All about writing a business budget

Writing a business budget is one of the most important steps that any business owner can take. A business budget can serve not only as a roadmap but also a financial tool for any business. Many business owners find that costs are difficult to control. Having a business budget will help to keep cost under control. Businesses usually keep a budget on either a cash or accrual basis but however you choose to do it having a budget is crucial to maintain a healthy state for your business finances. Here is all about writing a business budget-

The first thing that you will need to do is to gather all of the information that will be necessary for putting the budget together. Keep in mind that if this is the first business budget that you are writing (for a new business), then you will have to make some assumptions. Getting the information can be as simple as asking the following questions-
- How much will be sold in the first year after the business opens?
- How much can be sold?
- What are the sales predictions for the years that follow?
- What is the price of the products or services that will be sold?
- What is the production cost of the product or service?
- How much inventory will need to be on hand?
- What are the operating costs of the business for a month and a year?
- What type of workforce will be needed?
- How much will employees make? Will you pay yourself? What benefits will you offer and what will they cost?
- What sort of tax liability will you have in terms of payroll and unemployment taxes? What will the income tax rate be?
- Will you rent or buy your physical space? How much will that be?
- What equipment will you need to start your business? How much will the initial cost be and what costs will follow up over time?
- Will you offer credit to your customers? If so-what payment terms will you offer? What are the payment terms from your suppliers?
- Will you need to borrow money to open your business? Will you need collateral? What is the interest rate on any debt financing?
Once you have gathered the information you can begin writing your business budget. This can be done manually or done by using software. Many of the business finance packages also offer a business budget function that it makes it simple to put together a budget simply by plugging in the numbers to the right spaces. If you are unsure as to how to do this your business accountant can offer guidance on putting together a business budget.

Most business owners make a budget that goes month to month. For the first month you will need to input a specific amount for each category within your business budget. It is important to try and get as close as you can on the sales numbers since they will affect many of the categories within your budget. Remember, that you will need to take a close look at the market in which you do business, what your competition is doing, and the potential demand for your products and services. Also, you should take into account the current economic conditions that could influence demand for your product or service.

Finally, remember that you will need to input all operating expenses to get a true picture of the state of your business finances. This can include but is not limited to: advertising, marketing, any insurances, and applicable depreciation. Your business accountant can help you with these figures if you need to.