When starting a small business, any accountant will confirm that budgeting is crucial to the overall success of the company. Budgeting reveals how much money you can afford to spend and how much revenue you'll need to recuperate your expenses. Fortunately, creating a budget doesn't have to be hard. Here’s how to make it easier. 

How to Budget for Small Businesses

1. Understand the Budget Basics

While not all industries have the same business needs to thrive, every budget should include the same vital components, including business costs, profits, and projected revenue. If it's your first time creating a budget, start by learning the standards for your industry. Identify common sources of revenue and associated costs by speaking with other small business owners who may be willing to offer insight. 

2. Account for Emergencies

Emergencies can't always be anticipated, and unfortunately, unexpected circumstances can affect the overall success of your business. Prepare for any eventuality by creating a "rainy day" fund to rely on in emergencies such as an unforeseen financial hit, recession, or a pandemic. Work with an accountant to factor a realistic percentage of your profits into the monthly budget, then automatically transfer this money into a high-interest bank account each month.

3. Reassess as Needed

While the budget should act as a guideline for your daily operation costs, it's important to reevaluate the company's expenses every month. Plan to meet with your accountant at least every 30 to 60 days to look at performance and sales projections, as well as future staffing and inventory needs. Ongoing budget meetings can provide valuable insight into your current expenses and how to adjust them to meet the needs of your growing business. 

For help establishing and maintaining a successful budget for your small business, contact Roy E. Carter, CPA, PC, in Staunton, VA. For nearly 20 years, this team of certified public accountants has provided a variety of services, including financial analysis, budgeting, business consulting, and tax preparation. Call (540) 886-6251 to schedule an appointment, or visit them online to learn more about their services.