Creating a budget becomes more and more important as your company grows.
I did not start using a budget until last year. It started when I bought a house- my liabilities went up and I wanted to make sure I was going to be able to afford my mortgage! I also was making some other large changes, and our payroll burden rates went way up (specifically, our unemployment rates caught up with us.).
I looked into some budgeting software options, such as Planguru. This software syncs with Quickbooks and has some in depth budgeting abilities, essentially just a very complicated excel spread sheet generator.
After speaking with my accountant, this seemed to be a more complicated solution than we needed at this time. Instead, we decided to use the built in Quickbooks Budgeting.
A little bit about this- its really a pretty bad, weak piece of software (kind of like all Quickbooks software IMO). But it has been working for our needs, and it is nice that it is built right into Quickbooks so you can run reports, such as budget vs actual, which is very helpful.
I am basically using the budget as a cashflow forecaster. Since (go figure) the cashflow forecaster in Quickbooks is very limited, and only works if you input all your AP through their software, we weren’t able to use it.
So what I chose to do, is put some of my balance sheet items (such as loan payments and large equipment purchases) as expense accounts. This way, these cash flow items would be reflected in our budget. At the end of the year, we move these items back to their correct balance sheet item accounts.
It is important to note that with the Quickbooks budgeting, if you pull the information from the previous year, you need to make sure that any new accounts exist. For example, we added a couple new accounts to our chart of accounts so we had to create the accounts and make sure there was an expense in them in 2014, in order to pull the data into the 2015 budget. Another words, within the budget you do not have the ability to create a new account.
This has been working well for us, and we will probably continue to use this method until our needs change.
