Planning your IT budget

Most small-business IT budgets are a number someone remembers from last year, plus whatever broke. That's how a dead server turns into an emergency purchase at the worst possible price, usually in the same quarter as the roof repair.

You don't need a finance degree to fix this. You need a list of what you own, how long each thing lasts, and a calendar of what's coming. Here's how I walk owners through it.

Split the budget into four buckets

Every IT dollar fits in one of these. Keeping them separate makes the conversation with your accountant much easier.

1. Recurring per-user costs

These scale with headcount and renew monthly or yearly:

• Microsoft 365 or Google Workspace licenses
• Managed IT support
• Backup, including Microsoft 365 backup
• Endpoint protection and security tools
• Password manager
• Line-of-business software subscriptions (accounting, practice management, CAD)

Multiply by your headcount, then add the people you expect to hire. If you're planning to go from 12 to 15 people next year, budget for 15.

2. Hardware replacement

This is the bucket that causes surprises. The fix is to treat hardware as something you replace on a schedule, not when it dies.

My rules of thumb for small offices:

• Laptops and desktops: four to five years. Past that, they slow down, batteries fade, and they may not run the next version of Windows.
• Servers: five to seven years, and often the right answer is not to replace it at all but to move what's on it to Microsoft 365 or the cloud.
• Firewalls: five to seven years, plus the yearly security subscription. A Fortinet, Meraki, or similar firewall without its subscription does a lot less than you think.
• Wi-Fi access points and switches: five to eight years. Switches often last longer. Access points get replaced when a newer Wi-Fi standard is worth the jump.
• Phones and tablets: three to four years.

These aren't laws. A well-kept desktop can go six years. A laptop that rides in a truck around job sites in Rochester may not make it to three.

3. Projects

One-time work with a start and an end: an office move, a server retirement, a migration to SharePoint, new Wi-Fi for a warehouse. Get a project quote and put it in the year you plan to do it.

4. Contingency

Something will break that you didn't plan for. Set aside a modest percentage of the other three buckets. If you don't use it, it rolls into next year's replacements.

Smooth out replacements

Say you run a 15-person office in Portsmouth with 15 laptops on a five-year cycle. Replacing all 15 every fifth year is a painful year. Replacing three a year is a predictable line item, and nobody is stuck on the oldest machine for long.

Here's the simple spreadsheet I'd build:

Add one column per year for the next three years and drop each cost into the year it lands. You now have a three-year IT budget. It won't be perfect. It'll be far better than guessing.

Watch the end-of-support calendar

Microsoft stops releasing security updates for products on published dates. Once that happens, every new vulnerability stays open on those machines for good. These dates belong in your budget the way a lease renewal does.

Two that matter right now:

• Windows 10 reached end of support on October 14, 2025. Businesses can buy Extended Security Updates for up to three years, but the price per device doubles each year. ESU buys time. It isn't a plan. If you still have Windows 10 PCs, especially older ones that can't run Windows 11, they belong in this year's replacement bucket.
• Windows Server 2016 loses extended support on January 12, 2027. If your office still has a 2016 server in the closet running files, a database, or an old line-of-business app, the decision to replace, migrate, or retire it should be made now, not in December.

Look up the dates for your accounting software, your practice management system, and your firewall model too. Vendors publish them.

Things that get forgotten

• Renewals with odd dates. Domain names, SSL certificates, firewall subscriptions, and warranties all renew on different days. Put every one on a shared calendar.
• License creep. Former employees still holding paid licenses. Check every quarter.
• Hidden hardware. The PC that runs the CNC machine, the old box that controls the door system, the label printer at the front desk. They need replacement plans too.
• Training time. New systems take a few hours of everyone's time to learn. That's a real cost.

Questions people ask

Brady McNeill is the founder and CEO of Dreamline Technology. He has spent 12+ years running IT and security for small and mid-sized businesses across New England.