Setting up Budgets with QuickBooks

Using QuickBooks to budget for income. QuickBooks features include budgeting which should be used as a business planning tool to red flag when profits are not up to expectations.

From the company menu

• select planning and budgets,

• use the budget wizard to create a business budget for the next twelve months.  We recommend entering the one years budget in the month of  January.  Small business owners/managers do not have the personnel to perform monthly budget variance analysis.  With an entire year's budget entered in the first month, the year to date budget reports will report the balance available for the remainder of the year.  This amount will help managers determine what strategy changes are required to meet goals.  It also avoids timing differences which always pop up when the vendors invoice later or earlier than anticipated.

• Monthly, from the reports menu select budget & forecasts to generate the budget vs actual report.

• budget reports are easier to analyze by looking at year-to-date figures.

  • modify this report by changing the date to "year-to-date"

  • modify he columns (from month) to "total only".

• Research discrepancies and alter business plans as needed to bring your financial performance back in line with budgeted amounts. 

Plan your income and expenses with your employees.  It helps to have them involved in the process if you expect to hold them accountable for the outcome. A budget needs to reflect the priorities and feelings of everyone who has to live within the plan.

Include some cushion in your plan.  Don't budget to spend every last dollar. If you plan from the start to spend every dollar you earn, undoubtedly an unexpected expenses will arise when you don't have any money.

Regularly compare your actual income and outgo to your planned income and outgo.  This part of your plan is probably the most important. Make adjustments as necessary.

When you have problems with your budget -- and you will -- you'll know that your plan isn't working, but you will have time to make strategy changes before the  problems escalate to a point where goals are not met, company moral decreases, or financial troubles begin.

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