Managing your expenses and budgeting is also a very important part of running your business, and could land you in financial trouble if not done. Here is an example of what you can do.
let's take an expample of a window cleaner working for himself with a van. If you are using anything only for your business you can claim it all against your tax. There are two types of expenses; fixed and variable. There are others, but they don't concern us in this example.
Road tax, van insurance, MOT (test only), public liability and accountancy are all fixed expenses. This means that they have to be met whether or not you are actually working; while you are on holiday, for instance, whereas fuel and equipment etc is only used while you are working, and so is variable.
So let's assume for this example that road tax is £250, van insurance is £300, MOT (test only) £44, public liability is £370, accountantcy is £250. this totals £1214 per year, or £24 a week (50 wks). So, to avoid any nasty unexpected bills, set aside this £24 each week, either in a separate bank account or in a cash box. Now you are covered for all your fixed expenses!
Whether you are on a computer or using a cash book, keeping accounts is the same; you have three vertical columns with date, description and cost. I suggest that you add four more columns and head them; Fuel, Motor, Office and Equipment. Now, when you enter any item into your account, carry the same figure into the relevent column. If you carry the totals of these columns forward each week or month, you will have a total of each group by the end of the year. It's not dificult, just a matter of discipline! Let's say that the four totals for the year were; Fuel £750, Motor £110, Office £60 and Equipment £360. a total of £1280 (or £25 a wk). So now for the following year, you can make a pretty good estimation of how much you are going to spend in the coming year, and put that aside. This will show you that you are committed to putting £49 a week aside which should cover all your expenses. Do the same with your tax.
let's take an expample of a window cleaner working for himself with a van. If you are using anything only for your business you can claim it all against your tax. There are two types of expenses; fixed and variable. There are others, but they don't concern us in this example.
Road tax, van insurance, MOT (test only), public liability and accountancy are all fixed expenses. This means that they have to be met whether or not you are actually working; while you are on holiday, for instance, whereas fuel and equipment etc is only used while you are working, and so is variable.
So let's assume for this example that road tax is £250, van insurance is £300, MOT (test only) £44, public liability is £370, accountantcy is £250. this totals £1214 per year, or £24 a week (50 wks). So, to avoid any nasty unexpected bills, set aside this £24 each week, either in a separate bank account or in a cash box. Now you are covered for all your fixed expenses!
Whether you are on a computer or using a cash book, keeping accounts is the same; you have three vertical columns with date, description and cost. I suggest that you add four more columns and head them; Fuel, Motor, Office and Equipment. Now, when you enter any item into your account, carry the same figure into the relevent column. If you carry the totals of these columns forward each week or month, you will have a total of each group by the end of the year. It's not dificult, just a matter of discipline! Let's say that the four totals for the year were; Fuel £750, Motor £110, Office £60 and Equipment £360. a total of £1280 (or £25 a wk). So now for the following year, you can make a pretty good estimation of how much you are going to spend in the coming year, and put that aside. This will show you that you are committed to putting £49 a week aside which should cover all your expenses. Do the same with your tax.
