Step 2 Work out your business and household budget

​Help with managing your money and budgeting for your business

This section gives some useful hints and tips to help you make the right decisions.

Planning ahead

Business income and outgoings can vary from month to month. This can depend on a number of things including the time of year and competition from other businesses. There are also unexpected events, such as the loss of a major customer, that could affect your business income. These things can make it hard to pay bills on time or repay debts.

The money that comes into your business is called cash flow. Filling in the cashflow forecaster provided by Start Up Loans Company will help you estimate your income and outgoings for the future. The Start Up Loans Company provides Government funded loans and business mentors. It is designed to help support people with viable business ideas but who have no access to finance. A cashflow forecaster can help you see when you are likely to experience financial difficulties.

It is important to set aside some of the money from when your business income is higher, to cover bills and debts when business income is lower. You could open up a second business bank account to keep this money separate from everything else. Setting up a business overdraft can also help you cope with differences in business income over the year.

Business bank accounts

It is important to set up a business bank account when you are self-employed. This will help you to keep your business income and outgoings separate from your household income and outgoings. Set up an account with a bank that you don’t have any existing debt with. This will strengthen your position if you have difficulty paying your existing bank debts in the future.
By keeping things separate, it will help you to keep records that your accountant will need to fill in tax returns each year.
A second business account can help you set aside money each month for your income tax, National Insurance and VAT bills. You could also put money in this account based on the results the cashflow forecaster gives you to make sure that if your business income goes down, you still have enough to pay your bills and any debts. See more about avoiding cashflow problems on GOV.UK.
If you have difficulty setting up a business bank account, contact us for advice.