxes, and tools—so your business runs smoothly and you keep more of what you earn.
Calculate your rate first →Freelance Banking & Tax Decision Framework
Answer these key questions to build a solid financial foundation. Each decision builds on your calculated rate to ensure your business is sustainable.
Key Considerations
- Mixing personal and business finances complicates tax preparation
- Separate accounts provide clearer expense tracking
- Some business structures legally require separate accounts
- Easier to demonstrate business legitimacy to clients
Recommendation
Yes. Open a dedicated business checking account as soon as you have regular freelance income. The clarity is worth the minor effort.
Key Considerations
- The IRS expects quarterly payments if you'll owe $1,000+ in taxes
- Penalties apply for underpayment, even if you pay in full by April
- State requirements vary—check your state's rules
- Quarterly payments prevent a large April surprise
Recommendation
Start immediately if your freelance income exceeds a few thousand dollars annually. Use your calculated rate to estimate annual income, then pay quarterly using IRS Form 1040-ES.
Key Considerations
- Self-employment tax alone is ~15.3% on net earnings
- Federal income tax adds 10-37% depending on bracket
- State income tax varies from 0% to 13%+ depending on location
- Deductions can reduce your taxable income significantly
Recommendation
Set aside 25-35% of every payment until you have a year of data. The freelance rate calculator's tax buffer helps you price this into your rate from the start.
Key Considerations
- Spreadsheets work for simple situations but don't scale
- Accounting software automates categorization and reports
- Bank connections save hours of manual entry
- Cost ranges from free to $50+/month
Recommendation
Start with a spreadsheet if you have <10 transactions per month. Move to software like Wave (free), QuickBooks Self-Employed, or FreshBooks as volume increases.
Key Considerations
- Sole proprietorship is simplest—no formation required
- LLCs provide liability protection but add complexity
- S-Corp election can save self-employment tax at higher incomes
- State filing fees and annual reports add cost
Recommendation
Stay a sole proprietor until you're earning $50k+/year consistently or have significant liability exposure. Consult a CPA before changing structure.
Freelancer-Friendly Banks Compared
These banks are popular with freelancers for their low fees, freelance-specific features, and ease of use. Compare them to find the best fit for your workflow.
Best for international freelancers
- Hold 50+ currencies
- Low international transfer fees
- Real exchange rates
- Borderless debit card
Built for freelancers
- Automatic tax bucket
- Built-in expense categories
- No minimum balance
- Fee-free overdraft (Pro)
Modern business banking
- Integrates with Stripe, Shopify
- Free invoicing tools
- Reserve accounts
- Unlimited transactions
| Feature | Wise | Lili | Novo |
|---|---|---|---|
| No monthly fee | |||
| No minimum balance | |||
| Free ACH transfers | |||
| Free domestic wire | |||
| Multi-currency accounts | |||
| International transfers | |||
| Tax savings bucket | |||
| Built-in invoicing | |||
| Expense categorization | |||
| Accounting integrations | |||
| Physical debit card | |||
| Virtual cards | |||
| Mobile check deposit | |||
| FDIC insured |
Information current as of January 2026. Features and pricing may change. This is not financial advice—do your own research before choosing a banking provider.
Ready to Put Your Rate to Work?
Now that you understand the financial side, create professional invoices that reflect your calculated rate.