03 Plan your budget
Business budget planner
Enter a month or a year of planned revenue and costs in fixed categories. See profit before tax, gross profit and margins, and where the money goes.
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It runs in your browser, and JavaScript is turned off or blocked here. Turn it on to use the calculator, or work it out by hand with the formula and worked example below.
Your result
Choose month or year, then enter your revenue and costs. Blank amounts count as $0.
You will see
- Profit before tax for the month or year
- Gross profit and operating profit, with margins
- Each expense category and its share
Your figures stay in this browser tab. Nothing is saved or sent.
What to enter
- Month or year
- Choose whether every amount is for one month or one year. Switching does not convert amounts you have already typed. A blank amount counts as $0.
- Revenue
- Product sales, service sales and other business income you expect, before any sales tax you collect.
- Cost of goods sold
- What it costs to make or deliver what you sell: materials and inventory, direct labor, and other direct costs such as subcontractors or shipping to customers. Direct labor is pay for the people who make the product or deliver the service.
- Operating expenses
- The costs of running the business: payroll and related, rent, utilities, software, marketing, insurance, professional fees and two lines for anything else. Payroll and related covers wages and employer payroll costs not already counted as direct labor, so no one's pay is counted twice.
- Interest
- Interest on loans and credit cards. The loan principal you repay is not an expense here.
- Equipment, loan principal and owner draws
- Optional. Equipment purchases, loan principal repaid and owner draws are cash that leaves the business without being an expense in this planner, so they are listed beside profit and never subtracted from it. Depreciation, if you enter it, spreads equipment cost into profit as an expense that moves no cash.
- Owner pay
- Owner pay run through payroll as wages goes under payroll and related; other owner withdrawals are draws. Which applies depends on your business entity and how you are paid, and the planner does not decide it.
How it is calculated
- Revenue
- Product sales + Service sales + Other business income
- Gross profit
- Revenue − Cost of goods sold
- Gross margin
- Gross profit ÷ Revenue
- Operating profit
- Gross profit − Operating expenses, depreciation included
- Profit before tax
- Operating profit − Interest
- Share of operating expenses
- Category ÷ Operating expenses
- Month and year
- A month × 12 for a year; a year ÷ 12 for the monthly average, rounded to the cent
This is a planning estimate under one stated convention. It is not a GAAP financial statement or a tax return, and it does not estimate income tax.
Margins need revenue to divide by. With no revenue they are shown as unavailable rather than as a number, and a loss shows as a negative profit.
Profit and cash differ. Equipment purchases, loan principal and owner draws reduce cash but not profit here; depreciation reduces profit but not cash. The planner shows no bank balance; the cash flow planner handles timing.
There are no benchmarks or target margins. What is reasonable depends on your industry and how you sell.
Worked example
A small business plans one month: $24,500.00 in product and service sales, $10,000.00 in materials and direct labor, $10,580.00 in operating expenses including office payroll and rent, and $150.00 in loan interest. These are example figures.
- Gross profit
- $24,500.00 − $10,000.00 = $14,500.00, a 59.2% gross margin
- Operating profit
- $14,500.00 − $10,580.00 = $3,920.00
- Profit before tax
- $3,920.00 − $150.00 = $3,770.00
- For 12 months like this
- $3,770.00 × 12 = $45,240.00
Before income tax, the plan keeps $3,770.00 a month, 15.4% of revenue. Cash for equipment, loan principal or owner draws would be separate from that figure.
Common questions
What goes in cost of goods sold rather than operating expenses?
Costs that rise and fall with what you sell: materials, inventory, the pay of people who make the product or deliver the service, subcontractors on customer jobs. Costs of running the business whatever you sell, such as rent, office staff and software, are operating expenses.
Where does my own pay go?
If you are paid wages through payroll, include them in payroll and related. If you take draws or distributions instead, enter them under owner draws, which are kept outside profit. Which one applies depends on how your business is set up and how you are paid.
Why is buying equipment not an expense here?
Long-lived equipment is usually spread over the years it is used. The planner lists the purchase as cash outside profit, and you can enter depreciation to spread its cost into profit. Tax rules that let you expense equipment at once are not modeled, so use your own figures.
Is my profit margin good?
There is no single right number; it depends on your industry, costs and how you sell. A more useful check is whether profit before tax covers income tax, loan principal and what you plan to take out of the business.
Does this save my budget?
No. Your figures stay in this browser tab and clear when you leave or refresh the page. Note down anything you want to keep.
Build the budget with our team.
Go Big Accounting handles budgeting, general accounting and financial statements for small businesses.