As an accounting major in college, I quickly learned all of the complicated parts of the accounting cycle. I discovered how to input the details of business transactions into a computerized accounting system. At the end of an accounting cycle, such as a month, I became experienced with calculating the revenue for the period. If you’re starting a new business, determining an accurate amount of revenue for each accounting cycle is crucial. You must know how much profit you’re making each accounting period in order to be successful in the long-term. On this blog, you will discover how an experienced accountant can help you keep track of your revenue.
When you're setting up your small business budget, it's important to make sure that you have all of the relevant information that you will need to complete an accurate budget. Here are some of the pieces of data that you need to include in your budget.
All Income Sources
The first piece of information should be easy to get if you already have an accurate profit and loss statement set up. The income should include all sources of revenue, including sales and other income streams. If you're being conservative, you can use the numbers for your previous year's sales directly as your projected income for next year; otherwise, an accountant can help you determine a reasonable amount for your new projected sales in the upcoming year.
Fixed Costs of Your Business
The next part of the budget will include your business' fixed costs. Things such as rent and employee salaries are part of the fixed costs that happen each month for your business.
Variable Costs
Another portion of your costs comes from the variable costs that happen each month. These include many things, such as employee perks, office supplies, and other expenses. When you're looking to change up your operating costs, an accountant may target this area as a potential place to make cutbacks. For instance, cutting down on the amount of beverages and snacks that you keep in the office can help to keep these variable operating costs low.
One-time Expenses
Another part of your budget will include the one-time expenses that you expect to have in the upcoming year. This might include an office move that you're planning for the next year. Or it might be something simpler, such as getting new desks or expanding a section of the office.
What's Next?
Once you have all of these pieces of key information estimated accurately, your accountant can help you put together a fiscally sound budget for the upcoming year. They may look at your last budget to see how closely the estimates and actual spending matched. If they notice that there was a lot of spending in one category, they might help you scale back that area for the upcoming year.
Your accounting firm will also help you identify the types of budgets you need. While most businesses have a master budget, an operational budget may also be helpful for keeping indirect costs low. And some businesses prefer to have a rolling budget or other non-traditional method of looking at their finances.
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