The SIMPLEST Business Budget Template / Small Business Budget / Profit First Simplified

If you’ve been avoiding getting a business budget setup because it’s all too complicated and overwhelming, this business budget template will get you started in the simplest way possible and covering the 2 most important things first: your own profit and your ability to pay your taxes!
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In this video, I’m breaking down a simple business budget that fits any variable income/irregular income up to $250k based on the Profit First method, but made easier so you have no excuse to avoid it anymore. ;) This business budget example will show you how to create a business budget that’s not overwhelming and can be maintained in 5 min a week.
TIMESTAMPS:
0:00 Who this business budget method is best for
02:22 4 things you need for a business budget
05:27 3 small business budget percentages to know
10:46 Important note about taxes
11:43 What about materials or subcontractors?
// MORE INSPIRATION
LLC VS. S CORP - WHICH IS BEST:
• What is an LLC vs. S-C...
STOP USING YOUR BIZ BUDGET (HEAR ME OUT):
• STOP Using Your Busine...
HOW TO BUILD A BIZ EMERGENCY FUND
• How to Build a Small B...
HOW TO MANAGE YOUR SMALL BIZ FINANCES (& MINDSET):
• How to Manage Your Sma...
HOW TO CREATE A BUSINESS BUDGET USING YNAB:
• Simple Business Budget...
7 REAL MONEY-MAKING HABITS:
• HOW TO MAKE MORE MONEY...
7 MONEY MINDSET BOOKS YOU MUST READ:
• 7 Money Mindset Books ...
4 SIGNS YOU’RE UNDERCHARGING:
• 4 Signs You’re UNDERCH...
5 MONEY HABITS TO START ASAP:
• 5 Money Habits to Star...
“CHARGE WHAT YOU’RE WORTH” IS BAD ADVICE:
• “CHARGE WHAT YOU’RE WO...
ADVICE TO NEW ENTREPRENEURS:
• Advice I’d Give to New...
DON’T KNOW WHAT YOU WANT? DO THIS!
• Don’t Know What You Wa...
HOW I RUN MY BIZ IN 20 HOURS A WEEK:
• How I Time Block My Bu...
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// ABOUT ME
I’m Tara Wagner, Belief Breakthrough coach with a decade of experience. I help female entrepreneurs crush their goals, not their soul by getting their heads, their heart, and their HABITS straightened out, so you can take back your time, make more money, and feel great doing it. Looking for 1-on-1 Belief Breakthrough, life, and mindset coaching for women in business?
Let’s chat: xotara.us/coaching
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// DISCLAIMER
Everything I share here or through my website is for educational and informational purposes only. No health advice has been evaluated or approved by any governing body, and all advice should be undertaken at your own discretion because you’re a smart cookie. Affiliate links may be included and are noted as such. By watching or subscribing to this channel you agree to use the common sense discretion outlined in painful detail on my full disclaimer, found here: xotara.us/disclaimer

[@zoewrae]

SUPER helpful. I've been doing the immediate tax savings portion, but these proportions are super helpful... I love managing my money, so now I feel confident about managing my biz money, too. Thank you!!!

[@lulamampaki5404]

Wow, this is one simple way to do a budget for a small business. Thank you❤

[@geneeselove1803]

Thank you so much Tara! You have help me so much with the very simple, easy to follow, basic beginner budget. I really appreciate you!

[@TaraWagner]

So glad you found this helpful!

[@kimmDuong]

Thank you for the video and being more specific and very clear with all the explanations! I've been trying to find budgeting videos for new business and a lot of them were so vague and broad. This video definitely helped me decide how I would budget!

[@TaraWagner]

There are a lot of awesome videos out there. I'm thrilled you found this one helpful. What spoke to you the most?

[@ASMRKay_]

I appreciate you so much for this. This is my first month with my LLC and I enjoy budgeting but it was SO OVERWHELMING at first. You’ve help so so much and I will definitely be recommending anyone with questions to your channel!

[@TaraWagner]

I’m glad this is helping you get going!

[@lovelyalitiny5834]

Aww Thank you so much for making this video , it's really helpful

[@triumphant_pearls]

Thanks Tara! I appreciate you keeping it simple 👍🏾

[@TaraWagner]

You are so welcome! Simple and to the point so that you can put it into action.

[@redbhdfw104]

Thank you for the clarity! Great video and you’re a great communicator.

[@TaraWagner]

Why thank you!

[@dapperbowtique2696]

Thanks Tara! Great advice! I started my handcrafted bow tie and accessories business last year. I needed this because it reminds me that I need to pay myself 40-50% as I’m the person sewing all of my items and developing my business from scratch.

[@TaraWagner]

Heck yea!

[@belladavis5657]

Thanks so much. So helpful and easy to follow!

[@TaraWagner]

Yay!

[@MinyetteB]

This video was sooo good. I really needed this, I’ve been so overwhelmed and this calmed me down. Thank you ❤

[@TaraWagner]

I'm so glad to hear that!

[@enhancingbeautytp9338]

Thank you so much for making this so simple for me!

[@TaraWagner]

You bet! There’s a time and place for more, but KISS (keep it super simple) to start gets us there!

[@dejas6966]

This was a great video. You made it simple to understand! Thank you

[@TaraWagner]

I'm so glad to hear that! Making complicated things simple for my fellow biz owners is my jam.

[@szilvah497]

This is so encouraging. Thank you for being so compassionate and even expressing how overwhelming this can be yet how easy it will become once we start budgeting. I’m a first time small business owner with startup costs for second year now headed to opening soon. Thank you so much for uploading this.

[@TaraWagner]

This makes me so happy to read! Glad to be of service!

[@velepibethelchosengenerati8496]

Thank you for the insight 😊I'm starting this right away ❤

[@TaraWagner]

My pleasure!

[@TheElectrican]

So simplified! Thank you for the video :)

[@TaraWagner]

You are so welcome! I'm glad that you found this video helpful. What was your biggest takeaway?

[@shereesmith3102]

I Thank God for you! You made it so simple and easy! Opening a Business Savings Today!!

[@TaraWagner]

Glad it was helpful! Best of luck!

[@georgejemainekruger8271]

Great explanation, I am going to do this immediately !!!

[@TaraWagner]

I hope it’s helpful!

[@elvisbaiden8179]

I have been running my land Surveying services business for a while now ...and my finances is all over the place ... thanks for this ... appreciate it

[@TaraWagner]

That's awesome - I'm glad this was helpful. Get on track, you got this!!

[@justinwagner7607]

I’m glad you were there to tell me what to do. 😂

[@PlasticDetox]

I’ve been in business about a year and it’s just me, All of this was super helpful! Thank you!

[@TaraWagner]

So glad to hear that!!

[@chasitymobley883]

I’m so happy I came across this!!

[@TaraWagner]

I hope it’s useful!

[@according2leah]

This was extremely helpful! Thank you so much!

[@TaraWagner]

Glad it was helpful!

[@leonardwalker930]

Very helpful. Finances were one of my downfall. This year wanted to be a better Steward of money. How you just broke this down in simple terms was sooo helpful and great to get me started. Thank you

[@TaraWagner]

Glad it was helpful! It's a great way to get started. Another vid of mine you might find useful is this one: kzbin.info/www/bejne/gGmrYqmImrSag7M

[@alinaslavu2647]

woow thx u teach me a lot today how to control my new business..thank you.

[@TaraWagner]

Glad to hear that!

[@lochtessmonsterxoxo]

Thank you so much for this!

[@TaraWagner]

You're so welcome!

[@darlenepetrie8285]

Great information Tara. My greatest take away is to ensure ALL money made goes into my business account THEN distribute it out. I love the break downs of each of the expenses.

[@TaraWagner]

Glad it was helpful!

[@cedarsacademyofmakeup]

Love this!!! Thank you!

[@TaraWagner]

My pleasure!

[@loriepearman7184]

Thank you! this has been a huge help in preparing a budget plan for my new business. I was feeling overwhelmed and this made it clear for me.

[@TaraWagner]

Glad it was helpful! Lorie, what was your biggest takeaway?

[@loriepearman7184]

@@TaraWagner That it is OK to pay myself each week from the start of my business. I felt like it would be a while before I could do that. What you said made a lot of sense..

[@TaraWagner]

Yayyyy!

[@EnoAbby]

this is so great! thank you!

[@TaraWagner]

My pleasure!

[@itzelsaenz7374]

Thank you ! In the process of opening up my sneaker store

[@TaraWagner]

That's so exciting! I know this will help you get off to a great start

[@MindStrongWeightLoss]

This was helpful! Thank you!!!

[@TaraWagner]

Glad it was helpful!

[@Annie4Feed]

Thanks a lot it's helpful keeeep it going !!!

[@TaraWagner]

Glad to hear that!

[@I.asiaaa]

THANK YOU SO MUCH FOR THIS BREAKDOWN!!!!

[@TaraWagner]

Yes, you are so welcome! Are you ready to put it to use?

[@I.asiaaa]

@@TaraWagner Most definitely! ✨

[@tylershamone8068]

So Good!! 🙌🏽

[@TaraWagner]

Yay!

[@MinnieOnCam]

Thanks for making this video in bite size. I've been in business for 20 years and I'm relearning new habits. My industry as a webcam model is filled with people giving out bad habit advice I want to change that.

[@TaraWagner]

Glad it was helpful!

[@iverytaylor5379]

Thank you sooo much for this insight. Should I calculate my finances the same way even in a partnership?

[@TaraWagner]

I'd follow the same basic principles and steps, but you'd both want to sit down and decide on the percentages and any other details together. (Let me know if this answers your Q or if you mean something else.)

[@calfinnproducts8927]

you are awesome - thank you

[@TaraWagner]

No, YOU are. ;)

[@Eva.Collins]

Super helpful!

[@TaraWagner]

Glad to hear that!

[@monicajackson5869]

This was sooooo good! Literally God sent me here. you are a great teacher! My husband started a Handyman business when we got married 2 years ago and I'm so overwhelmed at how to manage everything plus our 2 babies. We have our 3 accounts already and I will start this immediately! Where do I go to find the "next level" steps when Im ready?

[@TaraWagner]

I have another video on using YNAB for biz budgeting (search "Tara Wagner YNAB"). But you might want to also read the Profit First book (or there's a Profit First for Contractors). HOWEVER, there are drawbacks to the Profit First method. If you also search "Tara Wagner Profit First" I have a vid on that too! lol And if you're struggling with burnout in your biz, I have a free class that might help too: xotara.us/training

[@dc37009]

3 Accounts and a little 4th grade math ! A little complexity now, into a manageable system down the line ! I thought this might be a excel tutorial, but it was soo much more ! Thanks ~liked ~subD ~Also, good job on the Clickup Vids, big fan...

[@TaraWagner]

Glad that it's helpful!

[@ayattelp1542]

Omg this is so beneficial to me I was searching to find exactly what you just provided Thank you so much Do you provide online courses in small business management ??????????

[@TaraWagner]

I’m so glad to hear that! Yes and no - I provide a program that helps entrepreneurs uplevel the way they think and approach their biz. (xotara.us/bbinnercircle) There is a lot of business coaching in it, but it's geared toward the groups needs. What kind of biz management skills are you looking for?

[@christinalittle3708]

Thank you ❤

[@TaraWagner]

My pleasure!

[@jessicatalley9192]

Thank you!!!!!

[@TaraWagner]

My pleasure!

[@TaraWagner]

What do you think of this super simple business budget template? P.S. Be sure to jump on my free training, “FREE CLASS: How to Upgrade Your Business So It Doesn't Burn Your Out (3 Mistakes to Correct Now)”. Learn more and reserve a seat here: xotara.us/training

[@maestro4337]

very helpful. thanks!!

[@TaraWagner]

So glad it was helpful. What was your biggest takeaway, Josh?

[@maestro4337]

@@TaraWagner The use of simple percentages between the different accounts. A lot of other methods were complex so I was more reluctant to implement

[@calfinnproducts8927]

I've been in business seven or eight years , I my turnover is heading towards $1 million , Yet I am always behind. This method is what I want to to I will implement . I was talked out of it by my financial people. I love the structure going to implement it!

[@TaraWagner]

Awesome! Start simple and let it evolve as you get the hang of it. You got this.

[@albrown1812]

I love it,I have a very similar budgeting layout.only difference I pay the 40/50% pers first,then 25% tax...👀

[@TaraWagner]

If it ain’t broke!

[@mattmillstein]

Great video! I really need to set up a business savings account. Quick question: how do you recommend single member LLC owners to pay themselves? We are double taxed (owner distribution & business tax). I want to become an S-corp but am curious for the time being.

[@TaraWagner]

If you can average your tax rate, what you put aside for taxes should cover it all. Then you cut yourself a check. Once you move over to SCorp you def want to take this up a notch and will require payroll setup instead. I have a vid coming up on LLC vs S-Corp, the pros and cons and when to make the switch that might be helpful if you're subscribed.

[@Offtrackks]

Question 1: If your business does involve materials/sub, and you’re taking the cost of materials(25) away from your gross income (100) and you’re left with 75 with 20% to taxes and 50% to yourself. Where is your other 30% going if you already paid your expenses? Question 2: What are the factors that determine the tax percentage so I don’t accidentally use too much of the emergency money in the business savings account? Final Question: The less I spend on expenses, the more I pay in taxes? Great video btw one of the only ones who can provide clear examples and instructions. Keep it up!

[@TaraWagner]

Q1: Expenses are different than COGS (cost of goods sold). COGS are things that are ONLY accrued with the job (materials, a subcontractor to do that job, etc). They generally vary per client and are worked into the price of the invoice (or should be). Business expenses are expenses you have regardless of whether you have clients - web hosting, ad expenses, business licenses, software subscriptions, etc. They don't get billed to a client (generally) and they don't increase or decrease based on the client (generally). Example: My husband has a contracting biz. Client A has his install an accent wall. The materials and the subcontractor he has do that job are considered his COGS. The CRM he uses to manage the client is a business expense. Q2: You would need to speak to your CPA about your exact percentage but up to 250k is usually around 15% in tax, depending on COGS, expenses, where you live, etc. Also it helps to track the money in your savings so you know what's been set aside for savings vs tax, and then of course paying quarterlies helps that tax fund not get too high. Your emergency fund shouldn't be touched unless it's a genuine emergency, so I personally keep that in a separate bank account, but everyone does it differently. Whatever works for you to keep them straight. (I also use a software called YNAB - if can search "Tara Wagner YNAB" and see a full-blown budget tracking system with that.) Q3: Yes generally that'll be the case. Your accountant/tax preparer should help you figure out a percentage with you. Glad to hear it! Keep in mind this is just a quick-and-dirty version. As your business grows, so will your budgeting and accounting methods! What kind of biz are you in?

[@loseweightyourway_]

Thanks Tara! Great video! So, do subs include team and team benefits like dental, health and referral incentives, etc?

[@TaraWagner]

Subs are not generally considered employees and wouldn't include employee benefits, but you should always talk to your CPA for your unique biz.

[@loseweightyourway_]

@@TaraWagner Thanks so much for your reply Tara. Have a great day : )

[@xBine92]

Thank you for that super helpful video. I'm an artist selling online, but also at markets and conventions. I'm tracking what I have sold on those events, but how would you recommend doing the math for the materials, since those are no commissions? The material costs are in every products price. 😊 Thank you

[@TaraWagner]

Materials would be considered a COG (cost of goods) so you'd follow the second part of this video and subtract what you spend on materials FIRST to get your gross profit, then use the percentages on the rest.

[@tomevans4902]

Thank you so much for this! Referencing the last bit, I sell vintage clothing, would that figure for sourcing the clothing minus the cost of models & a stylist come out of those subcontractor/material figures?

[@TaraWagner]

It’s always ideal to ask a CPA, but I would assume they’ll say yes to the clothing sourcing as a COG and maybe to your contractors. I think the barometer is “are these contractors a direct cost of producing the goods” or basically necessary to the production. It would be a grey area in my mind and wise to talk to your CPA about.

[@tomevans4902]

@@TaraWagner thank you!

[@Earthcitizen4609]

great

[@HealthandBeautyAP]

Every dollar comes into your business account...until you ask your husband to go make a business purchase and he forgets to use the business credit card. HAHAHAHA

[@TaraWagner]

Hahaha...exactly!

[@just_candles5271]

This was very helpful for someone like me, thank you! Quick question (hopefully I’ll get a response since this was posted so long ago): I’m still in the early stages of getting my website together, would now be a good time to open the accounts or do I wait until it’s up and running? Thanks in advance!!

[@TaraWagner]

I would do it before you plan to start accepting money. Usually it happens somewhere in the midst of a business setup so whenever you feel ready!

[@just_candles5271]

@@TaraWagner Thank you so much for responding, this was extremely helpful, have a great day!

[@Scooterp82]

Setting up a savings account for taxes.... hmmm, I might have to do that.

[@TaraWagner]

Makes it so much easier!

[@vamieses]

Thank you so much! You are such a great teacher! So since I'm paying someone monthly to run my business' social media, do you think that counts as a subcontractor or business expense?

[@TaraWagner]

A business expense since it’s not (technically) required to deliver the service - although I bet it feels pretty required! 😂

[@TaraWagner]

Oh and thank you! I’m glad to be a support!

[@vamieses]

@@TaraWagner that makes sense! Thank you

[@kawaiajackson9037]

Hi! How did you find someone to run it for you, I am interested in growing my business instagram? xx

[@pialeatherman3633]

Thank you soo much for this I'm a Daycare Provider and I've been holding my paychecks because I didn't know where to start this process. But I have one question so for the 30 to 40% of the biz money if it doesn't get used or you didn't buy anything that's need for the biz what do you recommend we do? Savings? Or leave it?

[@TaraWagner]

Good Q! That's a great place to be if you're keeping your expenses low. At that point, you can choose! Do you need more in savings (I have a vid on figuring out how much you should have saved - search "business savings Tara Wagner" and it'll pull up)? Do you want more cushion in taxes? Is there anything you need to invest in for growth in your business? If you don't need any of those right now, then you can keep it as profit/an owner draw! Woohoo!

[@pialeatherman3633]

@@TaraWagner Thank you soo much for a response I will look for that video. I appreciate these as they have been very helpful to me.

[@safarkt9626]

Thanks for the video. I have 2 queries can I have the answers please..1) What are the strategies to ensure that the business is operating within the allocated budget? 2) Tell me one example of a long-range strategy you created that was intended to increase organizational performance

[@TaraWagner]

Great questions! So for your first Q: check out my vid on how to use YNAB as your business budgeting software. It will answer a lot of your questions for a clear operating budget for your biz. kzbin.info/www/bejne/gGmrYqmImrSag7M And for your second Q: That's a toughie because the goal of each budget is to operate long-term. So, the best thing I could have ever done was to remain consistent and continue fine tuning my biz budget overtime. What is your biz budget goal currently?

[@kabito0o532]

hey the video was very helpful, only i am still a bit confused. Should I always split my profit or my sales every time. In Germany you are taxed on sales.

[@TaraWagner]

Follow the principles. Set aside what you need for taxes and savings, then what you want for profit, THEN adjust your biz budget to fit what's left (vs paying all your bills and hoping there's some left for yourself). Does that make sense?

[@cnamusicsupply3114]

Grest info. Does the 20 percent also include paying your local taxes or is that just for federal?

[@TaraWagner]

I would make sure you're taking enough out to cover all taxes - local and federal. Remember that 20% is just a guide though. Taxes will be vastly different if you live in NV (no state tax) vs CA or NY!

[@claudiamchang]

Hi Tara, thanks for this posting - how would you advise approaching this budgeting if a solopreneur is salaried on payroll/ ADP? Thanks -

[@TaraWagner]

Personal preference really! But I am an S-corp so I have salary that I pay myself as an employee of my business and I have owner draw. I currently put my salary in business expenses and my owner draw is profit. In the past I took salary and owner draw as both profit. The great thing about this method is you can do what works for YOU. The main goal is just ensuring you're keeping your expenses in check, taking a profit, and accounting for taxes and savings. P.S. As a solopreneur I'd really encourage you to check out Square Payroll! Much more affordable and also easy to use. I've been with them for about 18 months now and really like them!

[@claudiamchang]

@@TaraWagner Thank you Tara for this quick and helpful reply. I realize I'm not clear on the difference between salary/biz expense and then 'taking owner draw' (what does that mean and what does it look like re transaction). I will check this out in more detail (I'm in your BTB program so will engage via that program going forward). And I appreciate the Square Payroll tip tip, aka applying the Profit First mindset!

[@TaraWagner]

I'm gonna try to explain this BUT I'm not a CPA and I always mix things up. LOL But here's the gist of it....Salary vs owner draw are two ways you can take a profit in your biz. They are taxed differently and come with different filing requirements, so it's best to take to your CPA, have them take a look at YOUR biz and make recs on which is right for you. Most S-corps will take both - for example, my business pays me a salary and I pay regular employment taxes on that salary (what happens via payroll/Square). Then I also take owner draw/additional profit and pay different taxes on that. It's all very confusing tbh and of course this is based on US law, so again...always best to chat with your accountant!

[@makyamurray9482]

How do I factor this in as a new brick and mortor. I get so caught up paying gas/rent etc that I am left with very little at the end of the week. Should I put that in materials/subs? And do employees also count in that.

[@TaraWagner]

How old is your business? Newer businesses in start up are a bit trickier because you're still putting extra money into getting things in gear. But here are some thoughts: Employees that you have to pay regardless of whether you have biz revenue aren't a COG per say (contractors who only work when you have work for them are). But as this is your budget and not your actual bookkeeping, you can put them wherever it makes sense, as long as you know you're still taking enough out for taxes (talk to a CPA about that if you're not sure). Same goes for your overhead expenses like rent and gas. The goal isn't to move the budget categories around until you have the money left over you want to have. The goal is to use the budget to highlight areas that need attention. I would do your best with the budget that's laid out here, but focus alllllll your energy into MARKETING to bring in more revenue. If your business is already reaching max capacity (you'd struggle to take on more business) and you still don't have money left over you might have an overhead issue and need to look for ways to decrease your expenses (which isn't a bad idea anyway since expenses have a tendency to bloat faster than they should and we want to use our budget to help us avoid that "life style creep" as it applies to our business expenses). Does this all make sense?

[@kateskreationsrgv6617]

So if I have a business sewing surgical hats, I would need to subtract what I spend on fabric, elastic, thead, ribbon etc. first and then start taking out the percentages? Also where does the employee expense and shipping expense come from(postage, mailers,boxes) ? Just the regular 30-40 of the business?

[@TaraWagner]

Yes materials are generally COGS. Shipping could be too (worth asking your CPA), especially if your customers are fitting that bill. Employee is usually normal biz expenses. Helpful?

[@kateskreationsrgv6617]

@@TaraWagner yes. Very helpful. Thank you so much :)

[@More-ys4pw]

Thank you for doing this but this is really really basic

[@TaraWagner]

Yes, that's the point! To get biz owners in the habit and make it less intimidating. I have another video for biz budgeting using YNAB you might check out if you want something more in-depths. (This is NOT to be confused with biz bookkeeping though!) Here's the link if it's helpful: kzbin.info/www/bejne/gGmrYqmImrSag7M

[@timblandford5088]

You talked about subtracting out the cost for subs before directing 20% to the “tax account”. I have an office professional I pay every other week. Would her salary be the same idea as your sub? Hope that makes sense

[@TaraWagner]

Great question! NO, in your case she'd technically be in the employee category which is a business expense, not a direct "cost of goods sold".

[@danielanganile7457]

wao that is good

[@TaraWagner]

Glad to hear it!

[@wintervillerealtor]

where do employee salaries come from? the 40 that goes to personal account or from the 30% left in the business account?

[@TaraWagner]

Either the 30% for biz expenses OR it's considered a COG and gets taken out before these percentages (explained later in the vid).

[@oliverhojas]

I’ll pay also my personal bills with the 40-50% that goes in our personal checking right?

[@TaraWagner]

From your profit, yes. But that's a whole other budgeting topic! lol

[@kristianscirone771]

Hello! I own a jewelry business and make all my own jewelry, does that qualify under “materials”? Thank you! :)

[@TaraWagner]

Yes I would think it would! It’s a cost of the goods you sell - in other words you can’t sell the product (the product couldn’t even exist) without those materials.

[@Gonzalescinema]

so i have a question on this when you do this method for the personal pay do you take that % from after the taxes %?

[@TaraWagner]

This will depend on how you're structured (sole prop, llc, s-corp, etc) so talk to your accountant for sure so you're doing what's right for YOUR biz, but I take out my taxes % first and then transfer my profit.

[@dudewhatsup1870]

If I stay as a sole proprietor and get workers compensation and payroll for my 1-3 employees this year vs an LLC, will my tax burden be greater or is it indifferent? 3rd year in business with growth each year. Primarily solo and first year with employees starting this April. I have dependents at home and my wife is a homemaker so many write offs and deductions.

[@TaraWagner]

I would take this to your accountant/tax preparer and have them crunch numbers. Each situation may have unique things to consider and they should be able to help you determine your nest course of action (but I'd imagine it's going to be LLC + s-corp).

[@joanstump285]

What happens if the business is not making money and I have to pay the business expenses myself. Should I put the money in the account to pay them or just continue to pay out of our personal expenses.

[@TaraWagner]

Good question! If you’re in a phase of business where you’re still injecting personal capital to pay for the expenses, YES, deposit that into the biz account first before you pay any bills. This helps you show a loss in your taxes and get a refund. Just be careful because there are limits on showing losses. And of course, be super scrappy financially and focus on things that produce revenue the fastest so you can move through that phase quickly! What type of biz are you in?

[@susethmorales3101]

So is the 20% and 40-50% taken out and transferred to the accounts after deductions, employees salaries etc or from the total gross income received that week?

[@TaraWagner]

You set aside profit and taxes/savings before business expenses and deductions. You can adjust the percentages based on your income and expenses but the goal is to force yourself to keep expenses low.

[@pheoungsopheat4913]

I found this video today. I Just appreciated for the method. But this is really challenging me for how possible for me to keep that 30-40% for business expenses include cost of good sold? The amount to keep in the business account can't even afford for that every month when your net profit is around 20-25%. Example : 10K of revenue and the profit margin is 30% so the net profit is 3K, thus how can you handle for the business expenses and you need to make payments for products/services you bought for daily sale.

[@TaraWagner]

that 30-40% is NOT including COGS...the end of the vid explains what to do if you have COGS. The whole point though is to force you to keep expenses low and focus on revenue generating activities with your time so you're quickly out-earning your expenses. Essentially it forces you into smart biz practices. I'd read the book Profit First for more in-depth understanding of it!

[@widlandepierre4321]

I have a small restaurant,when I do event and catering, are renting tables, chairs, tents and other equipments considered as materials?

[@TaraWagner]

Do you mean “cost of goods sold”? Hmm that’s a good question. Seems like it could be but to be sure I’d email your/a CPA.

[@TaraWagner]

Oops I just realized I thought you were responding to another video on bookkeeping. 😆 Yes for budgeting purposes it would fall under materials/expenses!

[@widlandepierre4321]

Thanks😊

[@leahenry8044]

Our LLC business is in heavy equipments maintenance and repair like a contractor so we have a lot of expenses/materials/subcontractors, 2 employees, & travel expenses so we don’t get paid on a monthly basis. Sometimes we don’t get paid for 3-4 months so we front a lot of the costs and seems to play catch up every time. Do I still do the weekly budget in your template or just when we get paid so I divide things up?

[@TaraWagner]

It’s really a personal preference but it might be good to schedule the time weekly, even if you don’t use it weekly. My husband is a contractor and this is what he does so he can manage any deposits and payments as they come in (or use the time for other things in weeks where it’s not needed).

[@mariahenry9036]

@@TaraWagner I see, thank you for replying. Its just difficult to get a budget for all the materials we need to run the business since its as needed if we run out and we don't buy extras because the parts/steel we use are getting very rare and expensive these days. So, sometimes we eat the cost difference if not included in a job. I did notice that our expenses are much higher this year compared to last years bank statements/QBs. So, im re arranging our budget & utilizing your template this month to see if that helps. Thank you!

[@TaraWagner]

My husband is dealing with the same as a contractor. He keeps a spreadsheet with prices (that are constantly checked and updated these days as his materials have increased dramatically too) and only guarantees quotes for a certain number of days due to material changes so that he eats as few costs as possible. He also adds a % (I think it’s 5-10%) of costs to the invoice as a cushion should he need it. Have you thought about something like that?

[@mariahenry9036]

@@TaraWagner Yes, my husband started increasing prices to quotes for customers but I don't think he added the 10-15 % charges as cushion. Yes, we will look into it. Thank you for replying.

[@anasimplesolutions]

Question about the “every dollar into your businesses account”. When using Stripe or PayPal, they take out fees from what you were paid, so the biz account doesn’t accurately reflect you income. The income is minus those fees. Or am I missing something.

[@TaraWagner]

No you're not missing anything at all! You're just super smart. ;) This is just the super simple option. So you base the % off what hits your bank account to KISS (keep it super simple), but it's NOT a perfect system for bookkeeping. Just a step in the right direction.

[@anasimplesolutions]

@@TaraWagner Awesome. Thanks for the reply! I manually keep my bookkeeping now, but love how you break things down (it puts peace in my little business soul).

[@TaraWagner]

Aww my pleasure! I’m glad to know that it’s helpful!

[@oliverhojas]

To offer 1-1 coaching to go through our personal case?

[@TaraWagner]

Are you asking if **I** offer 1:1 coaching for this topic? I don't do calls just for this but it is something I do with members who need it inside the Inner Circle: xotara.us/bbic

[@webby7562]

another thing profit first talks about is having multiple accounts, would you say that's necessary for the start?

[@TaraWagner]

I've found it helpful to have multiple accounts but NOT helpful to have as many as he recommends in the book. I personally have 3 business accounts - one for money in + business expenses, one for taxes and savings, and one for payroll. My husband's business has only two - one for savings and taxes, and one for everything else. This might be because we use a software called YNAB (You Need a Budget) to budget the money in our accounts so we haven't found it necessary to use so many. I have a video on this topic here: kzbin.info/www/bejne/gGmrYqmImrSag7M

[@webby7562]

@@TaraWagner I've heard about YNAB! watching that vid right now. thanks

[@ROHANSAWANT-pb3dn]

but most of the time we have to reinvest in business so in that time what should we do like in the business of making cakes, we have $3 Cake and 1$ profit after All expenses so I have to transfer money into these 3 accounts?

[@TaraWagner]

This video is more geared toward service providers. For product based businesses, you need to subject your COGS first then work with what's left. If you find there's not enough profit, it might be time to adjust the product and/or pricing to create higher profit margins. You can't stay in business without a profit.

[@onlyagreeingsometimes]

If you have three methods of making money online... do you still but the money earn from them in the one business account or do you create a three accounts for each one and manage them separately 🤔

[@TaraWagner]

It matters less how many revenue streams you have as it does whether you're earning those under one business name/license or not. And THAT is a question for your tax advisor to help you determine! They can look at the individual details and help you do what's smartest for you, legally and tax-wise. If you have have a tax advisor, find one who offers free consults at the minimum, but def consider having one in your back pocket. they're worth their fees!

[@Carobcherub]

When you say 40-50%, is that of what's left or what the total was?

[@TaraWagner]

40-50% of the total!

[@andrecamacho7660]

uau ... what business is able to pay the owner 40-50% of sales ?? .. please tell me most of the businesses .. if the owner can take 15-20% of sales net for himself ... is a great business in my last business i had 2.5M sales a year ... 6% net for me

[@TaraWagner]

Higher revenue business will start taking a lower percentage but most businesses up to 200-300k should be able to take 40-50% if they're not allowing their expenses to get out of hand. Have you read the book Profit First? You might really enjoy it.

[@syukrishamsuddin7717]

Where does business loans fall in this budget? Are the installments supposed to be part of the 30% of expenses?

[@TaraWagner]

Good Q. Yes I would put that as an expense.

[@syukriseapond]

@@TaraWagner now that can be challenging. What wd you advise biz owner with a large amount of debt to cover monthly (say it covers the entire expenses budget) but wants to adopt the profit first concept in its financial budget?

[@TaraWagner]

This is gonna sound snarky which isn't my intention lol but my advice? Make more money. You can only save and budget so much...you need to be putting your energy on out-earning your debt. Until then, you'll likely be taking less % to profit and putting more toward biz expenses/debt.

[@syukriseapond]

@@TaraWagner yeah, great advice nonetheless! Appreciate the honesty despite snarkiness lol. I thought that wd have been the only out. At least, with this budgeting approach, I can be more realistic with adding more debt next time.

[@HealthandBeautyAP]

Wait? Why would I need money taken out for taxes unless you have sales tax? If you have a payroll company then you just have the taxes taken out when you pay yourself. What other taxes are you talking about?

[@TaraWagner]

That's a great question! This 5 min biz budget ensures you always have enough money set aside for taxes in the event that you don't have a payroll company to take out your sales taxes for you or to assist with paying for quarterly taxes, etc...

[@HealthandBeautyAP]

@@TaraWagner ok I get it now. The owner previously did this for her business and ended up with fines because she miscalculated the taxes or forgot to pay them. When I took over the business we did it this way we just paid employees through zelle and used a spreadsheet. When I switched the payroll over to a payroll service it was a nightmare because the back taxes were not calculated by the payroll company and it took until the following year to get it straightend out. I respect that you are trying to say to people but my personal opinion based on doing it this way and now I use Gusto which is a do it yourself payroll service is that even if it's just you, the first thing people need to do is to get a self serve payroll system and pay the 40 + 6 dollars per staff member and not do it yourself. It can end up in huge fines and it's hard to figure out the deductions and then make sure the taxes get paid quarterly which I also didn't know I had to do since I was used to doing them yearly. Just food for thought.

[@evelyntenthani7401]

Why am i just seeing this today

[@TaraWagner]

😆

[@HealthandBeautyAP]

If I had 10K coming into my account each month, I would be broke. My overhead is 20K

[@TaraWagner]

Definitely a good idea to keep you biz needs front of mine, including overhead/expenses!

[@stevesmith4901]

Correction: $100 is the revenue and $75 is the profit since $25 is the Cost of Goods.

[@TaraWagner]

$75 would be GROSS profit (before taxes and expenses), not NET profit (after those things are paid).

[@webby7562]

UNCLE SAMMM

[@Paumanokcom]

Or you can spend 100% of your time on the core competency which is product and customer service. Then put all your money in a "War Chest." Do not touch it. Let it build for battle. Then study the IRS 1020 form and the IRS 1040 form. Know each line item. Now you are in charge. Carve out your tax, carve out your R&D, carve out your goodwill. Pay yourself. Winner.

[@TaraWagner]

And while you do all this, you're saying someone should forego paying themselves?

[@Paumanokcom]

@@TaraWagner Pay yourself once a year after everyone else, including taxes and SEP are paid. Now you build another war chest for personal use. A war chest solves the bigger problem, which is when the tide of business rolls in and rolls out. Nine out of ten startups fail. Nine out of ten startups document their decline using Quicken, a program they paid for.

[@TaraWagner]

So it sounds like you're talking about annual budgeting (versus monthly) and a form of emergency funds. I can see the value in some situations but unfortunately many businesses can't afford to wait a year to take a profit.

[@Paumanokcom]

The cool kids call that "runway," and you need it to take off. Nobody gets paid. Nobody until the last bottle is washed. You must believe in it so much that you are willing to not get paid. The elasticity of that with respect to value is tremendous.

[@Paumanokcom]

Early in my career a memo went out saying dark suits and small pattern ties only. We all suited up ready to play and this hippie strolls in with patches on his courderouy professor jacket and his long Ringo Starr hair. I was like "who is this guy, acting like IBM but looking like my creative writing professor. I was disarmed. Guy was genius. Super-different; and there was a cinematic moment when a key crew member said- he has a vision of one day everyone having their own laptop computer. Pause...then...We all laughed. Lunatic. Then ate clams at Umb ertos. Be different.

[@mrluxury6721]

Its like you are doing a business with more than 50% profit margin which is impracticable in most cases.so for me this is BS.

[@TaraWagner]

Just at 50% for my biz. My husband has a contractor biz so has more materials and tools, and it's close to 50% now going into his second year (after start up costs are out of the way - first year was closer to 35-40%). If that sounds like BS I HIGHLY encourage you to get the book Profit First. It teaches how to do this. I spent the first 15 years in biz thinking it was impossible too. That booked changes lives, yo. lol There is a link in the description.

[@rullen648]

Wrong advise if you want to be entrepreneur that 40% paycheck is bulshit how you going to run business with that much taken out. Specially for start ups they should avoid taking anything out where possible. No business will give you 50% net profits at start and that paycheck will be taxed which will slow growth of Start up I am totally lost with this

[@TaraWagner]

I've been a biz owner for 22 years now and have coached countless others. What's your experience? (And yes the initial start up will cost you more than 50% in expenses, but I wouldn't make that a habit for long.)

[@HealthandBeautyAP]

Sorry but this wasn't that helpful. I have an accountant that keeps my books. I have 6 employees and 2 locations. My overhead is so high that this wasn't helpful. I cannot keep my overhead low because as you hire employees you have to also make room for those people, and you have to take care of the employees...Granted I need help with finance but this seems like a person who has a hobbie business. This didn't explain how to budget anything.

[@TaraWagner]

I hear you! If you have an accountant/bookkeeper keeping your books for you and your biz, I'm certain you are in good hands. But, always remain in the know with what is coming in and what is going out. Have you read the book Profit First? The numbers in in this video are demonstrating up to a certain income amount, but they're based off the numbers in that book which shows you how to make adjustments to those percentages based on your revenue. I'd def check it out. It has it's pros and cons but I still recommend it. I have a video on it here if you'd like to see it: kzbin.info/www/bejne/jHObZXmnh8p-nbc

[@HealthandBeautyAP]

@@TaraWagner thank you. I appreciate your help!