Planning and budgeting are all part of maintaining a successful business. Your budget models your company’s financial and operational goals to help you understand where you can allocate resources. Thus, you can formulate plans to continue maintaining a profitable business. For this reason, we’re going to share with you 3 things you need to consider when preparing for your 2020 business budget.
One of the first things that businesses should do is review their 2019 budget. This budget will give you valuable insight into how well your budget matched your true income and expenses for that year. Additionally, your 2019 budget should be used as the foundation for your 2020 budget and map out where adjustments need to be made.
Another great thing to consider is your business’s fixed costs. Fixed costs are considered anything that does not change each month. For instance, rent and insurance are considered fixed costs because they will remain the same over a period of time.
Incorporating your fixed costs is a great starting point for your budget and will be the easiest to implement. Businesses should review their bank statements or run a report to spot fixed bills and total the amount for each month.
Along with fixed costs, businesses need to consider other expenses such as payroll, utilities, and taxes. Further, even smaller expenses such as office supplies, fuel for company vehicles, and postage and shipping need to be included in the budget to create an accurate projection of expenses.
Business owners need to make an accurate projection of their income for their 2020 budget. Even if you’re just starting out, it’s important to talk to other business owners in your field to get an estimate of what you can expect to bring in each month.
Having an accurate income projection in place allows businesses to better understand how well they will be able to manage their expenses and what kind of profit they can expect to make. Overestimating your income can quickly lead to overspending while underestimating your income can keep you from making important investments that will help grow your business.
Creating a budget for your business is important because it will help keep your business on track. Businesses should consider reviewing their budget on a monthly basis to stay on top of any necessary adjustments. If you are a business owner that needs help with their 2020 budgeting, contact us today.
Tax Tips for the Self-Employed
An Overview of the Net Operating Loss Tax Provisions in the CARES Act
How To Decrease Your Small Business Debt? A Step-By-Step Guide
Why Every Small Business Needs a Bookkeeper?
Tax Credits That Could Benefit Small Businesses
Why You Should, and Shouldn’t, Apply for a Tax Extension