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If you are creating a budget for your new business what should you include

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Creating a budget for a new business is a crucial step in managing your finances and ensuring the sustainability and growth of your enterprise. A well-structured budget typically includes the following components:

Startup Costs: These are one-time expenses necessary to get your business up and running. This includes costs for permits, licenses, equipment, initial inventory, lease deposits, legal fees, and any renovations or build-out of your physical location.

Ongoing Operating Expenses: These are regular expenses you'll incur in the day-to-day operation of your business. They may include rent or mortgage payments, utilities, insurance, salaries, office supplies, and any fees for services (e.g., accounting, legal, marketing).

Revenue Projections: Estimate your expected income over a specific time period, typically on a monthly or annual basis. This is based on your sales and pricing strategies.

Sales and Marketing Expenses: Include costs related to advertising, promotions, website development, and marketing materials. These costs are essential for attracting and retaining customers.

Cost of Goods Sold (COGS): If your business involves selling physical products, calculate the costs associated with producing or purchasing your products. This should include materials, labor, and manufacturing costs.

Personnel Costs: Include salaries, wages, benefits, and any associated payroll taxes for your employees. If you're a sole proprietor, you may include your own salary or draw.

Taxes: Account for taxes such as income tax, sales tax, and property tax, depending on your business structure and location.

Contingency Fund: Set aside some money for unexpected expenses or emergencies. It's essential to have a financial cushion for unforeseen events.

Loan Repayments: If you have taken out loans to fund your business, include the monthly loan payments in your budget.

Capital Expenditures: Plan for any major investments in assets, like new equipment or vehicles, and allocate funds accordingly.

Debt Service: If your business has outstanding debt, budget for interest payments and principle repayment.

Depreciation: Consider accounting for depreciation of assets, as it can impact your taxes and long-term financial planning.

Cash Flow Analysis: Regularly monitor your cash flow to ensure you have enough working capital to cover expenses. This includes managing accounts receivable and accounts payable.

Profit and Loss Statement (P&L): This summarizes your revenue, costs, and expenses, helping you understand your business's profitability.

Break-even Analysis: Determine the point at which your business covers all its expenses and begins to make a profit.

Financial Projections: Create forecasts for future periods (e.g., quarterly or annually) to plan for growth, expansion, or changes in your business.

Comparison and Analysis: Periodically review your budget against your actual financial performance to identify variances and make necessary adjustments.

Remember that your budget is a dynamic tool that should be continuously reviewed and adjusted as circumstances change. It serves as a roadmap for managing your finances and making informed decisions to ensure the success of your business.

User Nick Vu
by
8.1k points
3 votes

Answer:

Step-by-step explanation:

You need to include

legal/professional fees

equipment price

supplies price

insurance price

advertising price

salaries/wages

utilities

rental fees

other expenses

User David Fox
by
9.0k points

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