6 Steps To Create A Budget For A Business: Your How-to Guide

Mike Renaldi

When you're starting a business, budgeting is a top priority, but it's not always easy to get started.

In this article, we will give you six steps to follow when creating a budget for your business. We'll also tell you how a Wise business account can help you save more and put some of your cash elsewhere next time you budget.

Want to keep your budget in order while sending and receiving overseas funds?

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Save on overseas payments and connect to Sage, Xero,
QuickBooks, and Wave

Table of Contents

What is a business budget?

A business budget isn't just a ballpark estimate of how much pocket money you've got to play with. As a new or existing business, your budget will cover absolutely everything from rent and employee salaries to marketing costs and inventory.

If you're operating with a poorly-written budget – or worse, no budget at all – it's going to be difficult to find lasting success. Plus, making a budget right from the beginning gives your business a boost.

Here's how budgeting will help your business:

  • You won't overspend as easily
  • You can track your progress and set realistic revenue goals
  • You can identify problem areas early on
  • It's simpler to get financing when you have a budget in place

If you want your business to go the distance, it's time to start budgeting.

New Wise Business Features for Budgeting
  1. Jars - A jar is where business owners and admins can set aside money for specific purposes. It’s kept separate from the balance of that currency. Team members can't spend from Jars.
  2. Groups - Groups give you control over how you separate your funds and manage your team members' access to spend from those funds. Money in Groups is kept separately from your main balances.

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Parts of a business budget

So, you are creating a budget for your new business? Here are some of the most important points. They are:

Estimated revenue

Your estimated revenue is a calculated guess of how much money your goods or services will make this year. It's not a profit estimate – that's further down the list. Revenue estimates are based on how much your products or services cost.

Fixed cost

All businesses have regular bills to pay. There's rent to take care of, employee salaries, office supplies, and other monthly or yearly payments. These are considered fixed costs because they don't change much from month to month.

Variable expenses

Not all costs are fixed – some will change based on your company's production. If you're running a restaurant with busy seasons and off-seasons, your variable costs (like food) will be higher during the busy times and lower when things are slow.

See the Best Banks for Small Businesses >>

One-time expenses

No one can predict computer issues, crazy weather events, or the lunchroom freezer breaking down – but you can (and should) account for them in your budget, just in case. These one-time expenses don't happen often, but they're important to consider.

Cash flow

Every business has two constant actions: money coming in and money going out. This is called cash flow. You can have a positive or negative cash flow, but you should consider three main goals while attempting to manage it:

  1. Keep more money coming in than going out
  2. Make sure that you forecast when money will come in and out
  3. Organize your future planning based on this projection (A good budgeting app can make this process much easier!)


And finally, profit. After you've paid all your bills and expenses, what's left is your profit. This is the goal of every business – to make more money than they're spending (and preferably, by a large margin!)

Want to keep your budget in order while sending and receiving overseas funds?

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How to create a budget for a business in 6 steps

We make budgets for our businesses to keep everything in check – but ultimately, we're trying to make a profit. Right? Some companies (like banks and insurance brokers) make over a 90% profit margin, but they're the exception; a 10% margin² is a good place to aim.

Here's how you can make a budget that will help your business make a profit:

1. Examine your revenue

Revenue is your starting point. How much money are you bringing in? For retailers, you'll be looking at the money made from product sales. If you're a real estate brokerage, your revenue will be the total commissions from each home sold.

Hint: If you're using Wise to handle the financial side of your business, you'll see 'Total Revenue & Gains' clearly labeled on your income statement.

2. Subtract fixed costs

Next, count up all of your fixed recurring costs. You'll want to consider:

  • Rent payments for company buildings or office space
  • Insurance premiums (health, liability, property)
  • Employee salaries
  • Utilities (phone, internet, electricity)
  • Accounting and legal fees
  • Loan payments

These are the costs that stay relatively stable month to month, and you can usually predict them pretty accurately. Subtract all of these from your revenue to move closer to your profit.

3. Determine variable expenses

This part's a little trickier; you can't calculate an exact number for these expenses because they change month to month. That's why it's best to base your budget on the figures from the most recent financial year. You'll be looking at:

  • Cost of goods sold (COGS) – the price of the materials or products you sell
  • Advertising and marketing costs – how much you spend on campaigns, sponsorships, etc.
  • Business travel – airfare, hotels, car rentals, etc.
  • Delivery costs – shipping, gas, etc.

How much did you spend on these costs? Subtract the number you come up with from your revenue, and move on to step four.

4. Plan for unexpected expenses and put money aside for them

In business, the unexpected happens all the time. The customer doesn't pay, the power goes out, or you lose a day's worth of work.

You need to have money set aside to cover these types of unforeseen expenses. How much? A good rule of thumb is to set aside 10-30% of your yearly revenue³. If you’re not at that stage, start with 5% and work upwards. That way when something comes up, you're not reaching for a personal credit card or taking out an expensive loan.

Subtract this figure from your revenue, too.

5. Create your profit and loss (P&L) statement

If you've followed steps one to four, you've got all the information to set up a profit and loss statement. Your P&L will show you whether your business is making a profit or not; simply subtract all known and expected costs from your revenue, and you'll be able to see at a glance if you're in the black or red.

6. Outline your future business budget

At this point, you can use your P&L statement to make a new budget. What needs to change? If you're sitting in the red, you need to find ways to increase revenue and decrease costs. Set up your budget to reflect that in five simple steps:

  • Trace your revenue sources. Find out where your money is coming from, and tally up an estimate for each revenue source to find your total revenue estimate.
  • Update your fixed costs. Use your fixed costs from last year to figure out what they'll be this year; account for any changes, too. For instance, have you moved to a new office that's more expensive?
  • List your variable costs. Estimate how much you'll spend in each category, based on last year's figures, as well as any changes or growth you expect this year.
  • Save for the unexpected. As mentioned, always set aside money to cover those pesky unforeseen expenses.
  • Put it together. With all of the estimates above, you can start to assemble your budget. Make sure you've left room for error since you're making estimates. At the bottom of your budget, subtract your costs from your projected revenue. Voila! You've got your budget.

Budgeting software for businesses

Feeling a little overwhelmed? Luckily, we're living in the digital age – and there are plenty of business budgeting software tools to choose from. They'll take care of the heavy lifting and give you a clear overview of your budget.

Here's a rundown of our favorites:


QuickBooks is an accounting and budgeting tool created by Intuit. Businesses can use QuickBooks to automate processes such as invoicing, payments, and accounting. These features make it easier to manage and track business finances.

This all-in-one solution is one of the best small business budget software on the market - small businesses accounted for 40% of the 3.3 million QuickBooks online subscribers in 2019.⁴

PricingKey Features 🆒Great for
  • Free trial: Yes, 30 days
  • Self-employed $15/month
  • Simple Start $30/month
  • Essentials $55/month
  • Handle all accounting tasks
  • Sync with banking platforms (like Wise)
  • Run budget overviews and reports
  • Create detailed budgets based on accounting data
  • Freelancers
  • Small and mid-sized businesses

Save money and connect
Wise to QuickBooks🚀

Learn More: How To Pay Contractors In QuickBooks Online: Quick Guide

Last checked: June 9, 2023


Xero is online accounting software which is built for entrepreneurs, small businesses and sole proprietors. With Xero, you can manage all your business finances in one place. This includes, budgeting, payroll and expenses, invoicing and billing, forecasting cash flow and much more.

PricingKey Features 🆒Great for
  • Free trial: No
  • Early: $13/month
  • Growing: $37/month
  • Established: $70/month
  • Pay bills and accept payments
  • Accounting dashboard to monitor day-to-day cashflow
  • Analytics and reporting help to inform budgets
  • Track fixed assets
  • Accountants and bookkeepers
  • Small businesses and sole traders
  • Mid-to-large businesses/enterprises

Save money and connect
Wise to Xero 🚀

Last checked: June 9, 2023

Sage Accounting

Sage provides business software to small- and medium-sized businesses. Their solutions can be categorized by business size, industry, and business need, making it easy to find what you need.

Sage Accounting is also a favorite for accounting and budgeting software. Like other industry leaders, it offers an all-in-one platform that will satisfy many of your budgeting needs. This software includes cash flow management, which might satisfy initial forecasting needs.

PricingKey Features 🆒Great for
  • Free trial: Yes, 30 days
  • Sage Accounting Start: $10/month
  • Sage Accounting: $25/month
  • Billing, invoicing, payments
  • Reporting and stock management
  • Integrate invoice payments
  • Connect with banking platforms
  • Contractors
  • Self-employed and startups
  • Retail, finance, and services

Save money and connect
Wise to Sage 🚀

Last checked: June 9, 2023


FreshBooks](https://wise.com/us/blog/freshbooks-review) might be the right fit if you want an easy-to-use accounting solution. This cloud-based software is built for freelancers and small businesses. It also has over 100 app integrations to help you streamline your daily tasks, such as sending invoices and tracking expenses.

PricingKey Features 🆒Great for
  • Free trial: Yes, 30 days
  • Lite: $8.50/month
  • Plus: $15/month
  • Premium: $27.50/month
  • Select: custom pricing
  • Comprehensive accounting features
  • Handle estimates, expenses, and receipts
  • Invoicing and payments
  • Time/project tracking
  • Professionals
  • Growing businesses

Last checked: June 9, 2023


Wave is one of the most popular budgeting tools for small businesses with basic demands. It stands out because of its free accounting and budgeting features(see Wave Accounting alternatives). The goal here is that you love their accounting tool so much that you buy into their paid features, such as transactions, payroll, and bookkeeping advisors. But, until you need those types of tools, you can skate along without paying a cent.

PricingKey Features 🆒Great for
  • Free trial: Yes, limited features
  • Invoicing, Accounting, and Banking: $0
  • Payments: $1/transaction
  • Payroll: $40/month
  • Bookkeeping advisors: $149/month
  • Accounting & payroll coaching: $379
  • Free access to automated accounting tools
  • Access professional advisors to help with budgeting
  • Handle all invoicing, payments, and bills
  • Designed for small businesses

Last checked: June 9, 2023

Save money and connect
Wise to Wave 🚀

With budgeting apps like these, you can cut out the hours of manual data transfer and number crunching – leaving you much more time to focus on driving a great profit.

The International Business Account: Send Funds and Save Along the Way

Wise Business is a great option for paying overseas suppliers and saving money. With Wise, you can send and receive payments in multiple currencies, making international payments quick and easy.

One of the best things about Wise is that they offer a transparent and low-cost pricing structure, so you'll always know exactly what you're paying and won't be hit with hidden fees or unfavorable exchange rates.

How does Wise Business help you save?

Using the mid-market rate, Wise Business can help you save money on international payouts compared to other payment methods. So, whether you're paying for a small order or a large shipment of goods (Wise offers high payment limits), using Wise Business can help you keep costs down and make sure your money gets to your overseas supplier quickly and securely.

  • International: Hold a balance in 50+ currencies and make payments in 70+

  • Batch Payments: Send up to 1000 invoices in one click (free with account)

  • Wise Business API: Set up recurring and automated payments (free with account)

  • Low fees: 19x cheaper on average than sending through PayPal

  • Integrates with popular account software: QuickBooks, Xero, Wave, Sage

The best part: the Business API and Batch Payments come with no additional payment for US-based businesses.

Send money with Wise >>

No monthly fees, no monthly balance requirements
No account opening fee for US-based businesses

Learn More:

The 12 Best FP&A Software Tools in 2023 (SMBs and Enterprise)

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks.


  1. Investopedia - What’s a good profit margin for a new business?
  2. Forbes - 13 tips for building up your business’ emergency fund
  3. Ace Cloud Hosting - Statistical Analysis: QuickBooks and Intuit
  4. QuickBooks - Pricing
  5. Xero - Pricing
  6. Sage - Pricing
  7. FreshBooks- Pricing
  8. Wave - Pricing

Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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