Budgets
You probably have a rough idea of your revenue and expense targets for the year, both for your company as a whole, for different divisions or specific customer projects. If you have recently written a business plan or spoken with an accountant, it is likely that you have already created a budget. You can enter that budget into Sage 50 Accounting to keep track of it, to compare it to your actual revenue and expenses, as well as to record changes to it. You can then periodically print income statements that compare budgeted amounts to actual amounts, and create budgets for specific projects.
Budgeting considerations:
- Use your earning and spending history (the revenues and expenses from your income statement) as a starting point. If you have just set up your business, you may want to keep track of your revenue and expenses for several months before beginning your budget.
- Be realistic. Do not underestimate your expenses or overestimate your revenue.
- Budget for fixed expenses (such as rent or mortgage payments) first, then determine your variable or discretionary expenses.
- Estimate a yearly amount for unusual expenditures (such as repairs to your buildings or machinery), and budget an equal portion for each budget period.
- Do not forget periodic expenses like insurance and licences.
- If expenses are over budget, consider holding down spending next month to get back on budget.
Why should I set up a budget?
A budget helps keep your business on track by setting out a detailed plan that predicts where your money is coming from and where it's going. Use it to spot problem areas quickly and run your business more effectively.
How do I check my actuals to the budget?
Sage 50 Accounting provides two key reports to help you compare budget numbers to what your company is actually earning/spending.
- Project Budget allows you to compare actual revenues and expenses for one or more projects to the original budget.
- Comparative Income Statement allows you to compare actual versus budgeted revenue, expenses, and net income for the specified period.
Keeping the budget up-to-date
At any time, you can change your budget expectations for a particular account or project. You may also want to increase or decrease your entire budget by a certain percentage (for example you may want to account for inflation on building costs).