No one likes budgeting. It feels like a padlock on growth, enjoyment, and potential for many. Small business bookkeeping solutions can be a real downer when you are a sole trader – a prevailing sense that you are not making the money you should be making for all your hard work. However, understanding your money is something that everyone running a small to medium business needs, and budgeting can be a simple exercise that doesn’t make you feel like you are running up against the wall – even for sole trader budgeting. With a clearer outlook on your budget, you may even have some financial freedom you didn’t realise!
Understand Your Income Streams
As a sole trader, you need to identify all sources of income coming into your business. Granted, as a sole trader, they will fluctuate and won’t be as regular as a typical weekly/monthly income.
Breaking down your revenue streams and categorising them based on consistency is a great start to building your realistic budget. Once you have this down, look at your fixed and variable expenses.
Your fixed expenses remain constant no matter what. Fixed amounts that you will pay every month that won’t change. Your variable expenses will be the ones that are less frequent or one-off for the year. Once you have these down, prioritising those payments and preparing for any fluctuations in cash flow will be a lot easier.
Creating a Realistic Budget
The least fun part for most people comes with creating their budget, mainly because it feels like the fun police. However, it can also hold some surprises when you organise it and allow for some better financial navigation.
Start listing your expenses, and we start with the regular fixed expenses. We mean your rent, utilities, and insurance. These are non-negotiable expenses for your business. After these are documented, begin with the variable, identifying and prioritising them as you go.
Variable expenses can be your marketing, travel, and certain supplies. They are occasional, so your budgeting can reinforce how important they are to your business. One of the biggest expenses to focus on when you are a sole trader is setting aside those important taxes and savings.
You must ensure that you are prepared for your tax payments and have a financial safety net. No matter if it is a low-paying month and business is slow, you will need that support net for any unexpected periods that can come along.
Help With Budgeting
There are avenues of help that you can receive as a sole trader to balance your books and budget. One is to explore user-friendly budgeting tools and apps designed for sole traders.
Accounting software like Quickbooks, Xero, or FreeAgent will streamline expense tracking and budget management, with some software simplifying the process of tracking receipts and managing expenses. Another is to work with bookkeeping services in Manchester that can help you navigate the pitfalls of budgeting and conduct regular reviews of your accounts and budget.
Contact the team at Pebbles Bookkeeping Services for help with your business sole trader budgeting and to keep things ticking over nicely.
