Did you know you can easily
create a budget for your business in QuickBooks? I promise you can! But before
I outline the basics of creating and reviewing your budget in QuickBooks, I
need to address the “Why” your business (and personal) finances need a budget.
First, the obvious reason
would be to help you forecast how much revenue and expense you believe your
business will incur in an upcoming period; typically the next calendar or fiscal
year. The budget then allows you to measure how you expected you would do –vs. - how you actually did (Budget vs. Actual). Additionally, you can make smart,
informed business decisions based on whether or not you have money in the
budget to purchase that new printer or not.
Second, as I write this blog
article, our economy is in dire straits. Unemployment is currently 10.2%. Factor
in the government's own U-6
unemployment statistics (people unemployed plus those who have simply given up
trying to find work, people whom are underemployed and people who want
full-time work but are currently working part-time) and the true unemployment
rate is a staggering 17.5%. If you want your business to succeed, and not
become another statistic, then you MUST know where your money is going and you
MUST have a viable plan.
One part of this plan needs
to ensure you have a sound budget in place and that you are consistently
checking this budget to measure how your plan is performing. I cannot think of
a better time of year for you to create a budget for the upcoming year.
The above represents the
“Why”. Next, let’s look at the “How".
To begin the budgeting
process, I suggest printing out a Profit & Loss for the current
year-to-date and then total columns by month so your report reflects each month
and then a total. This, of course will show your actual revenue, cost of goods
and expenses for the year. With this data in hand, begin thinking about the
upcoming year. Here are some basic questions to ask yourself (and you need to
be completely honest with yourself):
- What would or should you do differently to increase revenues, while decreasing expenses?
-
When your annual
date occurs for your leased space, does your rent increase?
-
How about
-
Insurance costs
– Is your Workmen’s Comp insurance likely to increase or decrease?
-
Does your
business accept credit cards? Is it time to look at the merchant service rates
you are paying to accept credit cards? (Shameless plug #1 – QuickTrainer can
help you get started with an Intuit Merchant Service account which offers
highly competitive rates, not to mention the tight integration you enjoy with
QuickBooks or QuickBooks Point of Sale.)
-
Paying too much
for your monthly telephone bill? Perhaps it’s time to look at the various
options to having an AT&T landline. At QuickTrainer, we use Voice Over
Internet Protocol (VOIP) technology. Our monthly telephone bill is only $64.97
and includes a fax number and voice mail technology which delvers both faxes
and voice mails as emails. It’s great!
-
Can your
business decrease the monies spent on accounting? It can if the QuickBooks data
you provide your CPA is clean and accurate (Shameless plug #2 – QuickTrainer
can help you with your data cleanup and ensure proper management going
forward.)
-
Will you be
hiring additional employees? Don’t forget to factor in the other costs of
employees (e.g., company Social Security, Medicare, FUTA and SUTA, Company
Medical/Dental costs, 401-K matches).
-
Are you
currently outsourcing your payroll? If so, GOOD! But how much are you paying to
your outsourced vendor? (Shameless plug #3 – Perhaps it’s time to look at
Intuit’s Assisted Payroll. QuickTrainer can help you get started with this
service and save you money.)
-
If your business
model currently has you traveling a good deal, you might want to seriously
consider the many technology choices you have today which can keep you grounded
and save you some serious bucks. All the while, providing the same excellent
client service your clients have come to expect.
No
doubt, I could go on and on with areas you should consider. But I believe you
get the idea. Regardless, question with boldness.
With the above in hand, you are ready to create your budget within QuickBooks. For a short video tutorial on the steps involved, click this link: How to create a QuickBooks budget.
Happy budgeting!
#ilm