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Budget for Business Owners and Workers on Commission

Making a budget is helpful especially if your income is predictable. But what about when you never know how much or when your income will come in.  That is sort of my situation and making a budget with those conditions is a real challenge and perhaps even more important to you.

Some salary and commission employees budget to live off the salary and then save and or invest the commission checks.  In this case too you can set a budget based on your salary and then make adjustments and treat yourself when the commissions come in.

But what can the straight commission people and business owners do? What you can do is the expense side. First, budget your necessary expenses like the mortgage/rent, utilities, food, transportation, etc. and leaving out optional purchases like clothes, travel, electronics, etc.  Start with money that you do have and see how long you can live off of that money.  Then as money comes in you add other non-essential expenses. As you bank money that exceeds these non-essential expenses then you can start planning what to do with it.

A good place to start with money after essential expenditures is saving and investing money. Where you put the money can be real important because the unexpected can always happen and you find yourself in need of cash.  So keep a generous amount of the money you save and invest in liquid accounts or investments. You also want to set aside money for bigger expenditures like replacing your car, getting tires, and replacing your computer that has become painfully slow.

Seven Reasons Why You Should be Investing After Tax Dollars!!!!!!!

Budgeting when your income is unpredictable is more art than science. Because your income is unpredictable you really need to keep more money set aside for the unexpected.  It is stressful but so is working the 9 - 5 in Corporate America. At least being your own boss allows you to make your own success and to be creative and have some flexibility with how you live your life. The cost is the unpredictable nature of your cash flow.  So the key is being really conservative with the money you have and the money you have not seen yet.  Then when the money comes in you can be a little freer with your money.

The CPA Superhero wants to help you to succeed in business, life, and in retirement.  While my main business is preparing tax returns, I also work with clients to setup accounting systems to start, manage and develop their business(es) and develop and implement a financial plan. Contact me using my information below to schedule a free introductory consultation up to a half hour. 

Jeff Haywood, CPA

The CPA Superhero

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My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

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