Big or small, all businesses need a budget. Budgets are the foundation of successful accounting. They can help you scale your venture for future growth. However, if you’re a new business owner or entrepreneur, you may be wondering where to start. What’s the best way to keep track of your budget?
Below we’ve outlined some of the basics of how to make a small business budget.
Where Does Your Money Come from and Go?
Let’s start with the basics. The first thing you’ll need to determine is your monthly cash flow: where the money comes in and where the money goes out of your business each month. This is also called the income source.
If you own a small business, your income source will likely be from selling a product or service. Besides tracking these funds, you also need to keep track of your fixed and variable expenses. This includes the cost of goods, salaries to employees, rent, electricity, and everything needed to keep your operation running.
The goal, of course, is to be profitable and to have more money coming in than going out each month.
What Can You Cut?
Running a small business comes with a lot of challenges. It’s important to be fiscally proactive to minimize your expenses as much as possible. When creating your budget, try to consider what you can cut out.
Is there a certain expense you don’t need?
Is there an alternative software, supplies, or vendors you could use instead?
Everyone likes to save money. However, for small businesses, making cuts is especially important.
Create a Spreadsheet
Now for the fun stuff—or at least for us accounting geeks. Spreadsheets are an incredibly powerful tool. They help you track your cash flow, balance your books, and monitor your profits and losses.
Using your preferred spreadsheet software, start by breaking down what you expect to make each month, vs what you have to spend each month. The expenditures should include fixed and variable expenses. This will help you understand your monthly profits.
With the leftover cash, break down how much you’ll give to yourself and anyone on your payroll. Also, budget for how much you’ll set aside for taxes, put into business savings, and leave for misc expenses.
Having business savings is very important in case you have a slow month/quarter. It will also allow some wiggle room for unexpected expenses.
By creating this spreadsheet, you may be surprised at how much money goes in and out of your business each month. To simplify the process at MI Tax CPA, we offer several small business accounting and CPA services. These include payroll management, tax services, consulting and planning, bookkeeping, and more. We can help you set a budget—and stick to it—to build a solid foundation for your business to grow.
Once you’ve set a budget and created your spreadsheet, you can review it every quarter. Make any changes as needed.
Hire a Professional to Save Time and Money
Budgeting is such an important part of running a successful business! But the truth is, budgeting takes a lot of time and work.
So why not have someone do all of this for you?
Our team of accountants at MI Tax CPA can help you save time and money by taking budgeting off your hands. With a team of accounting professionals, we can help you develop an effective budgeting strategy that sets up your company for success.
Not to mention, by hiring our team, you can save yourself countless hours in accounting tasks. This executive decision will give you more time to focus on what matters most: running your business.
There is so much to learn about business accounting. That’s why so many small business owners hire a professional. An accountant can help you set realistic goals for your business, take advantage of tax savings, and maximize your profits over time.
Our Goal: To See Your Business Thrive
At MI Tax CPA, we respect that a lot of time, work, and care went into building your business. We want to see it grow!
Our small business CPA services are designed to help small businesses find financial success, by giving you the tools they need to succeed. Looking for bookkeeping services, payroll management, tax consulting, small business accounting, new business advice, or something else? Our team is here to help.
Contact us today to learn more about how to make a business budget. We invite you to inquire about our services and to get a free quote.