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What Are Business Expenses?
Understanding business expenses, income statement reporting, personal expenses, non-deductible expenses, the bottom line.
- Deductions & Credits
- Tax Deductions
Understanding Business Expenses and Which Are Tax Deductible
Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.
Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.
Business expenses are costs incurred in the ordinary course of business. Every business, from the smallest corner store to the largest corporation, tracks these expenses throughout the year for tax purposes. Business expenses are subtracted from revenue to arrive at a company’s taxable net income.
Business expenses are also referred to as deductions. These are generally divided into two major categories, capital expenditures and operational expenditures .
Key Takeaways
- Business expenses are deductions from taxable income.
- The total of business expenses is subtracted from revenue to arrive at the business' total amount of taxable income.
- The IRS defines allowable business deductions as costs that are "ordinary and necessary" for the industry in which the business operates.
- The main deductible categories are direct expenses, indirect expenses, and interest on debt.
Section 162 of the Internal Revenue Code (IRC) details the guidelines for business expenses. The IRC allows businesses to report any expense that may be ordinary and necessary.
Business expenses need not be required to be considered ordinary or necessary. Generally, ordinary means that the expense is common in the industry and most business owners in the same line of business or trade would normally expense these things. Necessary means that the expenses are appropriate and a business owner might not be able to manage without making the expenditure.
An expense that meets the definition of ordinary and necessary for business purposes can be expensed and, therefore, is tax-deductible .
Some business expenses may be fully deductible while others are only partially deductible.
Below are some examples of fully deductible expenses:
- Advertising and marketing expenses
- Processing fees from business and corporate credit cards
- Education and training expenses for employees
- Certain legal fees
- License and regulatory fees
- Wages paid to contract employees
- Employee benefits programs
- Equipment rentals
- Insurance costs
- Interest paid
- Office expenses and supplies
- Maintenance and repair costs
- Office lease costs
- Utility expenses
The income statement is the primary financial statement used by businesses to record their expenses and determine their taxes. Most have three categories of expenses, broken down by direct costs, indirect costs, and interest.
Direct Costs
The value of inventory on hand at the beginning and the end of each tax year is used in determining the cost of goods sold (COGS), which is a large direct expense for many companies.
COGS is deducted from an entity’s total revenue to determine gross profit for the year. Any expenses included in COGS cannot be deducted again. Expenses that are included in calculating COGS may include direct labor costs , factory overhead , storage, costs of products, and costs of raw materials.
Indirect Costs
Indirect costs are subtracted from gross profit to identify operating profit. Typical indirect costs include executive compensation, general expenses, depreciation, and marketing costs.
Subtracting indirect costs from gross profit results in operating profit, which is also known as earnings before interest and tax.
Depreciation
Expensing of business assets is usually done by depreciation. Depreciation is a tax-deductible expense on the income statement and is classified as an indirect expense.
Depreciation expenses can be deducted over a number of years. They typically include the costs of computers, furniture, property, equipment, trucks, and more.
Gifts, Meals, and Entertainment Costs
The IRS places limits on costs associated with gifts, meals, and entertainment. For example, you can usually deduct 50% of the cost of providing meals to employees, although certain meals may be fully deducted.
Interest Expenses
The last section of the income statement involves expenses for interest and tax. Interest is the last expense a company subtracts to arrive at its taxable income, sometimes called adjusted taxable income.
In some cases, expenses incurred by a business owner may be both personal and business-related. For example, a small business owner might use the same car for personal purposes and business-related activities.
In this case, the portion of miles used for business purposes can be deducted. In the case of home offices, costs associated with the portion of the home that is exclusively used for business are generally deductible.
Some expenses incurred by a business are not reportable. These expenses include bribes, lobbying costs, penalties, fines, and contributions made to political parties or candidates.
What Is an 'Ordinary and Necessary' Business Expense?
This is IRS-speak for the type of expense that a business can properly deduct . Generally, "ordinary" means normal and widespread in the industry. "Necessary" means appropriate and useful, while falling short of absolutely essential.
What Is Not a Deductible Business Expense?
Any expense that has a personal benefit rather than a business benefit is non-deductible.
Granted, this can be a gray area. If you go to Los Angeles for business purposes and spend a day at Disneyland while there, your tickets to the park are not deductible. Your flight to and from L.A. should be deductible, as long as you're ready to prove that you spent most of your time there doing business.
Can I Deduct My Car if I Use It for My LLC?
If you use a car entirely for business purposes, you can deduct the related expenses.
If you have a car that you use for both business and personal trips, only the costs related to its business use are deductible. That means keeping receipts and a careful log of mileage and other costs associated with the vehicle.
The key to business tax reporting is "ordinary and necessary" expenses. That's the phrase the IRS uses to describe the costs of doing business . Those costs are deducted from income in order to arrive at taxable income for the period being reported.
Office of the Law Revision Counsel, United States Code. " 26 USC 162: Trade or Business Expenses ."
Internal Revenue Service. " Publication 535, Business Expenses ," Page 3.
Internal Revenue Service. " Publication 535, Business Expenses ."
Accounting Tools. " Operating Profit Definition ."
Internal Revenue Service. " Topic No. 704, Depreciation ."
Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Pages 10-12.
Internal Revenue Service. " Publication 535, Business Expenses ," Pages 5-6.
Internal Revenue Service. " Publication 535, Business Expenses ," Pages 47-49.
Internal Revenue Service. " Publication 535, Business Expenses ," Page 6.
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Free Financial Templates for a Business Plan
By Andy Marker | July 29, 2020
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In this article, we’ve rounded up expert-tested financial templates for your business plan, all of which are free to download in Excel, Google Sheets, and PDF formats.
Included on this page, you’ll find the essential financial statement templates, including income statement templates , cash flow statement templates , and balance sheet templates . Plus, we cover the key elements of the financial section of a business plan .
Financial Plan Templates
Download and prepare these financial plan templates to include in your business plan. Use historical data and future projections to produce an overview of the financial health of your organization to support your business plan and gain buy-in from stakeholders
Business Financial Plan Template
Use this financial plan template to organize and prepare the financial section of your business plan. This customizable template has room to provide a financial overview, any important assumptions, key financial indicators and ratios, a break-even analysis, and pro forma financial statements to share key financial data with potential investors.
Download Financial Plan Template
Word | PDF | Smartsheet
Financial Plan Projections Template for Startups
This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.
Download Startup Financial Projections Template
Excel | Smartsheet
Income Statement Templates for Business Plan
Also called profit and loss statements , these income statement templates will empower you to make critical business decisions by providing insight into your company, as well as illustrating the projected profitability associated with business activities. The numbers prepared in your income statement directly influence the cash flow and balance sheet forecasts.
Pro Forma Income Statement/Profit and Loss Sample
Use this pro forma income statement template to project income and expenses over a three-year time period. Pro forma income statements consider historical or market analysis data to calculate the estimated sales, cost of sales, profits, and more.
Download Pro Forma Income Statement Sample - Excel
Small Business Profit and Loss Statement
Small businesses can use this simple profit and loss statement template to project income and expenses for a specific time period. Enter expected income, cost of goods sold, and business expenses, and the built-in formulas will automatically calculate the net income.
Download Small Business Profit and Loss Template - Excel
3-Year Income Statement Template
Use this income statement template to calculate and assess the profit and loss generated by your business over three years. This template provides room to enter revenue and expenses associated with operating your business and allows you to track performance over time.
Download 3-Year Income Statement Template
For additional resources, including how to use profit and loss statements, visit “ Download Free Profit and Loss Templates .”
Cash Flow Statement Templates for Business Plan
Use these free cash flow statement templates to convey how efficiently your company manages the inflow and outflow of money. Use a cash flow statement to analyze the availability of liquid assets and your company’s ability to grow and sustain itself long term.
Simple Cash Flow Template
Use this basic cash flow template to compare your business cash flows against different time periods. Enter the beginning balance of cash on hand, and then detail itemized cash receipts, payments, costs of goods sold, and expenses. Once you enter those values, the built-in formulas will calculate total cash payments, net cash change, and the month ending cash position.
Download Simple Cash Flow Template
12-Month Cash Flow Forecast Template
Use this cash flow forecast template, also called a pro forma cash flow template, to track and compare expected and actual cash flow outcomes on a monthly and yearly basis. Enter the cash on hand at the beginning of each month, and then add the cash receipts (from customers, issuance of stock, and other operations). Finally, add the cash paid out (purchases made, wage expenses, and other cash outflow). Once you enter those values, the built-in formulas will calculate your cash position for each month with.
Download 12-Month Cash Flow Forecast
3-Year Cash Flow Statement Template Set
Use this cash flow statement template set to analyze the amount of cash your company has compared to its expenses and liabilities. This template set contains a tab to create a monthly cash flow statement, a yearly cash flow statement, and a three-year cash flow statement to track cash flow for the operating, investing, and financing activities of your business.
Download 3-Year Cash Flow Statement Template
For additional information on managing your cash flow, including how to create a cash flow forecast, visit “ Free Cash Flow Statement Templates .”
Balance Sheet Templates for a Business Plan
Use these free balance sheet templates to convey the financial position of your business during a specific time period to potential investors and stakeholders.
Small Business Pro Forma Balance Sheet
Small businesses can use this pro forma balance sheet template to project account balances for assets, liabilities, and equity for a designated period. Established businesses can use this template (and its built-in formulas) to calculate key financial ratios, including working capital.
Download Pro Forma Balance Sheet Template
Monthly and Quarterly Balance Sheet Template
Use this balance sheet template to evaluate your company’s financial health on a monthly, quarterly, and annual basis. You can also use this template to project your financial position for a specified time in the future. Once you complete the balance sheet, you can compare and analyze your assets, liabilities, and equity on a quarter-over-quarter or year-over-year basis.
Download Monthly/Quarterly Balance Sheet Template - Excel
Yearly Balance Sheet Template
Use this balance sheet template to compare your company’s short and long-term assets, liabilities, and equity year-over-year. This template also provides calculations for common financial ratios with built-in formulas, so you can use it to evaluate account balances annually.
Download Yearly Balance Sheet Template - Excel
For more downloadable resources for a wide range of organizations, visit “ Free Balance Sheet Templates .”
Sales Forecast Templates for Business Plan
Sales projections are a fundamental part of a business plan, and should support all other components of your plan, including your market analysis, product offerings, and marketing plan . Use these sales forecast templates to estimate future sales, and ensure the numbers align with the sales numbers provided in your income statement.
Basic Sales Forecast Sample Template
Use this basic forecast template to project the sales of a specific product. Gather historical and industry sales data to generate monthly and yearly estimates of the number of units sold and the price per unit. Then, the pre-built formulas will calculate percentages automatically. You’ll also find details about which months provide the highest sales percentage, and the percentage change in sales month-over-month.
Download Basic Sales Forecast Sample Template
12-Month Sales Forecast Template for Multiple Products
Use this sales forecast template to project the future sales of a business across multiple products or services over the course of a year. Enter your estimated monthly sales, and the built-in formulas will calculate annual totals. There is also space to record and track year-over-year sales, so you can pinpoint sales trends.
Download 12-Month Sales Forecasting Template for Multiple Products
3-Year Sales Forecast Template for Multiple Products
Use this sales forecast template to estimate the monthly and yearly sales for multiple products over a three-year period. Enter the monthly units sold, unit costs, and unit price. Once you enter those values, built-in formulas will automatically calculate revenue, margin per unit, and gross profit. This template also provides bar charts and line graphs to visually display sales and gross profit year over year.
Download 3-Year Sales Forecast Template - Excel
For a wider selection of resources to project your sales, visit “ Free Sales Forecasting Templates .”
Break-Even Analysis Template for Business Plan
A break-even analysis will help you ascertain the point at which a business, product, or service will become profitable. This analysis uses a calculation to pinpoint the number of service or unit sales you need to make to cover costs and make a profit.
Break-Even Analysis Template
Use this break-even analysis template to calculate the number of sales needed to become profitable. Enter the product's selling price at the top of the template, and then add the fixed and variable costs. Once you enter those values, the built-in formulas will calculate the total variable cost, the contribution margin, and break-even units and sales values.
Download Break-Even Analysis Template
For additional resources, visit, “ Free Financial Planning Templates .”
Business Budget Templates for Business Plan
These business budget templates will help you track costs (e.g., fixed and variable) and expenses (e.g., one-time and recurring) associated with starting and running a business. Having a detailed budget enables you to make sound strategic decisions, and should align with the expense values listed on your income statement.
Startup Budget Template
Use this startup budget template to track estimated and actual costs and expenses for various business categories, including administrative, marketing, labor, and other office costs. There is also room to provide funding estimates from investors, banks, and other sources to get a detailed view of the resources you need to start and operate your business.
Download Startup Budget Template
Small Business Budget Template
This business budget template is ideal for small businesses that want to record estimated revenue and expenditures on a monthly and yearly basis. This customizable template comes with a tab to list income, expenses, and a cash flow recording to track cash transactions and balances.
Download Small Business Budget Template
Professional Business Budget Template
Established organizations will appreciate this customizable business budget template, which contains a separate tab to track projected business expenses, actual business expenses, variances, and an expense analysis. Once you enter projected and actual expenses, the built-in formulas will automatically calculate expense variances and populate the included visual charts.
Download Professional Business Budget Template
For additional resources to plan and track your business costs and expenses, visit “ Free Business Budget Templates for Any Company .”
Other Financial Templates for Business Plan
In this section, you’ll find additional financial templates that you may want to include as part of your larger business plan.
Startup Funding Requirements Template
This simple startup funding requirements template is useful for startups and small businesses that require funding to get business off the ground. The numbers generated in this template should align with those in your financial projections, and should detail the allocation of acquired capital to various startup expenses.
Download Startup Funding Requirements Template - Excel
Personnel Plan Template
Use this customizable personnel plan template to map out the current and future staff needed to get — and keep — the business running. This information belongs in the personnel section of a business plan, and details the job title, amount of pay, and hiring timeline for each position. This template calculates the monthly and yearly expenses associated with each role using built-in formulas. Additionally, you can add an organizational chart to provide a visual overview of the company’s structure.
Download Personnel Plan Template - Excel
Elements of the Financial Section of a Business Plan
Whether your organization is a startup, a small business, or an enterprise, the financial plan is the cornerstone of any business plan. The financial section should demonstrate the feasibility and profitability of your idea and should support all other aspects of the business plan.
Below, you’ll find a quick overview of the components of a solid financial plan.
- Financial Overview: This section provides a brief summary of the financial section, and includes key takeaways of the financial statements. If you prefer, you can also add a brief description of each statement in the respective statement’s section.
- Key Assumptions: This component details the basis for your financial projections, including tax and interest rates, economic climate, and other critical, underlying factors.
- Break-Even Analysis: This calculation helps establish the selling price of a product or service, and determines when a product or service should become profitable.
- Pro Forma Income Statement: Also known as a profit and loss statement, this section details the sales, cost of sales, profitability, and other vital financial information to stakeholders.
- Pro Forma Cash Flow Statement: This area outlines the projected cash inflows and outflows the business expects to generate from operating, financing, and investing activities during a specific timeframe.
- Pro Forma Balance Sheet: This document conveys how your business plans to manage assets, including receivables and inventory.
- Key Financial Indicators and Ratios: In this section, highlight key financial indicators and ratios extracted from financial statements that bankers, analysts, and investors can use to evaluate the financial health and position of your business.
Need help putting together the rest of your business plan? Check out our free simple business plan templates to get started. You can learn how to write a successful simple business plan here .
Visit this free non-profit business plan template roundup or download a fill-in-the-blank business plan template to make things easy. If you are looking for a business plan template by file type, visit our pages dedicated specifically to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates. Read our articles offering startup business plan templates or free 30-60-90-day business plan templates to find more tailored options.
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What are business expenses definition with examples.
Business expenses are ordinary and necessary costs a business incurs in order for it to operate. Businesses need to track and categorize their expenditures because some business expenses can count as tax deductions. Deductible expenses reduce a business’s taxable income , which can result in significant cost savings.
Here’s What We’ll Cover:
What Can You Write off as Business Expenses?
What are examples of business expenses, can business expenses be carried forward, can i deduct personal expenses for business, what are the three types of business expenses.
NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.
Tax deductible business expenses are ones that are considered by the Internal Revenue Service (IRS) to be both “ordinary and necessary.”
Ordinary is defined by the IRS as “one that is common and accepted in your trade or business. A necessary expense is “one that is helpful and appropriate for your trade or business.”
Not all expenses a company incurs are tax deductible. Those that are may only qualify for a partial reduction. Some companies will need to ‘ capitalize ’ a business expense.
Capitalizing an expense refers to business assets that a business invests in to generate revenue, but is also one that will depreciate over a number of years (like a building or piece of equipment).
Capitalizing large business expenses means only the depreciation amount of those items for that year will show up on a company’s income statement , unlike regular business expenses which show the full amounts. This will allow a company to accurately assess its profits.
Here are some common business expense examples that may be partially or fully tax deductible:
- Payroll (employees and freelance help)
- Bank fees and interest
- Insurance expenses
- Business vehicles
- Equipment or equipment rental
- Office supplies
- Membership dues (including union or other professional affiliations)
- Commissions & fees
- Business meals
- Business travel expenses
- Employee retirement plans
- Employee education plans
- Employee benefit programs
- Subscriptions
- Equipment rentals
- Advertising and marketing costs
- Office equipment
- Repair and maintenance costs
- Executive compensation
- Employee salaries and wages
- Interest expenses
- Shipping costs
If you operate a small business out of your home, some of your housing costs may be partially deductible:
- Home office space (as long as this is your main place of business)
- Mortgage interest
- Security system
- Property taxes
- Maintenance, repairs or upkeep
- Business phone line (separate from home line)
For example, say your home is 1,000 square feet, and you use 100 square feet (10% of the total square footage) exclusively for your home office. In that case, you can deduct 10% of the above expenses as part of the home office deduction . The remaining 90% are considered personal expenses.
Typically, a company’s business expenses are fully deductible the tax year the purchases were made. If the business expenses missed were considerable and affected a company’s taxes, the company could then choose to file an amended tax return . You have three years from the tax return due date to file an amended return and claim business expenses and get a tax refund.
In addition, business expenses that are considered to be capitalized costs (see above) will be carried forward, but the depreciation amounts will change every year. Capitalizing business expenses is standard for a new company with a lot of expensive start up costs.
No, you cannot claim personal expenses as tax-deductible business expenses. The only exception is if the costs incurred are both personal and business expenses. In that case, you can only deduct the portion of the expense that relates to business purposes.
Let’s give an example. Take John, he’s self-employed and runs his own tax consulting business. He uses his vehicle 50% of the time to visit clients in their homes or at their place of business, and 50% of the time the vehicle is used for family or pleasure. The costs of maintaining and operating the vehicle include both personal and business expenses.
The rules allow John to deduct the business portion of gas, insurance, maintenance, and repairs as deductible expenses. But to back up these business expenses on his taxes he needs to track mileage and the purpose of each trip.
There are three types of business expenses:
Fixed Expenses
A fixed cost is one that does not change or changes only slightly. An example of fixed business expenses would be the monthly rent a business pays on its headquarters.
Variable expenses vary from month to month and are typically a company’s largest expense. Examples of variable business expenses would be payroll for a company with a large amount of freelance personnel, or overtime expenditures.
Periodic expenses are ones that happen infrequently. Periodic business expenses can be hard to plan for, such as money needed for an unexpected machine replacement or repair.
Tips for Tracking Business Expenses
Keeping track of business expenses can be a time-consuming burden for a small business owner . However, there are several ways to make this task easier and more efficient.
The following tips can help you ensure you track business expenses efficiently and effectively:
- Set up a separate business bank account . Open a business checking account and ensure all of your business-related income and expenses run through that account.
- Use business accounting software . Most business owners use accounting software to track business costs. Most modern accounting software can connect to your business bank account to automatically record expenses.
- Keep good records. Document all business spending with receipts and invoices to establish a clear paper trail in case the IRS decides to audit your taxable income.
- Review expenses regularly. It’s important for business owners to review their expenses regularly in order to stay on top of their finances. This allows them to identify areas where they can reduce operating costs to save money, spot tax deductions to lower the company’s tax liability, and make more informed decisions about how to grow their business.
By following these simple steps, business owners will always know where their business money is going, helping them make better decisions in their business and reduce their tax liability.
Janet Berry-Johnson
About the author
Janet Berry-Johnson, CPA, is a freelance writer with over a decade of experience working on both the tax and audit sides of an accounting firm. She’s passionate about helping people make sense of complicated tax and accounting topics. Her work has appeared in Business Insider, Forbes, and The New York Times, and on LendingTree, Credit Karma, and Discover, among others. You can learn more about her work at jberryjohnson.com .
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- Building Your Business
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- Business Plans
Writing a Business Plan—Financial Projections
Spell out your financial forecast in dollars and sense
Creating financial projections for your startup is both an art and a science. Although investors want to see cold, hard numbers, it can be difficult to predict your financial performance three years down the road, especially if you are still raising seed money. Regardless, short- and medium-term financial projections are a required part of your business plan if you want serious attention from investors.
The financial section of your business plan should include a sales forecast , expenses budget , cash flow statement , balance sheet , and a profit and loss statement . Be sure to follow the generally accepted accounting principles (GAAP) set forth by the Financial Accounting Standards Board , a private-sector organization responsible for setting financial accounting and reporting standards in the U.S. If financial reporting is new territory for you, have an accountant review your projections.
Sales Forecast
As a startup business, you do not have past results to review, which can make forecasting sales difficult. It can be done, though, if you have a good understanding of the market you are entering and industry trends as a whole. In fact, sales forecasts based on a solid understanding of industry and market trends will show potential investors that you've done your homework and your forecast is more than just guesswork.
In practical terms, your forecast should be broken down by monthly sales with entries showing which units are being sold, their price points, and how many you expect to sell. When getting into the second year of your business plan and beyond, it's acceptable to reduce the forecast to quarterly sales. In fact, that's the case for most items in your business plan.
Expenses Budget
What you're selling has to cost something, and this budget is where you need to show your expenses. These include the cost to your business of the units being sold in addition to overhead. It's a good idea to break down your expenses by fixed costs and variable costs. For example, certain expenses will be the same or close to the same every month, including rent, insurance, and others. Some costs likely will vary month by month such as advertising or seasonal sales help.
Cash Flow Statement
As with your sales forecast, cash flow statements for a startup require doing some homework since you do not have historical data to use as a reference. This statement, in short, breaks down how much cash is coming into your business on a monthly basis vs. how much is going out. By using your sales forecasts and your expenses budget, you can estimate your cash flow intelligently.
Keep in mind that revenue often will trail sales, depending on the type of business you are operating. For example, if you have contracts with clients, they may not be paying for items they purchase until the month following delivery. Some clients may carry balances 60 or 90 days beyond delivery. You need to account for this lag when calculating exactly when you expect to see your revenue.
Profit and Loss Statement
Your P&L statement should take the information from your sales projections, expenses budget, and cash flow statement to project how much you expect in profits or losses through the three years included in your business plan. You should have a figure for each individual year as well as a figure for the full three-year period.
Balance Sheet
You provide a breakdown of all of your assets and liabilities in the balances sheet. Many of these assets and liabilities are items that go beyond monthly sales and expenses. For example, any property, equipment, or unsold inventory you own is an asset with a value that can be assigned to it. The same goes for outstanding invoices owed to you that have not been paid. Even though you don't have the cash in hand, you can count those invoices as assets. The amount you owe on a business loan or the amount you owe others on invoices you've not paid would count as liabilities. The balance is the difference between the value of everything you own vs. the value of everything you owe.
Break-Even Projection
If you've done a good job projecting your sales and expenses and inputting the numbers into a spreadsheet, you should be able to identify a date when your business breaks even—in other words, the date when you become profitable, with more money coming in than going out. As a startup business, this is not expected to happen overnight, but potential investors want to see that you have a date in mind and that you can support that projection with the numbers you've supplied in the financial section of your business plan.
Additional Tips
When putting together your financial projections, keep some general tips in mind:
- Get comfortable with spreadsheet software if you aren't already. It is the starting point for all financial projections and offers flexibility, allowing you to quickly change assumptions or weigh alternative scenarios. Microsoft Excel is the most common, and chances are you already have it on your computer. You can also buy special software packages to help with financial projections.
- Prepare a five-year projection . Don’t include this one in the business plan, since the further into the future you project, the harder it is to predict. However, have the projection available in case an investor asks for it.
- Offer two scenarios only . Investors will want to see a best-case and worst-case scenario, but don’t inundate your business plan with myriad medium-case scenarios. They likely will just cause confusion.
- Be reasonable and clear . As mentioned before, financial forecasting is as much art as science. You’ll have to assume certain things, such as your revenue growth, how your raw material and administrative costs will grow, and how effective you’ll be at collecting on accounts receivable. It’s best to be realistic in your projections as you try to recruit investors. If your industry is going through a contraction period and you’re projecting revenue growth of 20 percent a month, expect investors to see red flags.
Planning, Startups, Stories
Tim berry on business planning, starting and growing your business, and having a life in the meantime., standard business plan financials: spending budget.
As I continue with my standard business plan financials series, I turn now to developing the spending budget. True, nobody likes budgets, but the budgeting function is one of the most important to management to keep cash in the bank; and we all know it. In standard business plan budgeting, you look for realism and credibility, with educated guesses. And the point of it is setting it down as a standard so you can track it, review it, and revise as needed.
The spending budget is also vital to projected profit and loss and projected cash flow . In the diagram here below of full financials (repeated here from three essential projections posted previously in this series) the spending budget includes both the expenses portion of profit and loss and additional spending that doesn’t show up in profit and loss but does impact the cash flow and balance sheet.
By the way, the word budget, as I use it here, is exactly the same as forecast. The difference between the two is just custom. I could just as easily refer to revenue and spending budgets, or revenue and spending forecasts, as revenue forecast and spending budget. Most people are used to them the way I’m using them, with forecast for revenue and budget for spending.
Also, the difference between Costs and Expenses is significant. In finance and accounting, costs are the direct costs you have in your sales forecast, and expenses are operating expenses like rent, advertising, and payroll. They are not the same thing.
Finally, a special note to our LivePlan users – LivePlan has its own interface to guide you through your spending budget. That’s for a different post. All the concepts you see here are valid, and included with LivePlan – but you don’t have to build them in your spreadsheet.
Three types of spending
There are three common types of spending in a normal business. These are the things you write checks for.
- The first is costs, direct costs, what you spend on what you sell. Those are the costs you have already estimated in your sales forecast.
- The second is your expenses. They are mostly operating expenses, like rent, utilities, advertising, and payroll.
- The third is what you spend to repay debts and purchase assets. I call that “other spending.” These are important financial terms that you have to use correctly; so if you have any doubt, investigate what assets are and how debt repayment is different from interest expense, not an expense, but something that absorbs cash and affects the cash available to the business.
Let’s look first at the most common kind of spending, the operating expenses.
The Expense Budget
Make sure you understand expenses as a technical financial term. Expenses are spending like payroll and rent that aren’t part of direct costs and reduce profits and taxable income. You need to understand that difference if you are going to run a business and manage cash flow. If you have any doubts, please read up on that.
Just as you did for sales forecast and direct costs, try to always project expenses in the same categories you have in your chart of accounts. If your accounting divides marketing expenses into personnel, advertising, and PR, don’t project marketing expenses in your business plan as print, online, and social media. This is important.
Summary of Operating Expenses
Forecasting your operating expenses is a matter of experience, educated guessing, a bit of research, and common sense. Let’s look at a sample expense budget from the same bicycle business plan I used in the sales forecast section above (with middle columns cut out):
All the numbers are educated guesses. Garrett, the bicycle storeowner, knows the business. As he develops his first lean plan, he has a good idea of what he pays for rent, marketing expenses, leased equipment, and so on. And if you don’t know these numbers, for your business, find out. If you don’t know rents, talk to a broker, see some locations, and estimate what you’ll end up paying. Do the same for utilities, insurance, and leased equipment: Make a good list, call people, and take a good educated guess.
Payroll and Payroll Taxes are Operating Expenses
Payroll, or wages and salaries, or compensation, are worth a list of their own. In the case of the bike shop owner, for payroll, he does a separate list so he can keep track. Payroll is a serious fixed cost and an obligation. Garrett’s summary budget (above) has the one line for payroll but it comes from a separate list. He just takes the total into the budget. ;Here’s the list:
Notice that the totals from the Personnel Plan show up in the expense budget. And if you look closely (it may take a calculator) at the expense row “Payroll Taxes” and compare that amount to the total payroll, you’ll see that it’s an estimate based on 25 percent of payroll. Garrett uses “Payroll Taxes” as a blanket term; it includes what he spends on health insurance and other benefits.
Other spending
This is tricky: standard accounting and financial analysis include only sales, costs, and expenses in the calculation of Profit and Loss . However, in the real world, some of what you spend isn’t included in either costs or expenses. For example, repaying a loan takes money, but doesn’t show up anywhere in the profit and loss. And if you have a product-based business and proper accrual accounting, the money you spend buying inventory doesn’t show up in the profit and loss until that inventory sells. Buying a vehicle or production equipment isn’t tax deductible and isn’t an expense; but it costs money. The rule of thumb is that all expenses are tax deductible, but not all spending is an expense.
What to do? Plan and track your operating expenses for sure. And if you need to handle loan repayments, purchasing assets, distributing profits, owners’ draw, or other spending outside of profit and loss, keep those in your spending budget. Keep track of them. Plan for them.
Understand Starting Costs
Startup costs are a special case that applies to startup businesses only. They are the sum of the assets you need to purchase before you start, plus the expenses you incur before you start. My advice on how to estimate starting costs is coming later, in a separate post.
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How Much Does a Business Plan Cost?
- Written By Dave Lavinsky
A complete business plan helps you to identify your business goals and how you plan on reaching them. Whether you are a new business owner or an experienced entrepreneur, writing a comprehensive business plan can help you start, grow, and/or attract investors to fund your business.
How Much Does It Cost to Write a Business Plan ?
Business plan pricing depends on what route you take to create it. However, there are a few essential elements that are common to all business plans:
- Executive Summary
- Business Description
- Market Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Strategy
- Operations Plan
- Management Team
- Financial Plan
There are several ways to approach writing a successful business plan, but the cost of each way varies widely. The cost of a business plan can be a significant investment, but it’s an essential tool for any business. Below we provide some tips for what to consider and the costs for the various methods of completing your own business plan.
Considerations When Writing Your Own Business Plans
There are several things to consider when writing your own plan. Depending on whether you’re in need of funding and how much, the costs for your business plan will be different.
Take into account:
- How long will your business plan be?
- How many hours does it take to complete the business plan?
- What kind of language is used in the business plan?
- Who will use the business plan?
- Who will fund your business?
- How much are you looking to raise or if you need funding at all?
According to our business consultants’ surveys of investor requirements, a 15- to 25-page business plan is the ideal length. Adding more pages may cause your time-constrained investor to skim portions of the plan, even if they are interested, which might result in important information being overlooked. However, fewer pages may lead potential investors to believe that the firm has not been thoroughly thought out or simply doesn’t have enough information for them to make an investment decision.
Business Plan Template Costs
There are a variety of business plan templates online that you can purchase for a one-time fee. These templates range in price but usually start at around $100. Remember, a bargain business plan template may not include all the information that you need, so it’s important to understand what is included with the template you purchase.
Many of these templates also come with instructions to help you fill in the template and make changes as needed. However, if there is something you want to be changed on the template, it may take time and money to have it done.
Be sure to do your research and find the right template for your business. The wrong template could set you back even further and change the face of your business entirely. If you purchase a professional business plan template, make sure it’s from a reputable business plan company with business plan writing skills in a variety of industries.
The business plan template should be easily editable and customized for your specific business needs and industry trends.
If you do not want to pay for a template, there are companies that will charge by the page and some that offer free resources . However, these templates may not have been professional business plans written for your exact type of business.
Experienced Consultants & Business Plan Writers Cost
Hiring a business plan writer or professional writing service will help you get a comprehensive business plan written just for your business. A professional business plan consultant will help you identify your goals and how your company will reach these goals. A business plan consultant fee usually costs more but can be worth it if you do not have the time or resources to complete the business plan yourself.
A business plan writer can be found through online directories, but be sure to do your research prior to engaging in business with them. Be sure to ask for references and read reviews before hiring a business plan writing service.
If you choose to hire a business plan consultant, the complexity and length of the plan will determine how much is a business plan. Generally, a consulting firm or private consultants charge between $1,000 and $5,000 to have a comprehensive business plan written . However, a lengthy and complex plan can easily start at a few thousand dollars and stretch into the tens of thousands of dollars based on the needs of the business.
Some experienced business plan writing services also offer package deals that include additional services, such as market research, a marketing plan, and realistic financial projections.
Business Plan Software Costs
There are business plan software applications that can be used for free or have a monthly subscription cost, which may work better for your needs depending on what you need in a business plan. These apps provide templates and make writing a business plan and business planning easier. They help organize the information you enter into the app and will sometimes offer advice on how to do things like financial projections for your business plan .
The information that you put into the application can be used for several different types of business plan needs. These apps are great for startups and small businesses looking to raise capital or secure funding.
Each app or software varies in what it offers. Some are more customizable than others, some have more options for presenting your business plan, and some even offer investment opportunities. With just your business idea, the business planning software can help you write your own business plan quickly and easily.
Write Your Own Business Plan from Scratch
If you do not want to purchase a template or use software, the easiest and most cost-effective way is to write a business plan from scratch. This route takes time and effort to complete but can be done by anyone willing to put in the work.
When writing your business plan documents, remember that they should be as detailed as possible. This document is your guide to starting and running your business. The more complete it is, the better off you’ll be.
There are a variety of free resources available online to help you write a business plan, including articles, templates, and even video courses.
When writing a business plan from scratch, it’s important to consider all of your business aspects. This includes your business concept or business model , management, production, market research , sales strategies , customer service, operations, human resources, financial projections , and more.
Try to be as thorough as possible when writing the plan. While the task may seem daunting at first, you’ll find that putting together a business plan is not so bad once you get started. After all, if you can dream it, you can write it.
The cost of writing a b usiness plan is dependent on the purpose, type, and length of the business plan. The amount of time it takes to complete a business plan , the language used, and who will be using the document also play a factor in the cost. You can find templates for a one-time fee or pay by the page, hire a business plan writing service or a business plan writer , contact a consulting firm , or use software/apps to create your business plan. Whichever option you choose, make sure you do your research, conduct an in-depth business plan review, and find the best resource to meet the goals for your business.
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What is a business plan?
1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.
A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.
A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.
Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .
» Need help writing? Learn about the best business plan software .
This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.
Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.
» MORE: How to write an executive summary in 6 steps
Next up is your company description. This should contain basic information like:
Your business’s registered name.
Address of your business location .
Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.
Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.
Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.
» MORE: How to write a company overview for a business plan
The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.
If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.
For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.
» MORE: How to write a successful business plan for a loan
In this section, go into detail about the products or services you offer or plan to offer.
You should include the following:
An explanation of how your product or service works.
The pricing model for your product or service.
The typical customers you serve.
Your supply chain and order fulfillment strategy.
You can also discuss current or pending trademarks and patents associated with your product or service.
Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.
Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.
Include details about your sales and distribution strategies, including the costs involved in selling each product .
» MORE: R e a d our complete guide to small business marketing
If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.
Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:
Net profit margin: the percentage of revenue you keep as net income.
Current ratio: the measurement of your liquidity and ability to repay debts.
Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.
This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.
This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.
Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.
Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.
NerdWallet’s picks for setting up your business finances:
The best business checking accounts .
The best business credit cards .
The best accounting software .
Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.
If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.
Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:
Licenses and permits.
Equipment leases.
Bank statements.
Details of your personal and business credit history, if you’re seeking financing.
If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.
How much do you need?
with Fundera by NerdWallet
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are some tips to write a detailed, convincing business plan:
Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.
Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.
Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.
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How to Write a Food and Beverage Business Plan + Sample Business Plan PDF
Elon Glucklich
7 min. read
Updated February 17, 2024
Free Download: Sample Food and Beverage Business Plan Templates
The food and beverage sector is booming. Restaurant openings rose 10% in 2023 compared to 2022 — even higher than in pre-pandemic years.
From fine dining to food trucks, farmers to brewers, and wholesalers to coffee makers, there are opportunities across the food and beverage industry.
But starting a business without covering the basics — your operations plan, marketing tactics, financial strategy, and more — carries huge risks.
That’s why we recommend you write a business plan.
- Why write a food and beverage business plan?
Writing a business plan is an easy first step that you can start for free. Plus, businesses that take time to plan are significantly more successful than those that don’t.
Many food and beverage establishments fail because of one of the following:
- Poor inventory management
- Underestimated expenses
- High employee turnover
- Misjudged the size of their market
Writing a business plan can help you:
- Develop processes for managing inventory and logistics
- Understand your cash flows and create a realistic expense budget
- Budget for competitive employee pay that increases worker retention
- Analyze your competition and determine how big your market is
If you’re looking for funding from investors for your business, you’ll definitely need a business plan.
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- How to write a food and beverage business plan
Many business plans follow a standard format and you can use it as a starting point when writing your own plan. Here’s what that includes:
Executive summary
- Company summary and funding needs
- Products and services
- Marketing plan
- Management team
Financial plan
For food and beverage companies, you must give extra attention to your market analysis, operations plan, and financial forecasts.
If you’re ready to start, download a free business plan template and fill it out as you read this article.
Every business plan should include an executive summary . It’s a brief outline summarizing the plan, no more than one or two pages.
We recommend that you write the executive summary last after fleshing out the details of your plan.
Just summarize the vision for your business, describe your offerings and target market , and touch on your management team and financials. Don’t go into tons of detail — just provide a high-level sense of what you want your business to accomplish.
Opportunity: problem and solution
This section of your food and beverage business plan describes the opportunity you hope to capture.
Maybe you’re a farmer looking to diversify your revenue streams by distributing to grocery stores. Or a bar owner with high-end liquor that competitors in the market aren’t serving.
Whatever your business is, describe the gap in the market and how you aim to fill it.
If you’re operating a more common type of business, like a restaurant , you can probably keep this section short. But it’s useful to document what makes your business unique and it will help focus your sales and marketing efforts later on.
Market analysis
In a field as crowded with competitors as the food and beverage space, a detailed market analysis is essential.
Your focus should be on identifying the specific customer segments you aim to serve.
Maybe you’re a butcher with connections to fresh livestock. Will you be more successful selling directly to consumers, or should you focus on selling to grocery stores and markets in your area?
Or, you’re opening a diner. Should your menu focus on healthy meals or easy-to-make child-friendly options?
These are the types of questions that market research helps you answer. This section should detail the defining characteristics of your target market, including the demographics and preferences of your ideal customer and the size of the market you’re targeting. Market research questions specific to a food and beverage business could include:
- Business location and characteristics
- Area income
- Local food and beverage preferences
- Existing food and beverage options
Elaborate on how your food and beverage offerings align with that target market ’s needs. Remember, you can’t please everyone, so focus on a specific group of people or type of person and build out from there.
Marketing and sales
For food and beverage businesses promotions are how you stand out and seize a share of your market.
The marketing and advertising chapter of your business plan is where you’ll detail your strategies for capturing the attention — and loyalty — of the customers you identified as your target market in the previous section.
With so many options for consumers in the food and beverage space, you’ll likely have to rely on multiple marketing channels , including::
- Advertising on websites, television, and in relevant publications.
- Content marketing — developing an engaging website and writing blog content that’s search engine optimized to drive traffic to your site.
- Engaging with your customers on social media.
- Offering discounts and customer loyalty programs.
- Appearing at food and beverage industry trade shows and community events.
It doesn’t matter how delicious your recipes are, how fresh your crops are, or how innovative your cocktails are — if you don’t operate efficiently, your business probably won’t last long.
The operations strategy may be the most detailed section of your business plan, especially if you’re writing it for a bank loan or investment. This section describes how you will run your business day to day.
When writing the operations section, describe the following:
Physical space
Whether it’s a restaurant, a farm, or a food transportation business, describe the space you’re operating in, and all of the physical assets and equipment you’ll need to be successful.
If it’s a sit-down restaurant, consider including a floorplan mockup in your appendix.
Supply chain
List the suppliers and partners that get your product to customers. Think about the businesses you purchase ingredients from, the warehouses that goods are stored in, and the trucking companies that deliver your products to grocery stores.
These are your supply chain partners. It’s crucial that you maintain good relationships with them.
Production processes
How long it takes to make your product, and what materials and equipment are required. Documenting how you produce your goods or services demonstrates that you understand the costs of making them.
You may also uncover ways to produce them more quickly, or at a lesser cost.
Detail how you’ll handle matters of efficiency like order fulfillment, storage, shipping, and returns, as well as customer satisfaction. If you provide delivery services, document how you will handle the process of getting your product to customers’ homes or businesses.
List your staffing needs, training, and experience requirements for key staff. Also, document the management structure of your business.
This helps ensure that important tasks you don’t have time to monitor are being done and that workers are being supervised.
Describe investments in payment processing systems, inventory management software, and other tools that support sales or operations in your business. Cataloging your technology systems will help you determine where it might make sense to invest in upgrades for efficiency.
Take some time to write a financial plan . Create detailed financial projections, including sales , expenses , and profitability .
If that sounds intimidating, take a deep breath, and remember that financial forecasts are really just best guesses. If you’re running an existing business, you can start with your previous year’s numbers. If you’re starting, make an educated guess about where you hope to be financially a year from now.
Investors will want to see a:
- Sales forecast
- Income statement (also called a profit and loss statement )
- Cash flow statement
- Balance sheet
If you use a tool like LivePlan , you’ll be able to build out your financial forecasts relatively quickly, even if you don’t have experience with business numbers.
Even if you aren’t seeking investment, the financial plan is crucial for understanding the viability of your business. It allows you to adjust your business model based on projected performance, and make informed decisions about where to spend your money.
- Food and beverage business plan templates and examples
If you want to see how other food and beverage businesses have created their plans, check out our free library of food and beverage business plans .
You can download all of them in Word format and jump-start your own business plan.
See why 1.2 million entrepreneurs have written their business plans with LivePlan
Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.
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WordPress pricing in 2024: Is it worth the cost?
Cat McAlpine
Sierra Campbell
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
Published 7:27 a.m. UTC Feb. 22, 2024
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fotostorm, Getty Images
WordPress is a well-known web hosting service employed by large enterprises like Time, Disney and CNN. But for individuals and smaller businesses, WordPress can also be an excellent option, offering a free plan and five different paid tiers with varying features and highlights.
The free option provides some monetization options for your site, like gated content and paid subscribers. Higher tiers offer benefits like customization of templates, the ability to add plugins, centralized site management and increased storage.
But which option is best suited for you, and is it worth the cost? Read on as we take a deep dive into WordPress pricing, comparing its tiers and value.
Who is WordPress best for?
WordPress’ best features are available at its higher tiers, most notably its large and varying library of plugins that allow for advanced customization. WordPress is best suited for businesses that want to develop their own custom website, whether or not they plan to provide e-commerce.
Web developers will find that WordPress provides a staging site, real-time backups and advanced security measures. For those looking to host e-commerce sites, WordPress is also an excellent option, with a large suite of international e-commerce features available in the Entrepreneur plan.
Featured website builder offers
Via Wix’s website
Monthly fee
Free domain
For one year
Drag-and-drop builder
Via Shopify’s website
Squarespace
Via Squarespace’s website
WordPress pricing overview
WordPress provides five separate payment tiers before the Enterprise level, ranging from free to $45 per month when billed annually. The Free plan includes several tools to support revenue but also takes the largest fee out of each transaction.
Beyond the Free plan, every paid tier includes a free year of domain hosting and added complexity and depth of features.
WordPress offers its Free plan with its most basic features available. Choose from any of the available themes to build unlimited pages and manage your site with unlimited users. You can use the free version of the platform for e-commerce, but WordPress will take a hefty 10% and a processing fee from each transaction.
The Free plan includes some minor features to support monetization, like gated content, paid subscribers, donations and tips. Visitor stats, contact forms and limited shares of social media are also included. If you want a custom domain, though, you’ll have to pay for it.
The Free plan is a good option if you want to start an e-commerce business but don’t have much up-front capital. WordPress’ Free plan also suits users who are exploring different website hosting options or need a straightforward website to host something like a portfolio or blog.
Starter plan
The Starter plan includes everything offered in the Free plan. The greatest value of the Starter plan is the ad-free user experience and the addition of a custom domain, free for one year. This feature is the same for all tiers above Starter. If you’re looking for a professional touch to your website but aren’t ready for a big investment, the Starter Plan is best for you.
Additionally, at this level, WordPress’ commission fee goes down to 8% per transaction and it provides email support. The upgrade from the Free plan to the Starter plan boasts the least amount of features for any upgrade, so if you’re looking for a more robust website, you’ll need to turn to the higher tiers. Luckily, the Starter plan is still relatively affordable at $9 per month.
Explorer plan
Including the features of the lower tiers, the Explorer plan is $18 per month. Its most notable feature is the ability to customize themes with color and font choices and a reduced 4% commission fee for transactions. This plan also allows for 4K video hosting, advanced site analytics and a site activity log, improving your website management experience.
At this level, users have access to better support as well, with live chat. For the more casual user, this tier is the best overall value. The Explorer plan includes customization and premium themes, some limited monetization options with a lower commission fee and unlimited shares to social media.
These features can all support a growing business, expanding your brand awareness and developing a unique website catered to your tastes. If you’re sold on using WordPress to host your site, this is where we recommend you start.
Creator plan
WordPress markets the Creator plan as the best option for devs. With all the features of the lower tiers, the highlight of the creator plan is its ability to utilize plugins and its heightened security features. For companies looking to develop a fully custom website, this is the best option, starting at $40 per month.
Plugins are WordPress’ best overall feature, allowing you to customize the way your site functions on both the front and backends. It’s what they’re known for, and the more than 58,000 plugins available for WordPress are a testament to the feature.
The Creator plan also has unlimited bandwidth, Web Application Firewalls (WAF), a free staging site, centralized site management and a 2% commission fee. Developers can rest assured that the Creator plan has real-time backups, one-click restores and integrated SEO tools.
Entrepreneur plan
The Entrepreneur plan is the best option for websites looking to host large-scale, international business. In addition to all the features available at lower tiers, the Entrepreneur plan includes premium store themes, unlimited products, tools to help manage stock and order quantities, loyalty programs, shipping integrations and a 0% commission fee. This is the final tier before the Enterprise level and is priced at $70 per month.
Additional costs
Additional storage for your website is available at the Creator and Entrepreneur levels for a fee. Upgrading to 100 GB adds an additional $50.00 per month. For 150 GB of storage, expect to pay an extra $83.33 monthly. 150 GB is the cap on WordPress’ storage. However, you can only add extra storage if you are paying for your plan annually, not monthly.
Also, keep in mind the additional cost of buying a domain once your free year is over.
Bottom line: Is WordPress worth it?
If you’re willing to pay for the mid- or upper-tiers, then WordPress can be a great solution for your website. However, with advertisements and no customization, the lower tier options don’t provide a user experience or product comparable to competitors like Squarespace or Square.
E-commerce is best supported at the highest payment tier, while lower tiers have limited features and high commission fees. For businesses with a web developer already on staff and looking to develop their own custom site, WordPress is an affordable and popular solution.
With its expansive library of plug-ins and automatic updates, WordPress is one of the best choices on the market for professionally hosting your website. For those looking for more user-friendly building tools that enable attractive, personal websites, it’s best to look for other options.
Frequently asked questions (FAQs)
There are five monthly payment tiers that range from $0 to $45 per month when billed annually. Each payment tier comes with different features, so review them carefully before deciding what you need and how much it will cost you.
Yes, you can start a WordPress website for free, and your site will always be available.
It depends. If you choose any of the paid plans with WordPress, you get a free domain for one year. After that, you’ll have to pay for it. The free version of the website does not offer this feature.
It depends on your skill set. WordPress has pre-built templates and advanced customization capabilities with HTML and plug-ins, making it a good option for those new to web building or experienced web developers. For those finding themselves wanting easy customization with a drag-and-drop style builder, WordPress may be more difficult to use.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
Cat McAlpine is a writer and marketer based in Columbus, OH. She uses her expertise to support small businesses and arts organizations in her city.
Sierra Campbell is a small business editor for USA Today Blueprint. She specializes in writing, editing and fact-checking content centered around helping businesses. She has worked as a digital content and show producer for several local TV stations, an editor for U.S. News & World Report and a freelance writer and editor for many companies. Sierra prides herself in delivering accurate and up-to-date information to readers. Her expertise includes credit card processing companies, e-commerce platforms, payroll software, accounting software and virtual private networks (VPNs). She also owns Editing by Sierra, where she offers editing services to writers of all backgrounds, including self-published and traditionally published authors.
How to start a small business: A step-by-step guide
Business Eric Rosenberg
Gov. J.B. Pritzker’s ‘more austere’ $52.7 billion budget plan turns to big business, sportsbooks for tax increases
There will undoubtedly be sticking points for some of the governor’s priorities, including about $182 million in funding for newly arriving migrants and more than $600 million in health care costs for the undocumented..
Illinois Gov. J.B. Pritzker delivers his State of the State and budget address before the General Assembly at the Illinois State Capitol, Wednesday, Feb. 21, 2024, in Springfield, Ill.
Brian Cassella, AP Photos
SPRINGFIELD — Gov. J.B. Pritzker on Wednesday unveiled a $52.7 billion budget that includes the blueprint for a pension overhaul, funding to care for newly arriving migrants and a new set of costs for businesses.
It’s also a plan that Republicans say prioritizes the needs of migrants and the undocumented over Illinois residents.
While calling the state’s financial future “bright,” the sixth spending plan of the Democratic governor’s tenure leans on large corporations and lucrative casino sportsbooks to churn out more than $800 million in revenue for the state.
Those proposals were not mentioned in the governor’s 52-minute joint State of the State and budget address before the Illinois General Assembly.
Instead, Pritzker focused on some of his key priorities, including early education, social services and health care. He defended the state’s response to the migrant crisis — while also railing against former President Donald Trump — and the state’s Republican congressional delegation — for rejecting an immigration bill that would have revamped the country’s border policies and helped Illinois.
“Listen, maybe some of you think we should just say, ‘This is not our problem,’ and that we should let the migrant families starve or freeze to death. But that’s not what decent Midwesterners do. That’s not what leaders do,” Pritzker said. “We didn’t ask for this manufactured crisis. But we must deal with it all the same.”
- Pritzker, Preckwinkle seek $250M more for Chicago’s migrant crisis — but no pledge from Johnson
- Pritzker signs $50.4 billion 2023 budget that boosts early education funding — and stops state officials’ raises from breaking the law
Pritzker, who also serves as a key surrogate for President Joe Biden’s reelection campaign, also acknowledged “our immigration system has been broken for a long time.”
“No doubt, the current migrant crisis is a problem of the federal government’s making, and I mean both political parties,” the governor said.
Some Republicans groaned when Pritzker called Biden a “very good president who has rescued the economy and protected freedom.”
New revenue
The governor is projecting a 1.5% increase in state revenue for the new fiscal year, which begins July 1, for a haul of nearly $53 billion. That’s largely due to the $800 million plus in tax increases mostly targeting large businesses.
Pritkzer’s plan extends a limit on the amount of operating losses corporations can write off on their income taxes. A $100,000 cap that was slated to expire at the end of the year would be extended three years, under the plan from Pritzker's team, which aims to soften that blow on businesses by upping that cap to $500,000. The maneuver would generate another $526 million for the state, the governor's office estimates.
The governor’s office pushed back on characterizing it as a new tax, arguing the continuation of the cap on corporate tax deductions will help the state keep gaining revenue.
The governor also wants to more than double the state tax on sports betting revenue collected by sportsbooks from 15% to 35%, a proposal that’s sure to draw pushback from a rapidly expanding industry that raked in more than $1 billion in 2023. The governor’s team predicts such a hike could pump an additional $200 million into state coffers.
And he wants to lower the tax discount retailers receive for collecting sales taxes, a measure his office says would net the state an additional $101 million. In his speech, Pritzker also said he wants to permanently eliminate the 1% grocery tax. But the Illinois Municipal League already opposes that initiative — saying the tax goes entirely to local governments across the state and would cost them $325 million a year.
“This loss in revenue is entirely borne by local governments and is clearly punitive toward municipalities,” Brad Cole, CEO of the Illinois Municipal League said in a statement. “Does anybody think this is a good time to cut the city of Chicago’s revenues by tens of millions of dollars a year?”
The plan also includes transferring mass transit costs from sales tax to the state’s Road Fund, to take in an additional $175 million.
The Illinois Chamber of Commerce panned two of the revenue proposals, calling the cap “nothing more than forced borrowing of funds from Illinois businesses to finance government,” and the collection discount reduction “a stealth tax on our retail sector.”
Pension overhaul
Pritzker’s budget team is also aiming to hasten the state’s pension funding ramp with an eye toward landing another credit upgrade from Wall Street ratings agencies.
Since 1994, the state has been on a slog toward filling the gap in the grossly underfunded system to 90% by 2045. Pritzker’s team is adjusting that goal to reach 100% funding by 2048 — closer to pension goals set by many other states.
The governor’s team says they can make that happen in part with savings from paying off two other major bonds issued by the state over the next decade. Pritzker will need legislative approval for the pension proposal.
The $52.7 billion in spending amounts to an increase of about 2% compared to last year’s plan. Officials on Wednesday morning called the plan a “more austere budget than in recent years” — which also maintains a promise of fiscal responsibility. Republicans noted spending plans in Illinois, led by Democrats, keep growing.
There will undoubtedly be sticking points for some of the governor’s priorities, including funding for migrants and the health care costs for the undocumented.
The governor’s budget includes $181.7 million to continue to care for newly arriving migrants, and $629 million to continue providing health care benefits to undocumented people aged 42 and up who would otherwise qualify for Medicaid.
- Pritzker’s budget to include plan to erase $1 billion in medical debt
Those issues drew swift rebukes from Republicans.
Illinois House Republican Leader Tony McCombie, R-Savanna, said the proposal places a burden on small businesses and is sorely lacking in reforms.
“We can’t tax our way into success. We need to have actual structural and tax reform, and we don’t see that,” McCombie said. The Republican leader also questioned whether the sports betting tax hike will be paying for “pork projects” for Democrats.
Illinois Senate Minority Leader John Curran, R-Downers Grove, argued Pritzker "just proposed raising taxes on every Illinois family struggling to make ends meet to fund the non-citizen welfare state he created.
"We have made it clear that the citizens of this state are our priority, while today, the Governor made it clear they’re his piggy bank. Our focus will remain on providing meaningful financial relief to the people of Illinois," Curran said in a statement.
Education dollars
Education funding would include $350 million towards the state’s school funding formula — although advocates have been warning they would put up a fight for more than that. The total K-12 funding under the governor’s proposal totals $10.8 billion in general funds.
The proposal also includes $400 million for year two of Pritzker’s Smart Start program, which aims to add 5,000 new slots and expand access to early childhood education. It also includes $13 million to launch a Department of Early Childhood.
The governor proposed a much more modest increase in funding for state grants for low-income college students than in previous years. Last year he secured a $100 million increase for the Monetary Award Program, or MAP grant , and this year advocates had called on him to request $50 million more. But he's asked lawmakers to approve just $10 million more for the state financial aid program, which would bring total funding for MAP grants to $711 million.
The proposed budget creates a $12 million child tax credit for lower-income families with children under age 3, for a credit of about 20% of the taxpayer’s state earned income.
The spending plan sets aside $175 million for the state’s “rainy day” fund, an emergency piggy bank that has gone from nearly insolvent in 2017 to $2.3 billion by next year, if passed by the General Assembly.
The budget also includes $10 million in federal funds to erase $1 billion in medical debt for Illinois residents — the first in a three-year plan.
Budget negotiations are expected to continue through the end of May, the deadline for lawmakers to pass a spending plan.
Contributing: Lisa Kurian Philip, WBEZ
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These borrowers are likely to be eligible for Biden's new student loan forgiveness plan
- The Biden administration has been working on a new student loan aid package that could come as soon as this year.
While Biden first attempted to cancel student debt through an executive order, he has now turned to the rulemaking process.
- Here's who may qualify.
Since the Biden administration's first student loan forgiveness plan was rejected at the Supreme Court , it has been working on creating a new, legally viable relief package.
That debt cancellation could come as soon as this year . The alternative plan, which has become known as Biden's "Plan B ," could forgive the student debt for as many as 10 million people, according to one estimate .
The U.S. Department of Education and the negotiators tasked with determining who will be eligible for the president's revised aid have identified five groups of borrowers.
1. Those who owe more than they borrowed
Borrowers with outstanding federal student loan balances that exceed what they originally borrowed may be among those who qualify for the cancellation.
A person's student debt can balloon for a number of reasons, said Nadine Chabrier , a senior policy and litigation counsel at the Center for Responsible Lending.
"Unfortunately, it is very common," Chabrier said.
More from Personal Finance: The best money advice I heard this year as a CNBC reporter Op-ed: Money dates are great — but not on Valentine's Day Black Americans face 'disproportionately steep hurdles' to homeownership
Student loan servicers, the companies the Education Department contract with to service its debt, have a record of steering consumers into forbearances and deferments, she said. These options for struggling borrowers can keep loans on hold for many years, but interest often continues to accrue.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, denied that the companies benefit by veering from the government's orders.
"We are incentivized to meet the requirements that the government sets, which includes giving borrowers the benefits that the law provides," Buchanan said. "We are audited, and get business or lose it based on meeting those standards."
Advocates have also said the interest rates on federal student loans are too high, especially for borrowers from the 1980s , who have rates exceeding 8%. Current fixed rates today can be nearly as high .
2. Borrowers in repayment for 20 years or more
Those who have been carrying their student debt for decades may also benefit.
With many of the Education Department's repayment plans requiring 20 years or more of payments, such stories are common. Millions of Americans older than 60 are still paying off their student loans , research finds.
"There is both financial harm and psychological harm of being in debt for decades, especially when it feels like there is no hope that it will ever be repaid," said Persis Yu , deputy executive director at the Student Borrower Protection Center.
3. Attendees of schools of questionable quality
In its revised relief package, the Biden administration notes it is looking to include student loan borrowers who attended career-training programs "that created unreasonable debt loads or provided insufficient earnings for graduates," as well as borrowers who attended institutions with high student loan default rates.
4. People eligible for forgiveness who haven't applied
The Education Department already has several programs that lead to student loan forgiveness, and as part of its new aid package, it is looking to identify those who may be eligible but just haven't applied.
For example, the Public Service Loan Forgiveness program, signed into law by then-President George W. Bush in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments. In 2013, the Consumer Financial Protection Bureau estimated that one-quarter of American workers may be eligible .
However, the technical and often confusing requirements of the plan have acted as a barrier, experts say.
Student loan servicers also earn a fee per borrower per month, which advocates say discourages transparency around loan forgiveness opportunities.
"Instead of providing borrowers with access to the affordable pathway out of debt, decades of mismanagement and abuse have left these borrowers trapped in debt like hamsters on a hamster wheel with no way out," Yu said.
5. Borrowers experiencing financial hardship
The Biden administration has also said it wants to forgive the debt of those experiencing financial hardship.
So far, it has proposed a set of factors that could identify struggling borrowers, such as those with student loan balances and required payments that are unreasonable relative to their household income, and people with high child care and health-care expenses.
It also said that financial hardship could be based on other debt obligations, disability or age, among other factors. Don't miss these stories from CNBC PRO:
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Liz Weston: Unqualified 529 college saving plan spending can incur taxes and penalties
- Updated: Feb. 18, 2024, 7:17 a.m. |
- Published: Feb. 18, 2024, 7:06 a.m.
Qualified expenses that can be paid from a 529 college saving's fund don't cover everything a student may need. Getty Images. Peter Dazeley | Getty Images
Dear Liz: You’ve been writing about what to do with leftover money in 529 college savings plans.
Our grandchild went to a great state university with low tuition. To manage this ahead of time, we have carefully withdrawn some “excess” funds every year. This must be payable to the beneficiary student. The tax on non-qualified distributions applies only to earnings, not contributions, and will be negligible while the student is in college and has no or very low income.
We paid for our CPA to prepare the tax filings. We have used this to pay for “non-eligible” living, travel and other expenses. I also recommend that parents start a college savings account in addition to a 529, because the strict definition of eligible costs leaves out a lot of expenses.
Answer: Previous columns have mentioned that withdrawals from 529 plans can be tax free when used to pay qualified expenses, which include tuition, fees, books and certain living costs, such as on-campus room and board or off-campus living expenditures up to the college’s “cost of attendance” limits, which are listed on its site.
Other common expenses, such as transportation and health insurance, typically aren’t considered qualified. Withdrawals that aren’t qualified will incur not just taxes on the earnings portion of the withdrawal but also penalties. The federal penalty is 10%, said Mark Luscombe , principal analyst for Wolters Kluwer Tax & Accounting.
Your approach could be a good way to use up excess 529 funds, as long as you’re reasonably sure your grandchild won’t need the money for graduate school and you’re not interested in other options, such as naming another family member as beneficiary or rolling up to $35,000, subject to annual contribution limits, into a Roth IRA for your grandchild . (The Roth rollover option is new this year and applies only to accounts that are at least 15 years old. In 2024, up to $7,000 can be transferred for someone under 50, assuming they have at least that much earned income.)
As you noted, it’s important to ensure the non-qualified withdrawals are paid to the student if the idea is to minimize the tax bite. Otherwise the taxes would be calculated based on the account owner’s tax rate.
“If the grandparents kept the excess earnings, it would be taxed to the grandparents plus a 10% penalty, so it would almost always be the case that it would be better to have the excess funds paid to and taxed to the beneficiary,” Luscombe said.
You have to make your own qualified charitable distributions
Dear Liz: This is the year I turned 73, and I’m planning how to take my required minimum distribution from my IRA and 403(b) accounts. I know from a Google search that I can redirect this distribution to charities without being taxed, up to a certain amount. However, the financial services company holding my 403(b) money tells me they can’t do that and won’t engage. They say take the money, pay the taxes, then donate it and take the tax write-off. Why would they make this difficult?
Answer: Because they’re correct. You can’t make a qualified charitable distribution from a workplace retirement plan. That option is available only for IRAs.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.
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Updated November 25, 2023 Reviewed by Lea D. Uradu Fact checked by Vikki Velasquez What Are Business Expenses? Business expenses are costs incurred in the ordinary course of business. Every...
To estimate potential inventory costs, start by figuring out how much product you expect to sell in a 12-month period. Then, divide that number by 10, aiming to keep 10% of your annual inventory ...
As long as the space is exclusively used for business, you can deduct $5 for every square foot, up to $1,500. Business expenses are the costs of running a company and generating sales. Given that broad mandate, the IRS doesn't provide a master list of allowable small-business and startup deductions.
This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business. Download Startup Financial Projections Template.
Business expenses are ordinary and necessary costs a business incurs in order for it to operate. Businesses need to track and categorize their expenditures because some business expenses can count as tax deductions. Deductible expenses reduce a business's taxable income, which can result in significant cost savings. Here's What We'll Cover:
Expenses Budget What you're selling has to cost something, and this budget is where you need to show your expenses. These include the cost to your business of the units being sold in addition to overhead. It's a good idea to break down your expenses by fixed costs and variable costs.
Operating costs include $2,000 in utilities, $10,000 in rent, $40,000 in salaries, $1,000 depreciation of the freezer and $2,000 for business insurance. There are no non-operating costs. That would make its net profit $70,000. (See the calculation below.)
Standard Business Plan Financials: Spending Budget As I continue with my standard business plan financials series, I turn now to developing the spending budget. True, nobody likes budgets, but the budgeting function is one of the most important to management to keep cash in the bank; and we all know it.
Conclusion. The cost of writing a b usiness plan is dependent on the purpose, type, and length of the business plan. The amount of time it takes to complete a business plan, the language used, and who will be using the document also play a factor in the cost.You can find templates for a one-time fee or pay by the page, hire a business plan writing service or a business plan writer, contact a ...
A business expense is a business cost for goods and services that are used up quickly.As a rule of thumb, periodic payments such as monthly wages are considered expenses. The purchase of capital that has a useful life that extends into the future is generally considered an investment in an asset as opposed to an expense. The following are common types of expenses.
Most Common Business Expenses: List of Deductible Items While specific expenses can vary by industry — for example, a restaurateur versus a barber — some financial obligations overlap for all business owners, including building, promotional and material costs.
Steps 2. Describe your company 3. State your business goals 4. Describe your products and services 5. Do your market research 6. Outline your marketing and sales plan 7. Perform a business...
Free Download: Sample Food and Beverage Business Plan Templates. The food and beverage sector is booming. Restaurant openings rose 10% in 2023 compared to 2022 — even higher than in pre-pandemic years. From fine dining to food trucks, farmers to brewers, and wholesalers to coffee makers, there are opportunities across the food and beverage ...
Upgrading to 100 GB adds an additional $50.00 per month. For 150 GB of storage, expect to pay an extra $83.33 monthly. 150 GB is the cap on WordPress' storage. However, you can only add extra ...
The spending plan sets aside $175 million for the state's "rainy day" fund, an emergency piggy bank that has gone from nearly insolvent in 2017 to $2.3 billion by next year, if passed by the ...
Here's who may qualify. President Joe Biden speaks about his economic plan at the Flex LTD manufacturing plant in West Columbia, South Carolina, on July 6, 2023. Since the Biden administration ...
Bended Page, LLC filed for Chapter 11 protections in the U.S. Bankruptcy Court in the District of Colorado in October 2023.The company was required to file its reorganization plan in mid-January ...
Answer: Previous columns have mentioned that withdrawals from 529 plans can be tax free when used to pay qualified expenses, which include tuition, fees, books and certain living costs, such as on ...