There are many aspects to running a successful business – and creating an annual budget is high on the list.
A budget is a financial plan that will assist business owners to set realistic financial goals and help them achieve their business goals. When done accurately and consistently, annual budgeting gives business owners a detailed preview of their financials and helps them manage expenses. Setting practical income projections allows them to determine whether or not they can cover all expected expenditures. They can then make informed business decisions and pivot accordingly.
What is the best approach to creating a budget?
There is more than one way to put together an annual budget. However, Main Accounting Services believes it is important to create a budget based on company goals – and not necessarily based on history. For example, if you plan to grow the business, and add employees, you will need to adjust your income to cover new expected expenses. In turn, if you plan to increase your income, you may need to hire additional team members to support the new revenue.
Is hiring an accounting expert beneficial?
Whether you are creating a business budget from scratch or need to take a fresh approach to your current budgeting process, there are tools that can help. That said, knowing which tools to choose and how to use them can be tedious and time-consuming. If you are struggling to get results tailored to your specific needs, partnering with an accounting firm that specializes in increasing the success and profitability of growing law firms has its advantages.
Main Accounting Services has developed a proprietary budgeting tool that outlines income modeling based on our clients’ practice areas. We have a comprehensive employee cost model that incorporates employee pay increases, benefits, and customized bonus structures. In addition, we build out operating expenses, including marketing, contract, labor, software, and administrative expenses. Our model looks at the future, rather than the past.
What is the best time of year to create a budget?
Fall is an ideal time to develop an annual budget. You will have a few months to review, make adjustments, and prepare for the upcoming fiscal year – without feeling pressured or distracted by end-of-year tasks and responsibilities.
At Main Accounting Services, we kick off the annual budgeting season in October. Once a client’s budget is complete and approved, we can then look forward and calculate cash flow forecasting. This shows clients what they can do with cash on hand, such as paying off debt, paying estimated taxes, and identifying how much cash can be used for owner distributions on a monthly basis.
Done right, creating and managing an annual budget will make operating your practice easier and more efficient – and help ensure you are spending money in the right places and at the right time. If you are looking for the peace of mind that comes with hiring experienced professional partners to assist with any of your accounting functions, click here to schedule a consultation.