Tax day has come and gone, and for most of us by now, our CPA has taken a look at 2021, filed a return, and maybe given you some tax planning advice for the current year. While the successes and learning opportunities from the previous year are still fresh, it is a great time to strategize and forecast so we can maximize our success in 2022.
In the budgeting process, we begin with our prior year’s profit & loss statement. We take a good look at the final numbers and analyze the results. With our overall strategic plan in mind, we build our budget. So what exactly is a budget? It is a dynamic forecast of the company’s revenues and expenses for the current or upcoming period. In the budgeting/forecasting process, we learn more about financial health and can gain insight into opportunities for improved efficiencies in our business. A realistic and timely budget can be a valuable tool for guiding strategic business decisions!
An effective budget breaks down expected revenue and anticipated expenditures for a period. With this information, we can estimate profit and plan for large expenditures. At the end of one period, we analyze our results then plan for the next. In addition to gaining a deeper understanding of the financial health of our business, a budget can also be a tool to forecast profits on paper to present to investors and access debt financing. As a tool for tax planning, we can gauge our payroll, sales, and income taxes. At Associates Accounting, we are budgeting experts! Check out some samples of our work below, then call us to get started!