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Annual budget and projected P&L

Build your business budget for the next 12 months: sales targets with seasonality, costs, increases, new hires and investments. See each month’s P&L, the margins and projected cash, and download a spreadsheet with a tab to compare budget and actuals during the year.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Example values for a retail business. Monthly amounts, starting in January.

Sales

Weight of each month: 1 is an average month; 1.5 sells 50% more. The average is rescaled to 1 automatically.

Costs and expenses
Investment and financing
Cash

Card settlements and invoices on 30-day terms arrive the following month. Owner draws (beyond any salary included in fixed costs) leave the bank account but are not an expense in the P&L. With 0% income tax, profit is shown before tax.

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—Budgeted net income for the year
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Sales, costs and profit each month

Where each month’s sales go. The stacked bars add up to revenue; the top part is profit (or the loss, below zero).

Tap the chart to see the values.

Projected cash at the end of each month

Balance after collections, payments, investment and owner draws. Below zero, the business would need credit.

Tap the chart to see the values.

Margins month by month

Gross margin, EBITDA margin and net margin on each month’s net revenue.

Tap the chart to see the values.

Month-by-month budget

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Monthly sales = today’s average sales × (1 + growth)^(month ÷ 11) × seasonal weight
Gross profit = net revenue − cost of goods; EBITDA = gross profit − commissions and fees − fixed costs
Net income = EBITDA − depreciation − interest − income tax on positive profit
Month-end cash = previous cash + collections − payments − investment − owner draws

Assumptions and limits

  • Educational simulation. Cost of goods, taxes, commissions and fees are proportional to each month’s sales. Fixed costs rise and new hires start in the months chosen.
  • The investment leaves cash in the month chosen and enters the P&L as depreciation over its useful life, from the following month.
  • Cash: credit sales are collected and purchases on terms are paid the following month (last December’s at today’s average sales); taxes, expenses, interest, income tax and draws are paid in the same month. It ignores inventory, separate payroll items and repayment of loan principal.
  • The budget is a management projection; real sales, costs and payment terms vary. Review it every month against actuals.

Official sources and references

Frequently asked questions

What is an annual business budget?

A month-by-month plan for the next 12 months: sales with seasonality, variable costs, fixed costs, investments, the resulting P&L and the cash balance. It helps you spot tight months in advance and, during the year, compare the plan with actual results.

Where do I get each number?

Average monthly sales and fixed costs come from the last few months of your books. Cost of goods, commissions and fees as % of sales come from your P&L. Depreciation and interest are in your accountant’s reports or loan statements. The seasonality weights can be built from last year’s sales by month.

How do I read the default example?

With average sales of $80,000 a month today, 10% growth by December and retail seasonality, the year brings about $1,011,000 in sales and ends with net income of $136,851 (a 13.5% net margin) after 21% income tax. Cash never goes negative: the lowest balance is $19,793 in March, the month of the $30,000 investment, and December closes at $79,851.

Why can a profitable month have negative cash?

Profit counts the month’s sales and expenses, while cash counts money actually received and paid. Credit sales arrive later, an investment leaves the bank all at once (in the P&L it becomes depreciation over time) and owner draws are not an expense but still reduce cash.

What is seasonality and how should I set it?

It is the yearly pattern of sales: a weight of 1 is an average month, 1.5 sells 50% more and 0.8 sells 20% less. Pick a preset or type your own weights from last year’s monthly sales; the calculator rescales them so the average is 1.

What are the limits of this budget?

It is a simplified management budget. It does not model inventory, separate payroll items such as bonuses, the repayment of loan principal or tax rules of a specific country. Taxes are entered as simple percentages; check the rates that apply to your business.

When should I talk to an accountant?

To confirm the tax rates for your business structure, split owner salary from profit distributions and prepare the opening balance sheet. An accountant or financial adviser can also help when the budget shows a cash shortfall that needs financing.

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How to build an annual business budget

An annual budget turns the company’s goals into month-by-month numbers: how much to sell, spend and invest, and how much is left. It helps you make decisions before problems show up and, during the year, compare the budget with actual results.

The steps of a budget

  • Sales target: start from today’s sales, apply the expected growth and spread it across the months according to the business’s seasonality.
  • Variable costs: goods, sales taxes, commissions and fees, proportional to sales.
  • Fixed costs: payroll, rent and software, with planned increases and new hires.
  • Investments: equipment, renovations and systems, depreciated from the month after purchase.
  • Profit and cash: the P&L of each month and the projected cash balance.

Seasonality

Few businesses sell the same amount all year. Retail peaks in November and December; tourism in the summer; school supplies in August. Spreading the annual target evenly hides the tight months. The calculator lets you set a weight for each month.

Profit is not cash

The P&L shows the month’s profit; cash shows the money available. Sales on credit, purchases on terms and investments make the two differ. A profitable month can still have negative cash if there is a large investment or a stock build-up before the season.

Budget vs. actual

The downloadable spreadsheet includes a tab to enter each month’s actual numbers. Review the gaps monthly: small, consistent gaps point to assumptions that need adjusting; large gaps call for action, such as cutting expenses or stepping up sales.