A budget provides the financial data that support your company’s vision, mission, and goals. It outlines key information on both the current state of your finances (including income and expenses) and your long-term financial goals. Because your budget will play a key role in making sound financial decisions for your business, it should be one of the first tasks you tackle.

1. Tally Your Income Sources: First things first. When building a small business budget, you need to figure out how much money your business is bringing in each month and where that money is coming from. Your sales figures are a great place to start. From there, you can add any other sources of income (i.e. interest, dividend, capital gains, rental revenue) for your business throughout the month.

2. Determine Fixed Costs: Once you’ve got a handle on your income, it’s time to get a handle of your costs—starting with fixed costs. Your fixed costs are any expenses that stay the same from month to month. This can include expenses like rent, certain utilities (like internet or phone plans), website hosting, and payroll costs. Once these costs are determined, add them together to get your total fixed cost expenses for the month.

3. Include Variable Expenses: Variable costs don’t come with a fixed price tag—and will vary each month based on your business performance and activity. These can include things like usage-based utilities (like electricity or gas), shipping costs, sales commissions, or travel costs. Variable expenses will change from month-to-month. Over time, you’ll get a sense of how these expenses fluctuate with your business performance, which can help you make more accurate financial projections and budget accordingly.

4. Predict One-Time Expenses: Many of your business expenses will be regular expenses that you pay for each month, whether they’re fixed or variable costs. But there are also costs that will happen far less frequently. Don’t forget to factor those expenses into your budget as well. If you know you have one-time expenses on the horizon (for example, an upcoming business course or a new laptop or major renovation), adding them to your budget can help you set aside the financial resources necessary to cover those expenses—and protect your business from a sudden or large financial burden.

On top of adding planned one-time spending to your budget, you should also add a buffer to cover any unplanned purchases or expenses. That way, when an unexpected expense pops up (and they always do), you’re prepared!

Putting in the work to create your budget may seem like a hassle, but thorough business budgeting gives you the financial insights you need to make the right decisions for your business to grow, scale, and prosper in the future.