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Monday, October 02, 2006

Business Expenses and What to Incorporate into Your Budget

Business expenses are a part of any professional endeavor, and you need to create a budget listing your main business expenses and what each will run you per year before you even start any business. The best way to track business expenses is with a cash flow planner. This item will help you plan for business expenses and the leftover cash one quarter, 13 weeks at a time.

The following is a list of common business expenses:

SALARY: Six to nine months after you’ve started your business you should be earning enough income to take some out for yourself. At the beginning salary is a great business expense even if you’re only getting $400 - $500 weekly.

EMPLOYEE BENEFITS: Benefits are yet more significant business expenses. You should investigate to see what the competitive benefits rates are currently and if you are still employed, figure out from your current employer what the total monthly premiums are. You may not be able to get a group discount rate at the beginning, so be prepared.

IRA: Many business owners forget about this business expense, but you need to be able to retire eventually; make an IRA a priority at the beginning rather than using it as an after-thought.

PAYROLL TAXES: You need to talk to your accountant about this business expense so he/she can give you the right advice specific to your business.

CERTIFICATION AND TRAINING: This business expense will be about $1,000 annually.

SUBSCRIPTIONS/DUES: This business expense will be about $300 a quarter.

PURCHASED PRODUCTS FOR INTERNAL USE: This business expense involves spare PCs and parts. You need to budget this in as a business expense that will run you about $3,000 to $4, 000 per year. You need to only buy items that will bring you immediate ROI and tie to billable hours.

TELEPHONE AND ISP: You should consider this business expense to total about $110 a month that includes a business phone plus a low-cost DSL account.

MARKETING/PROMOTION: You need to invest a lot into these items – about $5,000 - $6,000 each year.

COMMERCIAL INSURANCE: This business expense should be approximately $2,200 per annum.

TRANSPORTATION: You can expect this to be $30 each week.

PROFESSIONAL SERVICES: This yearly business expense will be about $2,000.

CORPORATE INCOME TAXES: These business expenses will vary; you should discuss specifics with your trusted accountant.

LOANS AND PAYMENTS: These items will depend upon your borrowing and situation, but you definitely need to plan for them in your budget.

Blogged By: Joshua Feinberg