💥How to Break down your business expenses💥
✨Save 30% of net income for taxes:
This can be for estimated tax payments for the end of the year federal taxes, payroll quarterly taxes being withdrawn, or quarterly sales taxes being withdrawn. This should also be moved to separate business savings account rather than staying in the operating account. When this is moved it is no longer being seen as income in the operating account that is ready to be spent. This money is now tucked away, safe and sound. It’s better to save more than needed, then need it and not have it.😁
✨ Around 40% put towards overhead, and expenses:
Every business is different, so it’s hard to pin point a magic number without having that data. But I always think it’s great to have enough to gather all your supplies, and cost of goods that help you make the products to sell more. I am a firm believer in overestimating then underestimating. The best part is if you overestimate this number you can keep the money that you didn’t spend in the bank account to accumulate more and more every month. Adjustments can always be made as well, if you learn that you don’t have a lot of expenses you can adjust that percentage to go towards increasing your payroll.
✨ Around 25% Pay yourself as a W-2 employee:
Every small business owner needs to pay themselves at least something during the year. Yes, this is your passion but you can’t do it for free. This is also key to help you save in your personal federal taxes at the end of the year. By listing yourself as a W-2 employee from your company to yourself you are now providing proof of income and work to your personal. This will help you in getting accepted for loans, mortgages, and lines of credit.
💖✨There’s a-lot that goes into managing and budgeting your business finances! The end of year is coming very soon🎄🦃🎊
I would love to work and assist you in your finances, please feel free to reach out to me on how you can learn to manage and budget your money to start the new year on a fabulous foot!💖✨