Starting a business requires entrepreneurs to take on several tasks, including the often-difficult task of securing start-up financing. When you are seeking financing for your small business, your lender will probably ask you for several financial documents, including bank accounts, tax returns, personal financial statements, profit and loss statements, and an operating budget. An operating budget is a tool used to track common expenses and overhead costs associating with operating a business. This article will provide you with a sample operating budget that you can use as a guide to create your own and some information about financing options for your business.
Rent |
$ |
Salaries/Wages |
$ |
Payroll Expenses |
$ |
Equipment Leases (i.e. copiers, fax machines, telephone system, computers, etc.) |
$ |
Depreciation |
$ |
Supplies |
$ |
Inventory |
$ |
Advertising |
$ |
Utilities |
$ |
Licenses/Permits |
$ |
Insurance |
$ |
Attorney's Fees |
$ |
Accountant Fees |
$ |
Dues/Subscriptions/Fees |
$ |
Repairs/Maintenance |
$ |
Taxes |
$ |
Loan Payments |
$ |
Other Expenses |
$ |
Please remember that this is a sample budget that is simply intended to serve as a guide for commonly incurred business expenses; don't forget to include expenses particular to your business. For more information about starting, running, or closing your business, you can visit FindLaw's section on Small Business Law.
Options for Financing Your Small Businesses
An operating budget is not only important to help monitor how your business is doing, but it's also the type of document that a lender will want to review before lending your business money. There are a few options when it comes to financing your business. One option is to ask friends or family members to loan your business money. This can be tricky, however, as mixing business and pleasure does have the risk of negatively impacting your relationship with family members or friends. Depending on your personal financial situation, you can also contribute personal funds to your business. However, this can be risky as there is no guarantee your business will succeed, and you may not want to risk losing your own money.
If you don't want to risk your own money, or your personal relationships, you can apply for a loan from a bank or other type of financial institution. One source that offers a variety of loans is the Small Business Administration (SBA). The SBA offers four basic loan programs, each with its own eligibility requirements. Another common place to seek a loan is a commercial bank, which may offer favorable terms if you can show a good business plan and an operating history of a couple of years. A credit union is another good option for seeking a loan. The procedure for borrowing funds from a credit union is generally simpler than getting a loan from a commercial bank. Regardless of where you seek a loan, each will have its own eligibility requirements as well as list of documents that they will want to review. More likely than not, however, the potential lender will at least want to review your operating budget and profit and loss statement.
Getting Legal Help
If you have any questions about creating an operating budget, or any other aspects of starting a business, you may want to contact a local business organizations attorney for guidance.
If you would like more information and resources related to this topic, please visit FindLaw's Business Finances section.
