It’s possible to balance your budget. Although this prospect gets even harder when you run a business, you can do it without fear of breaking the bank. With a solid financial foundation in place, you can ensure that your startup or sole proprietorship survives. Being an entrepreneur is exceedingly difficult, but if you have a head for numbers, it’ll be somehow easier, at least in this respect.
Assemble Your Income Streams
The first thing you’ll want to do is gather all of your revenue sources. How much do you make every month, and how do you earn your income? The Profit and Loss budget report helps you evaluate the fiscal health of your business. It all comes down to the business model you’ve chosen – and that differs depending on the industry your company operates in. For example, writing, editing, and consulting services all intertwine.
Figure Out Your Fixed Costs
You’re also on the hook for the fixed costs that recur every month. That’s why it is important to figure out what they are and how you can pay them off. In simple budgetary terms, the “fixed costs” are what you pay for every month and don’t fluctuate from one billing cycle to the next. Rent, Internet, website hosting, and outsourced payroll services all fall under this category. Once you’ve determined what each cost is, add them up. The sum will be what you owe every month.
Factor In the Variable Costs
However, plans change. As such, it’s always a good idea to prepare for variable costs. Unfortunately, it can be hard to predict these costs and how much you’ll have to pay to cover them. Usage utilities (gas, electric, and water) are some of the most common. More complicated ones are shipping costs, sales commissions, and travel costs. High profits spur your business’s growth, but failing to meet your minimum thresholds will set you back instead.
Forecast Your Incidental Spending
One-time or incidental expenses are inevitable. The upside is that, at least in theory, you won’t have to worry about them again once you’ve addressed them. A business course (maybe in pursuit of your MBA) and assets like a new computer or smartphone both count. Unexpected costs can torpedo your business, so do your best to prevent them from happening!
Trust the Professionals at the Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients.
Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning? We have the necessary expertise and years of proven results to help.
We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.