Freelancers and Small Business Need a Budget
Article submitted by http://www.Allfreelancework.com - 1000s of
freelance jobs, articles, and resources.
For people with a salaried job, budgeting their income and
expenses is an easy task. A regular paycheck comes in for them
every two weeks with taxes and benefits already taken out. For
them it is easy to predict how much income will come in and what
expenses will go out. But when you leave your full-time job for
a freelance career, you also leave behind your stable paycheck.
So how do you make sure that you have enough money to pay your
rent? You need to learn how to create a budget. This article
will explain to you the basics of budgeting for your freelance
business.
ADD UP YOUR EXPENSES
The first step in creating a budget is to add up your monthly
expenses. If you are new at freelancing, then calculating your
expenses the first few months is going to be tough for you, but
stick with it. Below, I have provided you a chart to fill out.
For the personal expenses listed, take a look back on last
year's checks, bills, and credit card statements to see what you
paid out last year. Figure out what the average month was for
each expense by writing down all twelve month's expenses and
then dividing this number by 12.
For example:
January --------------- 112
February --------------- 84
March ----------------- 96
April ------------------ 130
May -------------------- 65
June ------------------- 98
July ------------------- 101
August ----------------- 59
September --------------- 75
October ----------------- 84
November ---------------- 96
December ---------------- 115
++++++++++++++++++++++++++++
TOTAL ------------------ 1115
++++++++++++++++++++++++++++
Divide Total by 12
92.92
$92.92 = Average Monthly Phone Bill
In the above example, you would use $92.92 as your monthly phone
expense on your budget.
MONTHLY EXPENSES ==========================================
Utilities (Telephone, Electric, Gas, etc.)
==========================================
Mortgage / Rent
==========================================
Cable
==========================================
Food
==========================================
Loans
==========================================
Transportation
==========================================
Entertainment
==========================================
Health Insurance
==========================================
Life Insurance
==========================================
Home Owner's Insurance
==========================================
Advertising / Marketing
==========================================
Licenses
==========================================
Office Supplies
==========================================
Memberships
==========================================
Taxes
==========================================
Miscellaneous
==========================================
TOTAL EXPENESE
==========================================
You are going to need to guess or estimate for business expenses
unless you have a full year of freelancing under your belt.
Don't worry if your estimate is off, you can always readjust
your budget next month. If you have been in business for more
than a year, then use previous year's records to estimate this
year's expenses.
In order to figure out taxes, first you need to come up with
your target monthly income. Lets assume that your monthly target
income is $2,500. The government wants about 45% of this money.
But, this will depend on what tax bracket that you fall into and
what state that you live in. Your taxes each month would be
about $1,125. (When you are self-employed, you will need to pay
quarterly taxes on April 15, June 15, Sep 15, and Jan 15.)
REQUIRED INCOME
After you have estimated what all of your monthly expenses will
be, you need to figure out how much income you need to bring in.
It is quite simple to figure this out. All that you need to do
is add your target monthly income and your monthly expenses
together. The number that you get is your required income. For
example: If your target income is $2,500, and your monthly
expense is $3,200, then your required income is $5,700.
Once you figure out how much income you are required to make to
keep budget, figure out if your target income was too high or
too low. Are you going to be able to make this amount of money
each month? Review your numbers to assure that they match your
goals.
Now you have an idea of what your cash flow should be like this
year. As the year goes on, you will probably readjust your
budget a few times to meet new goals, increase your profit line,
and anticipate problems.
Article submitted by http://www.Allfreelancework.com - 1000s of
freelance jobs, articles, and resources.