Building an Annual Budget for Your Business

Building an annual budget for your business is essential to keeping your company financially solvent and successful. A budget also allows you to monitor cash flow and ensure that you are not overspending in any area.

There are several components to building an annual budget for your business.

Start With the Most Important Expenses

Most businesses have expenses they cannot avoid. Expenses such as rent, inventory, salaries, or other operational costs must be accounted for in your budget. Once you have a handle on your fixed costs, you can begin to estimate your variable expenses.

Add Variable Expenses

Variable expenses change monthly and include utilities, marketing, and office supplies. While these costs can fluctuate, it is important to have a close estimate of what they will be so you can plan accordingly.

Project Your Revenue

Revenue is the lifeblood of any business. Without it, any business is destined to fail. When building your budget, you need to have a realistic projection of how much revenue you expect to bring in.

Calculating revenue can be tricky, but it is wise to be conservative in your estimates. Use past monthly, quarterly, and yearly data to come up with a range that you think is achievable.

Once you estimate your expenses and revenue, you can begin to work on your profit and loss statement. A profit and loss statement will give you a clear picture of your business's budget.

If you need any help building an annual budget, the HWGCA team can help. Our accountants can help you develop a budget that meets your specific needs and goals.

Located in Surrey (Cloverdale), British Columbia, since 1971, HWG, Chartered Professional Accountants proudly helps clients throughout the Lower Mainland and across Canada.

Our team of chartered professional accountants provides helpful business and personal tax services. Our continued growth proves the success of our client relationships.