As a small business owner, you may find yourself spending most of your time “doing the business” instead of planning and preparing. In fact, most people I know who start their own home businesses have learned how to plan and budget as they went along, picking up business skills and organizational details “on the job” so to speak. You may find that in addition to your overall budgets and bookkeeping that you need to learn how to design a per diem expense budget. If you travel to conferences or workshops, or find yourself traveling at all in the line of duty, you will need to budget out for your daily expenses and it can take a while to get the hang of it.
Basically, “per diem” means “per day”—so when you travel or attend a show or conference, there will be daily expenses that are part of your being able to do business. Things like transportation, parking, meals, and other incidentals can all be included in a per diem expense budget. I do not usually include costs like hotel fees, but certainly any phone calls, tips or the cost of entertaining a customer or client would be figured into an expense budget.
There is a certain amount of speculation that goes into designing an expense budget, but I have found that the more I do it, the more accurate I become. Ask yourself some basic questions—Will any meals or expenses be included in the conference or activity? Will you be sharing any transportation or expenses with anyone else? Once you figure out how many meals you will be eating (will you be making a trip to the grocery store and getting any food items to prepare yourself?)—you can add in other incidentals including parking, tips, supplies, etc.
It is important to consider WHERE you are going to be. All cities and countries are not created equal and this is where you’ll need to do a little research. For example, recently I travelled to Norway—one of the most expensive nations on the planet right now—the exchange rate with the U.S. dollar is poor (at least for us) and everything was very expensive. Even with creative budgeting, the per diem expenses were quite high. Trips to different countries and cities will require different budgeting considerations. Be sure to allow yourself a little extra leeway to adjust. It is always nice to come home with unspent money, but stressful when you don’t have enough. Save your reciepts and notes so that you can reconcile your expenses when you return home.
See Also: Budget Strategies: The Envelope System
Keeping Track of Business Expenses