You know the importance of keeping a personal budget to keep your spending in check, but have you ever thought about your business? Business spending, especially if you are in the type of business that needs a lot of job supplies such as a contractor or tradesman, can run a business to the ground, and that is something we want to avoid. It’s easier than ever to get started with a business budget, simply using your QBO profile (only in the Plus and Advanced options). So how do you do it?
The first step is to make a list of all bills that you owe weekly (if applicable), monthly, and yearly. Going through your bank statements can help with this and if you use accounting software, double check there as well. Once you have a list of your repeating expenses, estimate how much it costs you per job for everything from your supplies to labor costs as well.
Next you want to see how much is your average monthly income. If you work on a project basis, then estimate this based on your average per month, taking into account if you have slower months in the winter. The ultimate goal is to keep your expenses within what you make per month, preferably below that.
Now that you have all this information, it’s time to make your budget. Head into the Settings tab on your QBO home page, then click on Budgeting. You can name the budget whatever you want, but I recommend naming it based on the period you’re budgeting for, either monthly, quarterly, or yearly, which, consequently, is your next option to choose. This is great because if you only want to budget during the slower months, you will be able to have the freedom to only choose those dates. You can pick to prefill the data from previous months, or if you haven’t had your accounting software as long as you’ve been open, I would recommend choosing based on what you have actually spent.
Once you hit Create Budget, you will be given the option to put in the amounts you expect to make as income and as expenses for every account that you have in your chart of accounts. Try to make reasonable choices of what you think you will make or spend for the time you have chosen. All that is left to do is hit save, and you’re good to go.
Now is the time for implementation. Whenever you need to make a financial decision, make sure you refer to your budget and see where you’re at as far as how much you’ve spent and how much you’ve made. You’ll be able to access the budget on the left hand side of QBO as well as in the QBO app. Always double check your budget before any purchases and at the end of the period that you put in your budget. Once you have finished that period, compare how you did and start planning for the next one.
Good luck with making your budget! Let me know how it goes in the comments and if you already follow a budget for your business.
