Business budget template: plan a small business year in one spreadsheet

The short answer: A business budget template is a month-by-month plan of what your business expects to earn and spend, with a column for what actually happened. For a small business, it needs six sections: income, fixed costs, variable costs, a tax set-aside, owner's pay and a cushion for slow months. Build it from last year's numbers, review it every month and adjust the forecast as you go.

This page walks through each section, a worked example and the mistakes that throw small business budgets off. You can start by gathering your costs in the free expense spreadsheet below. When you're ready to track actuals automatically, the Business Income & Expense Tracker builds a monthly profit and loss, a mileage log and a tax set-aside estimate from one transaction list.

What's included in the Business Income & Expense Tracker

• Start Here guide
• Income & expense log with category dropdown
• Income / expense type fills in automatically
• Monthly profit & loss
• Mileage log with deduction estimate
• Tax set-aside estimate each month
• Year & month totals by category
• Dashboard + chart

Spreadsheet (Excel + Google Sheets), $7.99. Instant download; nothing is shipped. See every page on the product page.

Who it's for

• Sole proprietors and freelancers who want a simple yearly plan, not accounting software.
• Etsy sellers, makers and side businesses with seasonal months.
• Service businesses (cleaners, photographers, tutors, consultants) with mostly fixed costs.
• New businesses writing their first-year budget from estimates.
• Not for payroll-heavy or inventory-heavy companies, which usually need full accounting software and an accountant.

How to build a business budget template, step by step

1. Gather last year's numbers. Pull 12 months of income and expenses from your bank statements, payment processor and receipts. If you're brand new, use quotes and realistic estimates instead.
2. Forecast income by month. Write expected income for each month, not one yearly number. Seasonal businesses should base each month on the same month last year.
3. List fixed costs. Add costs that stay about the same every month: software, rent, insurance, phone, website and loan payments.
4. Estimate variable costs. Add costs that rise with sales, such as materials, shipping, transaction fees and advertising. A percentage of sales is often easier than a fixed number.
5. Set aside money for taxes. Add a monthly tax set-aside line so estimated payments don't come as a surprise. Ask a tax professional what percentage makes sense for you.
6. Plan what you'll pay yourself. Add an owner's pay or draw line. A budget that only works when you pay yourself nothing is a warning sign.
7. Track actuals every month. Log real income and expenses and compare them to the plan each month. Adjust the forecast for the rest of the year, not just this month.

The six parts of a small business budget

A worked example

Here's a made-up example for a one-person shop selling handmade goods online. It's for illustration only.

Sales came in a little low and shipping ran high, so the cushion shrank. That's exactly what a budget is for: the owner can see it in March and adjust April's ads or shipping prices before it becomes a pattern.

Mistakes that break small business budgets

• One yearly income number. Most small businesses are seasonal. Forecast by month.
• Forgetting small fees. Payment processing, platform fees and subscriptions add up fast.
• No tax line. Estimated taxes are a predictable cost; budget them every month.
• No owner's pay. If the budget only works when you pay yourself nothing, the plan needs to change.
• Mixing personal and business spending. Keep separate accounts so the numbers stay honest.
• Untracked supply orders. Orders placed but not yet billed are money already committed. A free purchase order template and its PO log show what's coming before it hits the bank.

Turning the budget into a monthly habit

Once a month, log every transaction, compare it with the plan and update the forecast. A profit and loss statement template shows the month's real result, and our business expense template for Excel guide explains how to set up categories that match your tax forms. Keep your household money separate, too; a household budget template is the personal side of the same habit. See all of our templates for more. Just starting out? Map startup costs and a first-year forecast in our business plan template first.

This page is general information, not tax, legal or accounting advice.