Annual Budgets in QuickBooks 9-28-15

Annual Budgets in QuickBooks

Planning the creation and allocation of cash to meet financial liabilities as they come due is a unique art for each business, requiring a basic grasp of basic accounting principles and terms, an understanding of the yearly rhythm of income and expenses, and insight into predicting the impact of upcoming events and future decisions. Missing part or all of these aspects can crumble the otherwise solid foundation of a business’s annual budget, leaving business owners and other stakeholders in a compromised position. Annual budgeting allows a business to keep company goals for solvency, growth, expansion, as well as simple pre-planning to cover both regular and irregular expenses as they arise. QuickBooks offers a customizable process for creating an annual budget that will meet the needs of any business regardless of industry or depth of detail.

Basic Budget Creation in QuickBooks

QuickBooks allows for two major types of budgets, based upon either the profit and loss or balance sheet (though always to reflect the current Chart of Accounts listed within the file). To create a new budget in QuickBooks, the user must navigate to the Company menu and select Planning & Budgeting > Set Up Budgets. The Create New Budget option prompts the user for the year and type of budget before continuing on to ask for specific class/job budgeting and whether content should be generated based on the previous year’s figures or left blank and filled in manually.

Choosing whether to budget based on last year’s financial inflows and outflows or starting from scratch requires some consideration: Is this a new business, or run by a significantly different management style? What is the industry/economy like and predicted to be in the upcoming year? Have the major goals of the business changed significantly? Is there expected growth or loss in sales or costs of vendor purchases? Users can also opt to begin a preliminary budget based on the previous year and change line items individually, customizing the most impactful accounts and leaving others. Manually entering figures can also be done fractionally (that is, the total for the year is entered by the user and divided across the twelve months by QuickBooks) or entered as the expected amount on a monthly basis.

Other Budget Features and Options

For businesses with multiple classes or jobs maintained within the company file, QuickBooks allows for individual budgets to be applied to those sections of the business in much the same way as a general business budget. To set this criteria, simply check the box in the Create New Budget screen determining the class or job to apply the new budget towards.

If changes in the set budget require changes to all or subsequent months, the Adjust Row Amounts feature allows the user to apply either an increase or decrease of amount or percentage to a specific account. Users can also navigate between multiple budgets at once by utilizing the drop-down menu at the top of the Set Up Budgets screen.