There is nothing sexy about creating a budget. You created your very own start-up, and counting beans is not why you got into business. But it took ambition, drive, smarts, and courage to become an entrepreneur, and the best way to protect the result of your efforts is to be disciplined, responsible, and consistent when it comes to budgeting.

Follow this guide to stay on budget

budget
Budgeting is tedious and boring, but absolutely necessary.

Variable vs. Overhead

There are going to be a million expenses for any business owner, all of which can be generally divided into one of two categories: overhead and variable. Knowing the difference and categorizing them correctly is key to keeping up with your finances.

Overhead expenses are recurring costs you can expect to pay over and over, usually around the same time every month. Rent, employee payroll, and utilities are overhead. Variable expenses, such as a new air conditioner or laptop, are variable – or one-time – expenses.

Software

Software is your best weapon against making mistakes or not budgeting consistently – which leads to mistakes. The days of spreadsheets were slightly – but just slightly – better than the days of handwritten ledgers. Modern software automates your expenses and profits, does that math, factors in taxes, and – if your needs require a more sophisticated program – can handle shipping and receiving, inventory, and invoicing.

The Right Software

The first question you should ask is: What’s the right software? The answer is, the one that has all the features you need – and no more. It’s a common misconception that you should get as much as you can afford, that more features are better and it’s good to go bigger to leave room for your business to grow into it. The fact is, accounting software can be expensive and complicated. Not only are you wasting money for bells and whistles you don’t need, but your learning curve – and therefore propensity for mistakes – goes way up.

Entry Level

Entry-level software such as Mint and Outright are remotely hosted, so there’s no chance of data loss or security issues on your end. It’s simple and basic with a clear and easy interface. Best of all, it’s free.

This type of software can handle the needs of most sole proprietorships that don’t do a lot of invoicing. If you need a simple and automatic system to count what’s coming in and what’s going out that will automatically calculate pluses and minuses from several different accounts, start here before you spend a dollar on anything you may not need.

budget
Budgeting properly could be the difference between success and failure.

Software can go a long way to helping you keep track of your budget. But the reality is, nothing can replace discipline, consistency, and diligence when it comes to keeping your business’s finances in order. Budgeting isn’t fun, but it is necessary. Do it right to avoid having to do it twice.

Andrew Lisa is a freelance writer living in Los Angeles. He writes about small business, personal finance, and how to make a budget.