Do You Really Want to Be a 1099 Independent Contractor? Pros and Cons

Quitting regular employment and being your own boss can indeed be a dream come true. However, you’ll also have some new hassles to deal with and you’ll need to bring on an online bookkeeping team like Xendoo.

Only you can decide if the trade-off is worth it.

Pro: Being Independent

There’ll be nobody telling you what to do, how or when to do it (except, to some extent, your clients). No more punching a time clock, or using an outdated, ineffective process “because that’s how we’ve always done it.”

Con: Being Independent

It also means you’d better be good at self-discipline, or else pretty soon you’ll find that no work is getting done and no money coming in.

Pro: Getting Paid What You’re Worth

Many professionals decide to go solo when they realize their employer is charging its clients double or triple what they’re paying the employee to provide that service. Why not work directly with those clients and earn the big bucks?

Con: Getting Paid, Period

As an employee, you’re guaranteed a regular income. That won’t happen when you’re freelancing. It almost seems to be a rule that you’ll have either feast or famine: periods where you’re slammed with work, and others with no work at all. If possible, have a cushion of six months living expenses in the bank to tide you over the lean times.

Also, as a sole provider, you’ll run into clients who can’t or won’t pay you — and don’t try very hard because they think they can get away with it. So it’s a very good idea to always get a contract. And be prepared to make some collections efforts as part of your billing process.

Pro: Lots of Tax Deductions

From home office maintenance to equipment depreciation to travel, there are literally dozens of tax deductions you can use to reduce your income tax. You’ll probably pay less tax now than you did as an employee when you go to file your tax return.

Con: Buying Your Own Equipment

Of course, the reason you’re getting those deductions is that you own those assets. When you work for someone else, they buy all that. Depending on your industry, you may face some hefty start-up costs.

Con: More Administrative Work

Some people enjoy having control over business functions that they didn’t as an employee — such as sales, accounting, and growth planning. Others hate spending time on anything that’s not their specialty. Most fall somewhere in the middle, knowing that there will always be some boring or unpleasant aspects to any job.

Con: No Benefits

Employees enjoy a variety of benefits from their employer, such as lower-cost group health insurance, unemployment insurance, workers’ compensation, and 50% payment of Medicare and Social Security taxes (which will now be 100% your responsibility). In addition, they have more protection from federal and state labor laws.

This list shows more cons than pros to being an independent contractor. However, the vast majority of freelancers are happy with their decision and have no interest in going back to work for someone else. After all, there’s a reason why more than a third of all U.S. workers are now part of the “gig economy.”

If you really want to do it, you can! And Xendoo will be here to help with accounting, bookkeeping, and tax issues you may not be familiar with. We specialize in small businesses, and we love helping them grow.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


Still Writing Paper Checks? Here’s How Much It Costs You

With online bill paying from your computer or mobile app now so convenient, we’re
always surprised by how many small business owners still make payments with paper
checks. It seems like a harmless habit, but is it really? Let’s see.
Here’s an example of the costs of writing 100 checks a month.

Employee Labor

Paper Checks $256 Paper Checks $256
Receive invoice Receive invoice electronically or scan paper invoice
Pass invoice to the manager to approval Send the invoice for approval through automated workflow
Print check Electronic payment sent
Record payment in accounting software Payment automatically synced with accounting software and bank
Address, stuff and stamp envelope
Mail envelope
Reconcile payments with bank

Bank Fees

Paper Checks $76 Online Payments $14


Paper Checks $30 Paper Checks $0
Checks Receive invoice electronically or scan paper invoice
Envelopes Send the invoice for approval through automated workflow
Printer paper
Printer ink


Paper Checks $47 Online Payments $0

Total Monthly Cost

Paper Checks $409 Online Payments $28

We didn’t even include potential costs such as late fees because the invoice approval,
check to sign, and the mailing process took so long. Or the fact that you’d have more free
time to creatively grow your business if your accounts payable system was automated.

When you use Xendoo, you’ll have a complete software solution that streamlines the
entire process from automatic syncing with the accounting system to direct deposit in
the vendor’s bank account. And you can access it from your mobile device (or desktop
computer) at any time. After all, you have better things to do with your time — and money!


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


Before You Choose Accounting Software: 3 Essential Steps

All too often, new start-up businesses go with the accounting software that seems to be cheapest, or most popular, or as recommended by their father-in-law (even though his business is totally different). A couple of years down the road, it becomes clear that their choice is not really meeting their needs — costing them time and money that could have been better spent.

Now they need to go shopping for software again. Here’s how to not make the same mistakes this time.

1. Know What’s Available

There’s an ever-increasing variety of software products designed for small businesses. They fall into four broad categories:

• Accounting and payroll: Provides tools and reports for tracking and utilizing your financial data. Pay bills, send invoices, record expenses and income, manage inventory, calculate profit and loss, process employee paychecks and benefits. Some options are tailored to specific types and sizes of business, avoiding unnecessary expense on features and capacity that you won’t use.

• Business management: All-encompassing solutions integrate data-based processes throughout your business, such as customer relationship management, sales, marketing, job costing, and crew/equipment scheduling. Great efficiencies can be achieved by eliminating duplicated effort, reducing human error and preventing information silos.

• Cloud-based accounting: Ideal for business owners who can’t sit in front of their desktop computers all day. Provides the same features as traditional accounting software, except that it’s web-hosted rather than stored on a company’s own servers. Xendoo uses one of these, Xero, which offers a secure, user-friendly interface that can be accessed from anywhere, anytime.

• Free programs: There are many free accounting tools out there, but you should bear in mind the classic saying that “you get what you pay for.” We would suggest limiting their use to when you’re just starting up and need to create invoices or print checks in a hurry, but keep sensitive financial data away from them. Also, consider their scalability: will they be able to handle a growing business?

2. Figure Out What You Need

For most small business owners, accounting is not their area of expertise. However, if you want to stay in business, you’ll need to learn some basics, no matter how boring or frustrating you think it is. The software can’t control what data you enter into it, so you should at least know what processes your business performs (paying bills, receiving customer payments, paying employees, etc.) as well as what financial reports you’ll need to generate for taxes and growth planning.

Also, think about the specific activities of your business. Retailers and restaurants need a point of sale system that integrates with the accounting software. Contractors and landscapers need to send crews and equipment to multiple locations, with correct job data in hand. Look for a software solution that targets your industry, or has an optional add-on for the extra features you need.

If you don’t know all the answers, talk to your staff.
• Your accountant can help guide you through the jungle of choices, and ensure that what you buy is compatible with what you already have.

• Your production manager knows the processes — what needs to happen and when.

• Your IT manager will tell you what your current hardware can handle, how soon it will need to be updated, and whether your back-up procedures are adequate. Business accounting databases gobble up disk space really fast, which is one reason why cloud-based accounting services are so popular now.

3. Make a Short List

Now that you have clear objectives, it’s time to review what’s on offer and eliminate the ones that don’t make the grade. Some things to consider:

• Budget: Most of the well-known software is reasonably affordable. It’s when you add on industry-specific upgrades that things can get pricey. If you hire a consultant to help with installation and training or opt for an annual maintenance fee to receive software updates, those costs need to be accounted for as well.

• Quality: Research the software’s reviews, on both the vendor’s and independent websites. Ask for opinions from other business owners in your industry. You want to know if it has the functionality you need, is easy to use, and is supported with good customer service.

• Free trials: Some business accounting programs offer a limited-time test run, so you can get a real-life idea of how it performs. It can be labor-intensive, though, so save your demos for the shortlist.

• Priorities: What’s most important to you. It could be functions, ease of use, scalability, or budget.

Now You’re Ready to Buy

Congratulations, you’ve become an expert in choosing accounting software. Even better, you’re the expert in choosing the one that’s right for your business.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


File Your LLC in These States and Save $$$

Did you know that you don’t have to register your limited liability company (LLC) in your home state? Instead, you can file in one of the states below, and save considerably on fees and state income taxes.

There are also advantages to keeping all the paperwork close to home. Before you decide which way to go, check out these pros and cons.

Benefits of Filing in Your Home State

For those who have a brick and mortar location and conduct most or all of their business in the state where they live, convenience will probably be a major consideration. It’s easier to do business when all your customers, suppliers, contacts, and government offices are near at hand.

When you form the LLC in any state other than your home state, you must register as a foreign LLC — requiring a fee and extra paperwork you would avoid by filing at home.

Another added expense involved in an out-of-state LLC is that you must hire a registered agent to represent your company and accept the service of process in the state where your LLC is registered.

Benefits of Filing in a Business-Friendly State

If your business does not have a set location, for example, a consultancy, the convenience of home filing may not be that significant for you.

Income taxes and business fees can be thousands of dollars less than those in your home state. And there are other factors which may swing the convenience vote in their favor, too.

Here’s a run-down of each state’s advantages.


The most well-known business-friendly state offers:

• Simple filing process, so you can start doing business quickly

• No tax on out-of-state income, a huge deal if most of your business happens in other states

• Low filing fees and franchise taxes

• A separate court for business cases (Chancery Court), so your case will get resolved faster, and you’ll be heard by judges experienced in business law


In addition to being a great state for combining business with pleasure, Nevada offers:

• Fairly fast filing times

• No tax on business income, capital gains or inheritances

• No franchise tax (there are fees for business licenses and annual filing)

• No requirement to create an operating agreement or hold annual company meetings

• No information-sharing agreement with the IRS (if privacy or anonymity is your priority)

• Not much state disclosure required either, allowing LLC owners to file public documents anonymously


A relative newcomer to the business advantage arena, Wyoming is now an equally good choice, offering:

• No business income tax

• No franchise tax

• Lifetime proxy — you appoint a permanent representative for your company stock and votes while you remain anonymous

If you don’t already know your home state’s tax rates, business fees, and red tape hassles, do some research. Then see how they compare to the 3 most popular states for LLC registrations. You may not have known these options existed, but one of them could be the perfect choice for your company.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


How to Invoice an International Order

When you send your products to another country, you’ll have a whole new set of factors to deal with in order to get paid. Here’s what you need to consider.

Choosing a Currency

There’s no law that says which country’s currency you have to put on the invoice. You may choose to make it easier on yourself by specifying your home country’s currency (i.e. U.S. dollars), or use the customer’s home currency as a courtesy to them.

The right accounting software will do the currency calculations for you, saving you time and effort.

Handling the Exchange Rate

Currency exchange rates between countries go up and down on a daily basis. Given the time gap between when you invoice and when you get paid, you could end up receiving less for your goods than you thought you would.

You may decide to just accept this risk; many small businesses do. Or you can ask your bank to lock in the current exchange rate (known as forwarding cover). You’ll be protected against any drops in the rate, but you’ll also miss out on the extra money if the rate rises.

Receiving Payment

Protect yourself and make it convenient for your customers by offering an established international payment gateway such as debit card, credit card, or an automated clearing house (PayPal, Stripe, etc.).

Because there’s a transaction fee with the above methods (2% to 4%), for large orders you may choose a telegraphic transfer directly from their bank to yours.

Include clear payment instructions on the invoice. To ensure that they’re understood, have them translated into your customer’s language.

Paying Taxes

For income tax, declare it on your return exactly as you would income made from local sales.

For sales tax in your home country, you don’t need to collect it. But don’t eliminate the sales tax line from the invoice; just put 0%. For sales tax in the country, you’re exporting to, most of them don’t require it. However, that’s changing, especially for Amazon sellers. For example, Australia now requires you to collect 10% tax on goods sold to their residents through Amazon.

Paying Import Tariffs & Duties

If your customer’s home country applies duties to imported goods, those charges will be the responsibility of your customer. You don’t have to do anything about it.

Sending Invoices

It’s not advisable to send invoices through the regular mail to other countries. In the first place, it can be slow and unreliable. In the second place, the address formats can be tricky to get right. The preferred delivery methods are to email the invoice as a PDF attachment or send an online invoice through your accounting software.

Resolving Disputes

This is one of the biggest reasons that small businesses hesitate to sell internationally. You have fewer options for debt collection and legal action, plus it’s more expensive. Only you can decide whether the sale is worth the risk.

Thanks to Amazon and other international platforms, the world is your market. Use these invoicing basics to feel confident in your ability to get your piece of the action … and watch your sales grow!


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


8 Steps to Creating Winning Price Quotes

A potential customer has asked you to submit a price quote for their project. This is your big chance to convince them that you’re the right one for the job! What do you do next?

Here’s how to present yourself and your business professionally, clearly, and helpfully in a quote that can make the difference between winning and losing the contract.

1. Understand the legal implications of a quote.

A fixed price quote is more legally binding than an estimate. In many countries, once that quote is accepted by the customer, you can’t charge more than what you originally offered; so it’s crucial to calculate and provide numbers you can live with.

An estimate is a rough idea of what a project is likely to cost, but there’s no guarantee that the price won’t change during the project. Both you and your customer must understand whether you’re giving them a quote or an estimate.

2. Gather information.

If you don’t know everything that will be involved in the job, you can’t correctly price it. Ask questions, discuss options, and help the prospect make decisions they’re happy with. The benefits of having comprehensive communication with your customer start right now, and will continue throughout the project.

3. Calculate your costs.

Costs of labor and materials can change frequently. Check that your figures reflect current conditions, and take future conditions into account as far as possible.

4. Consider the schedule.

Can you meet the customer’s deadline without stretching your staff resources? Can any special ordered supplies be delivered in the time frame? Or will you have to pay extra for temporary workers and rush deliveries? These added costs should be factored in now, not come as an unpleasant surprise to you and your client when you’re in the middle of the project.

5. Add your markup.

You deserve to make a fair profit on your work. Your price quote should include a reasonable markup on your costs.

6. Fill out your quote form.

You may wish to use your accounting software to make a professional impression. The following information should be clearly specified:

• Business information including your company name and contact info, client’s name and contact info, customer ID number, quote number, quote submission date and quote valid until the date
• Itemized prices describing each component of the project, comprehensive enough to prevent misunderstandings later
Sales tax or other applicable taxes
• Timetable for completion of work
• Payment terms
• Legal terms and conditions (check with your lawyer or use a template from a government small business website)
• Space for your and your customer’s signatures

7. Send the quote within 24 hours.

Don’t give the prospect a chance to forget about you. If you use cloud accounting software, you can prepare and deliver your quote immediately after the sales meeting.

8. Follow up within 3 days.

Call or email your prospect to make sure they received the quote and ask if they have any questions or points to discuss. This will show that you’re committed to obtaining their business and building a good relationship.

More Tips for Improving Your Price Quotes

• Analyze failures. Don’t be afraid to ask a prospect why you weren’t selected for the job. Good accounting software can also track the quotes you send and how many of them were accepted.

• If a quote must be renegotiated, discuss it with the customer first. You may discover unexpected problems in mid-project, or the customer may decide to upgrade the quoted specs. Not explaining these additional costs to them upfront may ruin your relationship.

• Add a quote engine to your website. If the quotes you provide are typically standardized and simple, your website can respond to customers on-demand 24/7/365.

Customers will learn a lot more from your price quote than the actual price. They’ll see that your work is professional, thorough and of a high-quality standard — all things they look for in deciding who to hire. And that’s why your quote can help you win the job.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


How Do I Structure My Multiple Business Ventures?

As the U.S. and the world move toward a “gig economy” of self-employment, it’s becoming more common for entrepreneurs to have income streams from several sources. You may be a caterer who also does wedding photography or a computer programmer who also invests in real estate.

What’s the best way to set up these various projects? Arriving at the right answer for you and your businesses will involve three main considerations: legal, administrative, and marketing.


If your ventures are related, setting them up under one brand will give you more bang for your marketing buck. In the above example of the caterer/wedding photographer, having both businesses share a business name, website, and so on would offer more opportunities for cross-selling your services while reducing expenses.

On the other hand, the computer whiz/real estate pro is targeting two different audiences. In this case, separate brands would be easier to define and market.


Bear in mind that every company you set up will generate its own set of paperwork, from payroll to tax returns. Only you can decide whether the benefits outweigh the hassles.


There are three ways to legally structure multiple businesses. Here’s a brief overview of the pros and cons of each of them.

1. Separate corporations or LLCs

In this scenario, each business is a completely separate legal entity. This option will produce the most amount of paperwork and administrative labor.

On the other hand, for risky ventures such as real estate investing, it is a good way to limit your legal liability. If Company X gets sued, Company Y’s assets (as well as your personal assets) are not affected.

2. One corporation or LLC with multiple DBAs

You create one main company, then register a separate fictitious — DBA (doing business as) — the name for each of your ventures. This gives you the administrative ease and legal protection of having just one company, along with the marketing advantages of having the right brand name for each venture.

3. One main corporation or LLC with multiple subsidiaries

This is the most complex of the three options. You set up a holding company that will own the individual corporations or LLCs of each of your businesses. It’s often used by those who want to sell one of their subsidiaries and leave the others intact. Another reason to go this route is to start a new business and have it funded by the holding company.

The legal and tax ramifications are extensive for this option, so we suggest you consult a tax advisor or attorney before moving forward.

Deciding how to structure your multiple businesses is just the first step. You’ll also need smart solutions for accounting, bookkeeping, payroll, and tax planning. That’s where Xendoo comes in.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


How to Write an Effective Invoice and Get Paid Faster

When you’re thinking of ways to improve your cash flow, don’t forget to take a look at your invoice template. If it doesn’t contain all the necessary information, you could experience delays — both in getting paid and in processing payments.

To make it easy for customers to pay your invoice, make sure it displays the following:

Issue date and due date.

Include the date the invoice is sent as well as when payment is due. This will simplify the following up on late payments.

Your info.

You may use your standard letterhead: business name, address, phone number, and email. Or you may provide specific contact info for your accounts payable department.

Customer info.

Business name, address, and contact details for your customer should also be included. Use the name of the organization that will be issuing payment if it’s different from the DBA name.

Your reference.

Each invoice you send out should have its own unique number. Create your own numbering systems, such as a simple chronological order (2018-01, 2018-02, etc.), or subsets for each customer (WD-2018-01, WD-2018-02, MS-2018-01, MS-2018-02).  In addition, the invoice should include your job or project number, if you use them.

Customer reference.

Some customers use their own job or purchase order numbers to track their expenses. If they give you a number like this, be sure to include it, as it will expedite their payment process.

Products and services sold.

This is an itemized list of everything you’re billing your customer for. Each line should include a brief description of the item, the quantity, the unit price, and the total price. Add up all the numbers in the total price column and put that grand total underneath.

Additional charges and discounts.

Next, list and subtract any discounts you’ve promised to the customer. Add shipping charges (if applicable) and sales tax.

Payment terms and methods.

Clearly state your late fees and on-time discounts. List which types of payment you accept and provide whatever info customers need to pay the invoice, such as your Paypal address, bank account number, or link to online payment.

Tips for Getting Paid Faster

Creating the invoice is just one part of a protocol that can significantly reduce your time and effort. Here’s the bigger picture:

  • Advise customers upfront, preferably in the contract, of your billing and payment expectations. Don’t just surprise them after the job is done.
  • Send invoices more frequently. Establish a schedule, say once a week, to ensure that invoicing doesn’t get put off until you “have more time.”
  • Keep itemizations brief. If the customer requests more detail, send it in supporting documents.
  • Copy the same language from the customer-approved quote into the invoice, to help prevent misunderstandings or disputes.
  • Use a smart invoice template. Integrate with your spreadsheet software to automatically fill in customer information and standard pricing, calculate total charges, add taxes, perform bank reconciliations, send past due reminders, and more.

Xendoo understands how hard it is for small business owners to find time for accounting chores, even though they know effective invoicing can make a big difference to their ongoing success. Our monthly services include Xero accounting software that offers robust invoicing tools to get you paid faster.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


“I’m Worth It!” Deciding How Much to Pay Yourself

As a small business owner, you’re always the last one to get paid — after employees, suppliers, lenders, and everyone else who contributes to keeping your doors open. But that doesn’t mean you should never get paid!

After all, you need money to live, too. Struggling with your personal finances will only add to the stress of running a business, and may even affect your performance in both your professional and family life.

Here’s how to figure out when and how much to pay yourself.

Calculate a fair value.

Do some research into standard salaries for your industry and region. Check out:
• What your competitors are paying employees in a position similar to yours
• What salaries or hourly wages are being offered in the want ads
• What your current income works out to as an hourly rate
• How your current income compares to your own employees

There’s nothing to be gained by undervaluing yourself, either — unless your business is founded on the principle of having the lowest prices in town. Customers will value you at the same level that you value yourself. Those who want good quality expect to pay for it and will be loyal to the business that provides it. Those who want cheap prices will always be shopping around or trying to negotiate for a better deal.

Go over your personal budget to see how much money you absolutely need to live on without going deeper into debt each month. Are there places where you can trim expenses?

Find out your legal obligations.

The structure of your business may have a bearing on how you pay yourself. If it’s a sole proprietorship, you can do pretty much whatever you want, whenever it’s convenient.

On the other hand, a corporation is accountable to shareholders and must be able to demonstrate “reasonable compensation.” That’s why this type of business usually has the owner on the payroll, just like every other employee.

You also must keep records of payments to yourself for tax purposes — even (especially!) if you withdraw money from the business as the need arises rather than on a set schedule. Enter these transactions in your accounting software as they happen, and you’ll have less stress when faced with a tax filing or audit.

Decide on a payment structure.

Now that you have a number in mind for paying yourself a fair, livable wage, choose your payment strategy. Which one is right for you and your business will depend on your business structure, applicable tax laws, and cash flow situation. The possibilities include:

• Straight salary

Easiest to manage but not always the most tax-smart.

• Salary plus stock dividends

Dividends from the company stock you own are taxed at a lower rate than salary income, but make sure it’s legal in your location.

• Stock and stock options

Most tax-efficient way of paying yourself.

• Salary plus annual bonus

Could save on taxes in some circumstances.

• A business agreement to pay yourself later

If the business is short of money right now, but still needs to account for your salary.

When NOT to pay yourself.

It’s best not to take any money out of your business if it’s experiencing any of these financial situations.

• Employees haven’t been paid

This would affect staff morale, turnover, and productivity, likely leading to even further losses.

• Creditors haven’t been paid

This will damage supplier relationships and hinder your ability to obtain new credit.

• The business isn’t making a profit

Don’t take money straight out of revenues without first checking your profit and loss (P&L) statement.

If you’d like further advice and insight on setting a fair wage for yourself, tax implications and records, cash flow improvements, or understanding your P&L statements, just ask your expert Xendoo CPA team. We know you’re worth it!

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

How to Make a Budget for Your Small Business

Many small business owners started the company because they’re passionate about what they do, not because they’re good at crunching numbers. So they’re at a loss when it comes to business essentials such as creating a budget.

We’re here to tell you it doesn’t have to be super complicated. As long as you have a few key numbers in place, you’ll be able to see:

• Whether the business is making or losing money
• How much income you need to cover expenses
• How much money you have to reinvest in the business, hire more help, pay down debt or put into a reserve fund
• Where you can cut costs or increase income
• Whether you can or should take out a business loan

With Xendoo, our monthly profit and loss statement will give you a lot of the essential information you’ll need for creating a budget.


Look through your records and note all the outlays your business makes per month to keep operating. These may include:

• Overhead — fixed, recurring costs such as rent and utilities.
• Payroll — permanent staff and independent services or consultants. Don’t forget payroll taxes and employee benefits.
• Materials — retail stock or manufacturing raw materials.
• Depreciation — on business equipment such as computers or vehicles.
• Debt repayment — on business loans or other investments.
• Insurance — liability, property, worker’s compensation, commercial auto.
• Taxes — income tax, sales tax, business licenses, import duties.
• Marketing — advertising, promotions, business forms printing.
• Incidentals — office supplies, business travel, client entertainment.


Now review your monthly income. Ideally, it is greater than your expenses. Although it is sometimes a good strategy to take a loss for a short period in order to meet a particular goal, no business can sustain long-term losses. You may receive one or both of these types of income:

• Recurring income — consistent revenue from retainers and contract work.
• Expected income — variable revenues depending on the season and other factors inherent in your market or industry.

Next Steps

Now you can start creating versions of your budget for different situations — both good and bad — that may happen to your business, and planning how you’d handle them. For example:

• Your competitor undercuts your prices
• You lose your biggest client
• You move to a more (or less) expensive location
• You boost the sales volume by 5%
• You hire an additional employee
• You obtain a loan to expand your business

Make It Even Easier

Xendoo makes it easy for small businesses to use our professional services by offering flat monthly fees. No variable expense like you get from accountants who charge by the hour; just one simple, affordable number. Try plugging that number into your budget, along with how much more you can produce in the time you used to spend on accounting chores. We think you’ll find that it’s a very smart option indeed.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.