How to budget correctly

Knowing how to budget properly is the absolutely central principle for any business owner, manager, or individual.Budgeting properly within your business is absolutely key to the successful running of your business, because it will determine that you use your money properly, that you don't overspend your profits and assets, and that your business can actually be profitable.

Whenever you own or manage any part of a business, one of the things that you have to be most careful about is the use of business funds within your budget.It is easy to abuse business fund without even realizing that one is doing so; using business funds to go to lunch, for example, or paying for things that should not be covered by business funds when on a business trip, like tickets to a show or a tour of an art museum.

Of course, there are the more glaring abuses of business funds.These include pretty obvious fraud, like funneling large amounts of money into personal accounts or using business funds as bribes or for personal use, like upgrading homes or helping with the kids' college education.Fortunately, there are a number of measures that you can put into place to ensure that business funds are not abused.

5 tips for proper budgeting
1.Determine how much money you have
2.List all expenses
3.Put specific guidelines in place for the use of business funds.
4.Have particular guidelines in place for reporting the use of business funds.
5.Require particular guidelines for documenting the use of business funds.
6.Ensure careful and continuous review of business fund use documentation.

1.Determine how much money you have

Go through all of your accounts and your business.How much money do you have?How much money do you have coming in?Make sure that you list all different avenues of incoming money, so that you know how much you have to spend.

2.List all expenses

Now, you need to list all of your expenses.List them in order of importance: salaries will come before company parties, for example.List your expenses in different categories: wants and needs.Then list how much you are currently spending in each category.Are you spending more than you make?Where can you cut back?Now that you can see where your money is going, it's time to make some guidelines for spending that money.

3.Put specific guidelines in place for the use of business funds.

Having specific guidelines that determine which types of funds can be used at particular times and for particular reasons is the first step in ensuring that business funds are used appropriately.There are a number of different types of funds set up for your business, from purchasing accounts to purchasing cards to petty cash funds.

Draw up specific guidelines for each type of account.Make a detailed list of what each account may be used for.Make these guidelines readily available to all employees.

4.Have particular guidelines in place for reporting the use of business funds.

The next step to making sure that business funds are used appropriately within your budget is coming up with a way that business funds are reported.Have a detailed procedure-not too complicated-that requires that all receipts are saved and all business fund uses are precisely detailed.These reports should be given to the accounting department.The accounting department should also run everything by the owner or the manager of the company or organization, so that there is oversight with the use of business funds.

5.Require particular guidelines for documenting the use of business funds.

This step goes along with the previous one.Ensure that everyone fills out the same forms when it comes to reporting the use of business funds.Having the same procedure across the board for documentation can help cut down on abuse.

6.Ensure careful and continuous review of business fund documentation.

It is the responsibility of the manager or the owner to be on top of and aware of how business funds are being used.Educate yourself about accounting procedures so that you can understand where business funds are going and where they are coming from.Keep on top of the way that business funds are being documented, and be on the lookout for any discrepancies.