How to Organize a Personal Budget to Start Your Own Business

Interested in starting your own business, but not sure where to find the funds or stay organized while you do it? A side business can offer excellent additional income and eventually replace your job if you work hard at it. Staying organized in the process and managing your budget is key to your success. Here's how to organize a personal budget so that you can start your own business.

Difficulty: Moderately Easy

Instructions

1. 
    
   Organize your budget

   Evaluate your personal budget, noting your income, expenses and debts. If you've been lax about making a spending plan and recording your purchases, now is the time to reorganize your personal finances, before you add the additional paperwork for your business.

2. Determine how much money you need for your start-up venture. It may be very little, if your work is service-based and you already have the tools and initial contacts you need to get started. Or, it could be quite costly if you'll be buying new equipment or undergoing extensive training and certification in your field.

3. 
    
   Budget cuts?

   Decide how much money from your personal budget can be diverted to your business each pay period. You may need to make budget cuts, spending less on entertainment or travel, to cash flow your business needs.

4. Open a separate checking account for your new business. Once your business begins earning money, it is especially important to have separate accounts that let you easily distinguish between your business and personal funds.

5. 
    
   Transfer money online

   Each month or pay period, transfer the budgeted amount from your personal account to the business account. When you've funded the account, use it for your budgeted business expenses, such as advertising or buying supplies.

6. Save your receipts and keep track of invoices so you know how well your new business is doing. Use budgeting software to help you stay organized (see Resources, below).

Tips & Warnings

• Use personal budgeting software to organize your spending plans. See link under Resources, below, for free budgeting software tools at Mint.com.
• It's best to pay cash for your new business needs, rather than start off with debt you may not have the means to repay.
• Don't drain your savings to start your new business: keep several months' expenses safely tucked away.
• Avoid spending un-budgeted personal money on business expenses. Find ways for the business to break even and begin turning a profit.

Resources

• Free Personal Budget Planner at Mint.com

[TeryLynne]

on 7/12/2008 Great tips! Love this article! 5*****

[amylaine]

on 7/11/2008 Great advice.

[mchapman]

on 7/8/2008 I've always thought of starting a business but never knew where to get the money.....thanks for the info....Mary

[heatherschulte]

on 7/5/2008 Very useful information.

[Elizabethknows]

on 7/5/2008 thank you for sharing I need to do this so this will help me start.