Often, people use the income and expense numbers of the prior year as the starting point for creating a budget. Then they consider their knowledge of the future expectations and anticipated trends of the industry and adjust the budget numbers to embrace those trends. In addition, a good budgetmaker throws in a dose of personal experience with the way the business operates and the way the business is expected to operate so the budget can accurately reflect the goals and reasonable expectations for the year(s) ahead.
For example, if you are in the new home construction industry and know that the new factory in town will bring in hundreds of new employees, you can reasonably expect your business to increase next year. Or, if your landlord has been raising the rent on other buildings he owns and your lease is due for renewal, you can safely expect your rent expense to increase in the near future.
Traditionally, a budget is created for an entire year at a time, with amounts shown for each month of the year. The monthly amounts are often the same, using an average of annual amounts from the prior year as a starting point.
You enter the monthly amount you expect to earn or spend in the next year, and QuickBooks automatically extends that amount to each month of the coming year. You can then revise and tweak individual monthly budgeted amounts.
Alternatively, you can enter different amounts for each month of the budgeted year, or you can enter an initial monthly amount and have QuickBooks increase or decrease that amount by a particular percentage each month.
Before you begin the budget process in QuickBooks, print a copy of your prior year's (or several prior years') Profit and Loss statement. This statement can be a guide for you as you create the budget. You might also want to schedule a session with other members of your company to discuss plans and expectations for the future and to rough out a budget on paper before committing it to QuickBooks.