Why add up expenses regularly
Most small businesses know their largest bills, but few know the total. Small recurring charges add up, and they rarely get cancelled once they are on autopay. Seeing every category in one place makes it easier to spot what has crept up.
Convert unusual bills into monthly amounts before you enter them. An $1,800 annual insurance premium counts as $150 per month, and a $600 quarterly fee as $200. Leaving those out makes ordinary months look better than they really are.
The formulas
Monthly total
Monthly total = Sum of all categories
Annual total
Annual total = Monthly total × 12
Share of revenue
Share % = Monthly total ÷ Monthly revenue × 100
Worked example
A small agency enters the example categories above against $10,000 of monthly revenue.
- Monthly total: $4,100.00.
- Annual total: $4,100 × 12 = $49,200.00.
- Average per day: $49,200 ÷ 365 = $134.79.
- Share of revenue: $4,100 ÷ $10,000 = 41%, leaving $5,900.00.
- The largest category is rent, at 36.6% of expenses.
What to do with the numbers
- Look at the largest category first. Saving 10% there generally beats cancelling three small subscriptions.
- Review subscriptions quarterly. Check your bank statements for tools you have stopped using.
- Plan your break-even. Your fixed expenses feed straight into the break-even calculator.
- Set up your reserve. Compare the monthly total with your cash in the cash runway calculator.
A note on record keeping
This tool helps you plan and does not store anything. It does not decide what is tax-deductible, since that depends on your location and circumstances. Keep receipts and records as your accountant advises.
Frequently asked questions
Should I include my own pay?
If you take a regular wage, include it under wages. If you take draws, you may want to enter a figure anyway, as it gives you a fairer view of what the business really costs to run.
What about one-off purchases?
Large one-offs can distort a monthly view. Spread them across their useful life for planning purposes. A $2,400 computer lasting four years would count as $50 per month.
Should cost of goods sold go in here?
This tool is meant for operating expenses. If your materials vary with sales, the contribution margin calculator is usually a better place to account for them. Add them under "Other" if you want a total of all spending.
Does this tell me what I can deduct on my taxes?
No. It simply totals what you enter. Deduction rules vary and change over time, so ask a tax professional.