Step 2 Work out your business and household budget

​Variable costs

Variable costs change depending on how much trade you have done. They may include stock and employees’ wages. Do not include your own living costs or your drawings (money you take from the business) here. These are included in the Your household outgoings section of Your budget. If you work from home, you may want to include a proportion of your household costs (for example, heating and lighting costs). Your budget can help you work out how you should split these costs.

Use your receipts, books and statements to work out how much you have spent on variable costs over the same number of months you used to work out your average income. Divide the total variable costs by this number of months to work out the average cost each month.

Business gas, electricity and phone bills 

Business gas, electricity and phone bills are normally sent out every three months. Add up the last four bills and divide the total by 12 to work out the cost each month. You may find it easier to budget by paying your bills every month.

If you work from home, you may want to include a proportion of your household gas, electricity and phone bills in the Your business outgoings section of Your budget. Contact us for advice.

Travel costs

If you have a vehicle that you use for business only, you can put all the costs in the Your business outgoings section of Your budget (for example, road tax, insurance, repairs, services and fuel). If you use your vehicle for personal or social journeys as well as for business, you will have to divide the costs between your business budget and your household budget to show how much you use for each. You should include fuel for journeys to and from your home and business in the Your household outgoings section. Your budget can help you work out how you should split these costs.
 
Work out your transport costs each month by adding up the yearly costs and dividing this by 12. Remember to put money aside for road tax, insurance, repairs, services and so on. You can then make sure that you are able to afford the ongoing costs of running a vehicle.