Small Business Budgeting and Tax Essentials for Entrepreneurs
If you’re an entrepreneur who has recently started a small business, you may still be learning the ropes of what it all entails. From tax payments to budgeting, you are navigating the world of trying to make a profit while covering the many expenses that are involved in running a business. To help you along the way, here are a few tips that can get you on top of your business finances:
Estimate your revenue
As you work towards understanding your business and how to manage your finances, a good place to start is estimating the revenue that you expect to make in the seasons and years to come. If you’ve already been in the world of running a business for a minute, you may have noticed how things fluctuate over the years.
If you can accurately plan for your revenue, then it’s easy to get ahead with planning for other aspects of your business and prepare your finances and budget accordingly.
Take away the monthly costs
Once you have a better understanding of your expected revenue, you’ll want to subtract the monthly expenses to have a better idea of how much profit you’ll be making, as well as what you need to budget from your income.
For example, monthly costs could include the rent for the office you’re using, payroll for a couple of employees that you may have, tax payments, etc. If you want to streamline preparing your taxes or taking care of payroll, there are both software options for payroll and options for taxes, such as Intuit Tax Advisor.
Look at potential extra expenses
Depending on demand, new types of projects, and an increase or decrease in employees, you may discover that there will be variable expenses that aren’t always as fixed as the ones you’ll know you’ll need to have covered every month. It’s still important to plan for these variables so that you can be sure to have what you need within your budget.
This may look like hiring freelancers for a special project or extra product. It could also be due to exterior factors like your product supplier needing to increase costs due to issues in the supply chain.
Make sure you have a contingency fund in place
As you sit down and plan for your expenses, keep in mind that there will also often be unexpected emergencies. There could also be a lull in your profit, depending on external circumstances such as pandemics or an unexpectedly slow season.
If you want to be confident that you’ll keep your business going, even in these times of uncertainty, consider planning your budget to include a contingency fund so that you’re always prepared to keep the essentials going in the down times. Don’t forget that along with an emergency fund, you also want to be paying for business insurance, as that can save you thousands of dollars, should you ever need to use it.
Know your profit
It’s important to get a clear view of your profit as you’re building your business. When you do the steps above, calculating your revenue and expenses, you can better understand what kind of money is left over. You’ll find that as you get your business going, in the first year, you may not see as much profit as you’d like.
That doesn’t mean that you should give up. Just make sure you’re budgeting right to avoid any mishaps with your business finances so that you can keep it going to the kind of success that makes you the profit that you want.
One of the most important things that you can do for your future success is to manage your business finances. It’s not always easy to know how to budget and make the profit you want, but with these ideas above, you can have an understanding of how to plan ahead.