Multiple businesses/1099s: Is it best to have a separate budget for each small business or just ONE "business" budget that holds them all?

Hi all, I have been going through the incredible tutorials and browsing the forum (such great info here!) and I wasn't able to see this question asked and answered yet.  My wife and I both have W2 income that goes into our personal checking account and we also have get 3 1099s at the end of the year for small/home businesses - these all have their separate checking accounts and they are all sole proprietor so we don't (yet) have an S-Corp or LLC.  When I was using YNAB4 I just had everything in one budget but I see that it makes sense to have a separate budget for business.  My questions is should each business/1099 have a separate budget in YNAB or just ONE business budget that has all of them:

Business 1

Income

Expenses

Business 2

Income

Expenses

Business 3

Income

Expenses

 

Thanks in advance for any tips! :-) 

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  • If you want to keep each business self-contained, then use separate budgets. If you are going to use your various businesses to fund each others business budgets, feel free to mix them.

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  • Hi Randy R. !

    Nolesrule is exactly right. If each business has separate finances then separate budgets are the best way to go. That way you don't accidentally budget Business 1 funds towards Business 3, or any other combination of them.

    If you have a moment, check out this article on how to set up a business budget.

    Our founder, Jesse, has written a number of blog posts that would be helpful. Here are some great ones:

    Keep in mind that they were created based off of our previous version of YNAB (YNAB 4) so you won't recognize some of the screenshots. The information is all still relevant, though! :)

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  • Thanks for the responses.  One of the businesses is not self-sufficient where it can fund itself yet so one of the other businesses does help fund it for now.  So if I did have separate budgets for each, would I take money as an "owners share/salary" or similar to take the funds from my self-sufficient business (business 1) into my personal account and then send the necessary funds from my personal account to business 2 when needed?  Also, I have a separate savings account that is just to collect quarterly tax payments from each business (after watching some of the videos I can see that this may not be necessary anymore). If I have separate budgets for each business, i am not sure which budget should include the tax payment savings account since each budget would be contributing to it.  Any tips/suggestions on that?   Thanks!

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    • Randy R. How are you tracking the funding of the business that isn't self-sufficient yet? If you do take profit from one business and invest in another, then what you described is correct (withdraw from one business to your personal account, then deposit from your personal account to the other business). If you consider the funds a loan from one business to the other, that would be handled differently.

      As for that savings account, you're right about not needing it. ;)

      You could leave it out of all of the budgets and enter the transfers to the Savings account just like any other expense, categorized it to a "Taxes" category. This article goes over leaving out Tracking accounts - it mentions loan accounts, but the approach is the same. Instead of entering transfers, you'd consider the money as spent in the budget as soon as it leaves your account. 

      If you decide to include the savings account, I'd consider adding it as a Tracking account to your personal account. You'd handle the transfers the same way in each business budget (as an expense in your Taxes category) and in your personal budget you'd track the inflows (transfers from each business budget) and outflows (actual tax payments).

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
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      • Reported - view

      @Randy I'm somewhat in agreement with . I'd put the taxes account in my personal budget file, but I'd make it a budget account instead of a tracking account. You are paying Self Employment and Income taxes on the business profits via Schedule C / Schedule SE, but they are all "personal" taxes as part of the 1040. This will make it easier to manage your taxes when filing your return, in case you owe money or get a refund. Your tax liability come April 15th does not belong to your businesses, it belongs to you.

      While I don't have a separate savings account for taxes, I have categories for Federal and State taxes in my budget, because our withholding is at a lower rate than our marginal tax rate, and I set money aside to make tax payments using my budget categories rather than a specific account.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • Reported - view

      That was weird. I thought I tagged Faness in my previous post after "somewhat in agreement with"

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      • Randy R.
      • randy_r
      • 7 mths ago
      • 1
      • Reported - view

      nolesrule Faness - Thank you for your input!  Very helpful! 🙂👍

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