Operating Budget Calculator

How it is calculated

The tool nets one period's expected income against its expected costs: net income = total income − total expenses and margin % = net income ÷ total income × 100. Both inputs are dollar totals for the same period, whether a month, a quarter or a year. A loss is shown as a negative net income and a negative margin, with a minus sign. The margin is measured against income, not against expenses, so spending equal to income gives 0%, and zero expenses gives 100%. Total income must be above zero, because the margin would be undefined otherwise, and expenses cannot be negative; those cases return no result. The tool takes only two totals, so it does not split costs into categories, show fixed against variable costs, or account for taxes, which you must include in expenses if you want them reflected.

Common mistakes

• Mixing periods, for example monthly income against annual expenses. Both totals must cover the same period, or the margin will be meaningless.
• Leaving one-off or annual bills such as insurance, licences or taxes out of the expenses, which makes the margin look better than the plan really is.
• Confusing margin with markup. Margin is profit as a share of income, so $16,800 on $85,000 is 19.76%, while profit as a share of expenses would be a different, higher number.
• Entering the owner's draw or salary as income. Only money the business earns counts as income; withdrawals belong in expenses or outside the budget.