Real-Life Math -- Solution
You are a self-employed tutor who must look after all the business details. It is now the end of the month, and you are going over your records and getting your invoices ready to send out to your clients.
How much should you invoice each of your students?
Robert Smith: 6.5 x $15 = $97.50
Tax for Robert Smith: 0.07 x $97.50 = $6.83
Total = $6.83 + $97.50
Total = $104.33
Chelsea Adams: 3 x $15 = $45
Tax: $45 x 0.07 = $3.15
Total = $45 + $3.15
Total = $48.15
The Black twins: 12 x 2 = 24 hours total
Fee: 24 x $15 = $360
Discount: 0.15 x $360 = $54
Subtotal = $360 - 54
Subtotal = $306
Tax: 0.07 x 306 = $21.42
Total = $21.42 + $306
Total = $327.42
How much tax money must you set aside for the government?
$6.83 + $3.15 + $21.42 = $31.40
What is your gross income this month? (Gross income is the amount of money you make before you pay expenses.)
$104.33 + $48.15 + $327.42 = $479.90
What is your net income? (Net income is the amount of money you make after business expenses are paid.)
$479.90 - $25 (what you spent on the newspaper ad) - $31.40 (tax) = $423.50
"If you are a self-employed tutor, you have to run your tutoring service like a business," says Richard Bilonick, who runs his own tutoring business. "You have to keep track of your hours and you have to calculate your expenses. Then your rates have to be high enough to cover your expenses and your hourly fee."