As part of our monthly calendar tips on doing one thing each month to run your business better, our tip for October is:
Create a budget. Outline how much you spend each month and how much income you need to bring in to pay your expenses.
Creating a budget and running regular reports will show how your actual income and expenses compare to what has been budgeted – this will help you to anticipate potential cash flow problems.
Dates for your diary
Important dates this month are:
- 7 October: Deadline to notify chargeability for Income Tax/Capital Gains Tax for 2011-12 if not registered for Self Assessment or a penalty for failure to notify may apply. Complete form CWF1 for self-employment or form SA1 for non self-employed income
- 19 October: PAYE payments and pay all employee/employer payroll deductions
- 19 October: Reporting and payment of CIS for construction workers
- 31 October: Deadline for paper submission of Self Assessment tax return for tax year ended 5 April 2012
- 31 October: End of accounting period (VAT Return due 7th December)
Three golden rules for creating a business budget
A business budget estimates income and expenses over a certain period. They are often created for an annual period but they can also be over weeks, months or a number of years, depending on your business needs.
Most businesses set out their budget on a monthly basis over a financial year. That way you can compare performance against your projections each month.
The budget will include:
- Revenue – from sources such as sales, interest and others
- Expenses – including rent, marketing, wages, utilities and other costs
You can create a budget using pen and paper, spreadsheets or, most reliably by far, accounting software such as QuickBooks. However you choose to do it, follow these golden rules.
1. Refer to previous budgets
If you’ve ever put a budget together before, you can begin by working from that. Make sure you keep any aspects that worked well but update those that weren’t so useful. Was it simple enough? Were your chosen categories the right ones?
Rather than pulling numbers from thin air, get realistic. Obviously, you’ll use past spending and income data from within your business but industry trends and statistics can help too.
3. Keep it simple
Striking a good balance between complexity and usefulness is essential. You don’t need to detail every single transaction and expense. Categories of income and expenditure, such as supplies, utilities, marketing
and staff will ensure your budget is simple and quick to update and use.
More help with business budgets
Do you have a business budget yet? If not, what’s stopping you? If you have one, do you have any tips to share with other small businesses?
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