Episode 44: Stop Guessing: How to Build a Business Budget in QuickBooks You’ll Actually Use cover art

Episode 44: Stop Guessing: How to Build a Business Budget in QuickBooks You’ll Actually Use

Episode 44: Stop Guessing: How to Build a Business Budget in QuickBooks You’ll Actually Use

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Episode 44: Stop Guessing: How to Build a Business Budget in QuickBooks You’ll Actually UseCan your business afford to hire, buy equipment or expand next year? A useful budget helps you answer those questions with a plan you can actually use.In this episode of QuickBooks Mastery for Small Business Success, Erica Northrup and Lee Davis explain how to build a realistic business budget in QuickBooks—and how to use it throughout the year.Drawing on a real client budgeting project, they discuss where to begin, how to use historical Profit & Loss information, why seasonal businesses should not automatically divide annual numbers by twelve, and how your Chart of Accounts affects the usefulness of your budget.They also explore Budget vs. Actual: how to understand the story behind a variance, decide which differences need attention, and use your numbers to guide business decisions.Planning for 2027? Download the free 2027 Business Budget Planning Worksheet in the Resources section to document your assumptions, draft your monthly budget and review your results.Key TakeawaysA business budget is a financial plan for what the business wants to accomplish.Begin with historical Profit & Loss information, but do not automatically turn last year’s actual numbers into next year’s budget.A useful budget reflects reasonable assumptions about revenue, pricing, costs, staffing, contracts, capacity and business changes.Ask: What has to happen operationally for this number to be true?Revenue and expenses should be placed in the months when they are actually expected to occur.Do not automatically divide every annual budget number by twelve, especially in a seasonal business.Your Chart of Accounts should support the information you actually need from the budget and Profit & Loss.Budget vs. Actual turns the budgeting process into an ongoing management tool.Being over budget is not automatically bad, and being under budget is not automatically good. The important question is why.Investigate meaningful variances rather than simply labelling them as over or under budget.Make Budget vs. Actual part of your monthly reporting process, with more frequent tracking when your business needs it.Keep the original budget intact so you can see how reality differed from what you originally expected.Budgeting becomes more useful each year as your assumptions, systems and review process improve.Questions to Reflect OnWhat do you realistically expect revenue to be next year?What has to happen operationally for that revenue number to become reality?What costs will be required to generate that revenue?Which expenses are recurring monthly, quarterly, annually or seasonally?Are material costs, fuel, wages, rent, insurance or subscriptions changing?Are you planning new hires, equipment purchases, expansion or new services?Which months are naturally stronger or slower for your business?Does your Chart of Accounts give you the information you actually need?Which expenses have changed significantly during the past year?If revenue increases, does your business have the capacity to deliver the additional work?Which Budget-vs.-Actual differences are meaningful enough to require action?Does your current performance support the hires, purchases and goals you are considering?Chapters00:00 QuickBooks Mastery Podcast Introduction00:55 Episode 44: Stop Guessing — Build a Business Budget You’ll Actually Use02:31 Does a Small Business Really Need a Formal Budget?03:57 A Budget Is More Than a Spending Limit05:22 Where to Start Building a Budget in QuickBooks06:45 Why Last Year’s Numbers Are Only a Starting Point09:07 Why You Shouldn’t Divide Your Annual Budget by 1210:23 When Your Budget and Chart of Accounts Don’t Match12:39 Building a Realistic Budget Instead of a Wish List14:33 What Has to Happen for This Number to Be True?15:06 The Real Value: QuickBooks Budget vs. Actual16:46 Understanding the Story Behind a Budget Variance17:44 Why Being Over Budget Isn’t Always Bad18:28 How Often Should You Review Budget vs. Actual?19:53 Should You Change the Budget Midyear?21:09 The Questions to Ask During Every Budget Review22:59 Turning QuickBooks Into a Decision-Making Tool23:42 Your Practical First Step: Build the Budget24:41 Focus on the Expenses That Actually Matter25:21 Your Budgeting Homework for This Week26:19 QuickBooks Clarity Scorecard26:34 QuickBooks Mastery Program and Waitlist26:56 Lee’s Final Advice on Budgeting27:29 Episode Wrap-Up27:45 Podcast OutroMentioned in This EpisodeQuickBooks budgeting tools and Profit & Loss reportsCalendar-year versus fiscal-year budgetingHistorical financial information and zero-based budgetingRevenue assumptions, pricing and capacityCost of goods sold, payroll and staffingMaterial, fuel, wage, rent and insurance increasesSubscription and contract renewalsSeasonal revenue and expensesChart of Accounts structure, budget categories and subaccountsBudget vs. Actual reports, dollar variances and percentage ...
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