by Tim Harry

Created on: September 20, 2009   Last Updated: May 21, 2010

A home-based business is still a business. The fact that work is now being undertaken from the home, in preference to a shop or office, makes no difference. To be a success, a home-based business will require commitment and time, but it is also important to create a home based business budget to keep track of the finances.

When creating a budget for any home based business it is also important to separate work from the home. Whilst the business may have been set up to improve home finances, the business is a separate entity.

Traditionally of course budgets have been written down using pen and paper, but today it is advisable to make use of the technology available. Technology can make it much easier to forecast and report finances as required. There are numerous accounting software programs on the market, including the likes of Quicken, Microsoft Money and QuickBooks. The latter is one of the best although all of them work best when full versions are purchased. A good program though will ensure that money is not unnecessarily lost from a business. A home based business budget though can also be created using a spreadsheet program like Microsoft Excel, although some skill is required to get reports and predictions from the data.

A home based business budget is basically made up of incomings and outgoings. So a good place to start is with the positive, the income of the business.

Depending on the type of home based business, income may be a large figure received once a month, or could be hundreds of smaller sums. Either way it is important that all sources of income are recorded, ensuring that none are missed. Once totalled, this will result in one, hopefully, large figure for total income.

Unfortunately the budget doesn't stop there and just as there is income, there are outgoings. Some of these outgoings are immediate, and some are paid monthly, quarterly or yearly, thus the budget will help ensure that there is money available to pay future bills.

There is no right or wrong way to organise outgoings, and everyone has their own priorities. A good place to start is with taxes, as Benjamin Franklin once said, "in this world, nothing can be said to be certain, except death and taxes". Each country has their own rules and regulations for self-employment, and so it is important to know the law, but income needs to be reported and taxes paid on that amount. Additional taxes will also need to be paid if the home based business is employing additional staff as

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