How to Create a Business Budget (2024)

Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. Consult your own legal and/or tax advisors before making any financial decisions. Any informational materials provided are for your discussion or review purposes only. The content on the Center for Business Empowerment (including, without limitations, third party and any Bank of America content) is provided “as is” and carries no express or implied warranties, or promise or guaranty of success. Bank of America does not warrant or guarantee the accuracy, reliability, completeness, usefulness, non-infringement of intellectual property rights, or quality of any content, regardless of who originates that content, and disclaims the same to the extent allowable by law. All third party trademarks, service marks, trade names and logos referenced in this material are the property of their respective owners. Bank of America does not deliver and is not responsible for the products, services or performance of any third party.

Not all materials on the Center for Business Empowerment will be available in Spanish.

Certain links may direct you away from Bank of America to unaffiliated sites. Bank of America has not been involved in the preparation of the content supplied at unaffiliated sites and does not guarantee or assume any responsibility for their content. When you visit these sites, you are agreeing to all of their terms of use, including their privacy and security policies.

Credit cards, credit lines and loans are subject to credit approval and creditworthiness. Some restrictions may apply.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S" or “Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser,Member SIPC, and a wholly owned subsidiary of BofA Corp.

Banking products are provided by Bank of America, N.A., and affiliated banks, Members FDIC, and wholly owned subsidiaries of BofA Corp.

“Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets division of Bank of America Corporation. Lending, derivatives, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.

Investment products:

Are Not FDIC InsuredAre Not Bank GuaranteedMay Lose Value
How to Create a Business Budget (2024)

FAQs

How to create a good business budget? ›

Creating a business budget takes several steps:
  1. Calculate your revenue. Include all your revenue streams, preferably over at least the last 12 months, to determine your monthly income. ...
  2. Add up your fixed costs. ...
  3. Determine variable costs. ...
  4. Subtract your fixed and variable costs.
Jan 16, 2024

What is the best way to create a budget answer? ›

You can use your budget every month:
  1. At the beginning of the month, make a plan for how you will spend your money that month. Write what you think you will earn and spend.
  2. Write down what you spend. ...
  3. At the end of the month, see if you spent what you planned.
  4. Use the information to help you plan the next month's budget.

How to make a budget work Ramsey answers? ›

How to Create a Budget
  1. Step 1: List Your Income.
  2. Step 2: List Your Expenses.
  3. Step 3: Subtract Expenses From Income.
  4. Step 4: Track Your Transactions (All Month Long)
  5. Step 5: Make a New Budget Before the Month Begins.

What are the 5 steps to creating a successful budget? ›

How to create a budget
  1. Calculate your net income.
  2. List monthly expenses.
  3. Label fixed and variable expenses.
  4. Determine average monthly costs for each expense.
  5. Make adjustments.

What are the keys to making a good budget? ›

7 tips for creating an effective budget
  • Calculate your income. ...
  • Is it fixed or variable? ...
  • Track your spending. ...
  • Figure out your non-negotiables. ...
  • Cut back where you can. ...
  • Set financial goals. ...
  • Review your budget regularly.

How to create a budget for beginners? ›

Follow the steps below as you set up your own, personalized budget:
  1. Make a list of your values. Write down what matters to you and then put your values in order.
  2. Set your goals.
  3. Determine your income. ...
  4. Determine your expenses. ...
  5. Create your budget. ...
  6. Pay yourself first! ...
  7. Be careful with credit cards. ...
  8. Check back periodically.

What is a good budgeting strategy? ›

In the 50/20/30 budget, 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs. This budget recommends a specific balance for your spending on wants and needs.

What is the 50 30 20 rule of money? ›

Key Points. The 50-30-20 rule is a simple guideline (not a hard-and-fast rule) for building a budget. The plan allocates 50% of your income to necessities, 30% toward entertainment and “fun,” and 20% toward savings and debt reduction.

What is the simplest budgeting method? ›

1. The zero-based budget. The concept of a zero-based budgeting method is simple: Income minus expenses equals zero. This budgeting method is best for people who have a set income each month or can reasonably estimate their monthly income.

What is the #1 rule of budgeting? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

What is the 60 20 20 method? ›

Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.

What are the 5 basics to any budget? ›

What Are the 5 Basic Elements of a Budget?
  • Income. The first place that you should start when thinking about your budget is your income. ...
  • Fixed Expenses. ...
  • Debt. ...
  • Flexible and Unplanned Expenses. ...
  • Savings.

What are the 3 R's of a good budget? ›

Refuse, Reduce and Reuse.

How to create a budget for a business? ›

How to Create a Business Budget for Your Small Business
  1. Analyze costs. ...
  2. Negotiate costs with suppliers. ...
  3. Estimate your revenue. ...
  4. Know your gross profit margin. ...
  5. Project cash flow. ...
  6. Factor in seasonal and industry trends. ...
  7. Set spending goals. ...
  8. Bring it all together.

How do small businesses make a monthly budget? ›

How to create a business budget in 6 easy steps
  1. Look at your revenue. ...
  2. Determine your fixed costs. ...
  3. Determine your variable costs. ...
  4. Create a contingency fund. ...
  5. Create a profit and loss statement. ...
  6. Outline your forward-looking business budget.
May 3, 2024

Which budgeting method is best for business? ›

Activity-based budgeting is an effective method for identifying the exact cost of activities and expenditures so that businesses can better manage their money and eliminate unnecessary expenses. In turn, eliminating these costs can increase profits while strengthening relationships with customers.

How do I create a cash budget for my business? ›

Six steps to build a cash budget
  1. Create a template. Build a simple spreadsheet to help calculate your cash budget using the steps below. ...
  2. Establish your budget timeline. ...
  3. Input your opening cash balance. ...
  4. List your cash inflows and outflows. ...
  5. Estimate the cash inflow or outflow. ...
  6. Calculate the budget.
May 15, 2024

What are the four steps in preparing a business budget? ›

How to create a budget for a small business
  • Step 1: List expenses. Start by looking at your fixed and variable costs. ...
  • Step 2: Forecast revenue. As well as knowing how much money your business will spend, you need to know how much it is likely to make. ...
  • Step 3: Estimate profit. ...
  • Step 4: Review and plan.
Jul 3, 2023

Top Articles
Latest Posts
Article information

Author: Nathanael Baumbach

Last Updated:

Views: 5479

Rating: 4.4 / 5 (55 voted)

Reviews: 94% of readers found this page helpful

Author information

Name: Nathanael Baumbach

Birthday: 1998-12-02

Address: Apt. 829 751 Glover View, West Orlando, IN 22436

Phone: +901025288581

Job: Internal IT Coordinator

Hobby: Gunsmithing, Motor sports, Flying, Skiing, Hooping, Lego building, Ice skating

Introduction: My name is Nathanael Baumbach, I am a fantastic, nice, victorious, brave, healthy, cute, glorious person who loves writing and wants to share my knowledge and understanding with you.