Small Business Budget Template: What You Need to Know

There are many things that help create a successful small business‚ great products, hard work, great staff, good timing or location and a dash of luck. One thing that every great business has is a small business budget. This post will give you everything you need for your small business budget template.

Why you need a small business budget

On a fundamental level, a small business budget lets you know the financial health of your business. It's useful to help you make short and long-term decisions. For example, a strong budget can help you know if you can truly afford to hire on that extra employee or invest in a new piece of equipment.

A budget also has many other benefits. If you're seeking loans, a partner or additional capital, having hard numbers to point to can help you make a better case.

For this post, we're going to focus on budgeting basics to help you get started. As your business grows, the complexity of your budget could also grow as well.

Small business budget template: 3 things you must have

Fundamentally, there are three major things you need to keep track of -  expenses, revenue and the profit/loss. Of course, that's simplifying it dramatically but you'd be surprised how often small business owners don't really have a grasp on those three things.

Revenue:

This is the amount of money your business brings in. For many of you, this will be sales but this could also be things like affiliate fees, franchise fees, or more. You'll want to keep track of your revenue by month, as well as your revenue by quarter and by year.

Depending on what type of business you run, you'll likely break down revenue into granular categories. It's up to you how detailed you want to get with that but the more details you keep, the more insight you'll have into your business. This also does mean a little bit more work. So, use your best judgment.

For example, if you own a convenience store, knowing exactly how much revenue you get from every single item can be useful. But, it's also labor-intensive. Instead, you might just break it down by types of items (soft drinks, candy, dry goods) to keep your budget manageable at first.

If you received a loan to start your small business, you'll also want to keep track of that amount.

Expenses:

These are the costs your business incurs. These should include your recurring costs like rent and employee compensation, as well as one-time costs like investments in machinery.

Be sure to include all of your expenses when you're recording your budget. Some of your expenses could include:

• Payroll
• Taxes
• Transportation
• Marketing
• Cost of goods
• Utilities
• Rent
• Insurance
• Business meals
• Memberships
• Business car usage
• Startup costs like a computer

Like with revenue, you'll want to at least know how much you're spending per month, per quarter and per year.

Profit or loss

This is the difference between your expenses and your revenue. If your expenses routinely exceed your revenue, you don't always need to panic. Many small businesses take time to ramp up and losses are expected at first‚ that's why keeping track of your total cash and loans is important.

If you do make a profit for the year, be prepared to pay some taxes. Your taxes can be impacted by the type of company you have, too. It's not just income tax, as there are plenty of other taxes you'll have to pay.

That's why it's great to take as many tax deductions are you're legally allowed to. Nearly any business expense that's "ordinary and necessary" can be written off. Of course, there are also valuable write-offs like the mileage deduction, health care deduction and others that can help lower your taxable income.