Creating a budget for your business is the simplest way to keep track of the money flowing into and out of your company. Your budget can be as simple as a handwritten list of expenses and income, or you can create a more sophisticated version using accounting software or online tools.
Budgets are useful for understanding how much money you’ll need to make a profit, showing a bank your intentions if you’re applying for a loan and costing out new products or services. Here’s how to make one that works for you.
Choose a time span
Most budgets span one fiscal year to allow you to break down longer-term expenses into monthly installments. You can consult an accountant to help you prepare a budget sheet, or you can use an online template. Additional monthly budgets can also be useful for setting and measuring sales targets and other goals.
Pick the right categories
Start by recording your expenses. These can be split into fixed (rent, standing orders, loan repayments, etc.) and variable (utilities, suppliers, etc.). If you don’t know exact figures, you can research an average amount to work with while you’re establishing your business. When it comes to income, you can start with a forecasted number and modify it to reflect actual income at the end of each month. For each category you should include ‘budgeted,’ ‘actual’ and ‘difference’ columns so you can compare the numbers.
Keep tabs on cash flow
It’s easy to keep your eye on cash flow with Square Dashboard and the new Dashboard app, which allows you to see live sales data in real time. All payments made through Square before 5 p.m. PT/8 p.m. ET will be transferred in your bank account the next business day, making it quick and easy to access the cash and keep track of your income.
Get an app
There are quite a few apps that can be used with your Square Dashboard. Try one of the simple accounting apps for a professional budget that can be synced with your sales data. Keeping your budget in the cloud makes it easier to update in real time and feed in figures as you receive them.