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rugbywolf

Managing your expenses

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rugbywolf

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.

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rshandyman
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.

Good planning but I do not put money aside,

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High-tower

Interesting to find out other peoples methods for managing their businesses.. Thanks...

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rugbywolf
Good planing but I do not put money aside,

 

This example is theoretical, how you do it is up to you. I myself have a bank account in which I keep the money, but run it off a credit card. Last week I had a repair to my van for £122, and yesterday filled up with fuel for £42. so, of course I don't go to the bank every time, I pay with my card. The card cuts off on the 8th of the month, and I have until the 3rd of next month to pay it off, so will incur no costs.

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rshandyman
This example is theoretical, how you do it is up to you. I myself have a bank account in which I keep the money, but run it off a credit card. Last week I had a repair to my van for £122, and yesterday filled up with fuel for £42. so, of course I don't go to the bank every time, I pay with my card. The card cuts off on the 8th of the month, and I have until the 3rd of next month to pay it off, so will incur no costs.

I buy using credit card because I can earn few point but I pay off in full so no extra cost.When I need to buy something I buy. not complicated, it depends how people are with managing their money if it works for you good.

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rshandyman

card has direct debit set up so I go to the bank once a year really if needed otherwise internet banking.

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Dave B

I buy using my wad of cash that i have in my wallet

The paypal payments stay in the bank

(I hope mr taxman isn't lurking on here)

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