This month, we’re sharing a few of our favorite budgeting tips. Bookkeepers and accountants love a good budget.  Not sure how to use it? Here are 5 best practices to get you started!

  1. Link your budget to your firm’s overall workflow. There are a lot of potential applications to this tool. Focus on the pieces that best correspond to your firm’s practices. Keep in mind that just like other key performance indicators (a.k.a. KPI’s) a budget should be “SMART” – Specific, Measurable, Attainable, Realistic, and Timely. Pay attention to what performance targets will help you grow your firm long term.
  2. Update your budget regularly to reflect reality.  As we mentioned above, being realistic is a crucial part of setting the right goals for your firm. Your budget should not be set in stone.  You should be reviewing your circumstances throughout the year and adjusting as needed to reflect economic, organizational, or other changes affecting your firm. The unexpected happens, give yourself room to adapt. Your business plan is a living document, your budget should be as well.
  3. Know when to keep an eye on the big picture and when to dial in. Focus on the detail where it matters, such as your regularly occurring operational expenses.  Use your profit and loss data from the prior year as a launchpad to get yourself started. From there, include projected outlays for larger capital assets and improvements, as well as projected costs for financed projects in the coming year. 
  4. Be deliberate and decisive when planning your budget. Set aside time to be intentional and give thought to your budget process, but not so much time that your budget becomes outdated before it is put to use. Try building your base for the budget three months prior to the beginning of your new fiscal year. Remember, it doesn’t need to be perfect. Your budget can and should be updated as the year goes on and your circumstances change. 
  5. Learn to use your resources! Let the tools of QuickBooks and Excel bring efficiency to your budgeting process and monthly review.  Once your budget is loaded into QuickBooks, a monthly report comparing your budgeted profit and loss to actual performance can easily become a standard monthly report. Not sure how to read your reports, give CPN Legal a call and we can assist as well!