How To Use QuickBooks Budgeting Tool To Plan Budget

Looking to plan your profit with the QuickBooks budgeting tool? Here in this blog, we have described in detail what it is as well as how important a role it can play to grow your business. Go through the article and find the steps to set up a budgeting tool to plan your profit, Learn here how we can plan as well as implement it. At any stage, if you need to talk with our expert & get consulting service, feel free to dial our QuickBooks support toll-free: +1-844-405-0904

We all know that running a business successfully is a complex task in itself and what is even more complex is creating a budget for your business. The general perception of budgeting is different among different business owners, some consider it a very important aspect of the business while some consider it a restriction to their business growth.

However, If you have some ultimate goal or aim in your mind that you want to achieve in a certain period of time. Then overlooking or ignoring budgeting can hamper your chances of achieving that goal and ultimately restrict your business growth.

Importance of Profit Planning

So, it’s important to plan your budget in such a way that it doesn’t restrict your business growth. And you would be able to save your business from falling short. That is the reason why nowadays the focus from “planning the expenses” is shifted to “planning the profit” business is going to make in a financial year. “Profit Planning” is all about budgeting. In such a way that your profit margin is ensured at the end of a financial year or month.

How to Use QuickBooks Budgeting Tool to plan your profit

QuickBooks is a great accounting tool. But proper financial coaching is necessary before you move on to this accounting software. Another such thing is profit planning which can be done flawlessly with the help of Quickbooks. You can prepare the budget for the whole company by job/customer or by class.

These are the steps you should follow to set up the budget in Quickbooks:

• First of all click on Company at the top bar of QuickBooks followed by Planning and budgeting
• Click on Set up a budget, and your last prepared budget with appear if you have already created a budget before, you can edit it here otherwise you have to click on Create a new budget for a fresh new budget.
• Now a new pop-up would have appeared, click on Profit and loss which will include all activities from previous years, and then click Next.
• Now, on this screen, you have to select your budget criteria if it is for a Customer/job or it is for a Class, click Next after choosing your criteria.
• If you want to create a fresh budget by filling in all the data by yourself then you have to choose to create a budget from scratch, alternatively, you can prepare the budget from previous years’ actual data. Click Finish after choosing the right option.
• Now you have to decide that you want to enter the same amount for each month of the year. Or the amount going to vary throughout the year. Usually, the amount of such payroll continues to vary around the year. And amounts such as rent and insurance continue to remain the same.
• If the amount is going to remain the same you can quickly enter the data by just filling in the data for a single month and using the function Copy across, this will copy the data you have entered for the single month in the rest of 11 months.
• You can use the function “Adjust row amount” for the amount that keeps on changing throughout the year.

How to create a budget or forecast in QuickBooks Desktop

Forecasting and budgeting tool is one of the most important tools that are useful in making the right decision for the organization. For this, you have to follow the given link:

Review the data of last year

Before setting up your budget and forecast you have to set your fiscal year correctly.

• Open the company menu and then click on My company.
• The next step is to select the pencil icon and then click on Report Information.
• Then you have to confirm that the first month of your fiscal year is correct.

Review all the financial reports of last year, For this, you have to

• In the menu tab, go to Reports and then tap on Company & Financial.
• If you want to forecast according to the Balance sheet then select Balance sheet Details and if you want to forecast or budget according to the profit and loss then select Profit & Loss Details.
• Now select Date, and the dropdown list is open where you have to select Last Fiscal Year.
• Then select Refresh.

Set up a budget or forecast

Set up for creating a budget

• The first step is to open the Company from the menu.
• Now tap on Planning & Budgeting.
• After that, you have to select the Set Up Budgets.
• Now you have to create a new budget then tap on Create new Budget.
• Then the next step is to choose the Profit and Loss or the Balance Sheet after setting the fiscal year.
• If you select profit and loss for creating a budget then you have two options for selecting, either select Create Budget from scratch or Create budget from the previous year’s actual data.
• Then the last step is to select the Finish.

Set up for creating a forecast

• The first step is to open the Company from the menu.
• Now tap on Planning & Budgeting.
• After that, you have to select the Set Up Forecast.
• Now you have to create a new budget then tap on Create new Forecast.
• Then the next step is to choose the Profit and Loss or the Balance Sheet after setting the fiscal year.
• If you select profit and loss for creating a budget then you have two options for selecting, either select Create forecast from scratch or Create forecast from the previous year’s actual data.
• Then the last step is to select the Finish.

You can review your budgets and forecasts by going to the report menu and then selecting Budget and Forecast.

How to create a budget in QuickBooks pro

One of the best ways to remain over business finances is to budget. QuickBooks enables you to make a yearly budget for your business.

While settling on a financial plan can be a bit time-consuming, really making a financial plan in QuickBooks pro just takes six steps.

In this post, we’ll walk you through how to set up your financial plan, pick the best possible planning option, and run planning reports.

Create a Budget

To begin, go to the company > Planning & Budgeting > Set up Budgets.

Step 1: Select the Budget year

Use the arrows to select the year for which you want to make this budget.

Step 2: Choose Budget Type

Choose the budget type. You can make a profit and loss budget or a Balance Sheet Budget. The profit and loss budget offers a more perspective view of your yearly activity, whereas the balances sheet budget deals predominantly with your completion balances. For our test organization, we will pick the benefit and misfortune alternatives. Once you select profit and loss, click on the Next button at the bottom of the screen. If you select your Balance Sheet, click on the blue finish button and proceed to step 5.

Step 3: Add Additional Criteria

if you want, you can make budgets for specific clients and occupations by clicking the “Customer: Job” option. Or on the other hand, you can click “No extra criteria” to make a general yearly budget. once you have decided, click on the Next button at the bottom of the screen.

Step 4: Choose Budget Creation Preferences

Select between “make spending plan without any preparation” or ” make spending plan from a year ago’s Information.” utilizing a year ago’s information can be useful and give understanding while making a financial plan. Be that as it may, our example organization is spic and span, so we will choose the primary alternative.

Step 5: Enter Your Budget

Now enter your budget objectives for every month and each account. This part takes some time and thought.

I prescribe using QuickBooks reports to help give you some insight into your sales and expense patterns.

Reporting “Profit Plan”

The most important aspect of Budgeting is how you report your budget. Because only by correctly reporting and analyzing your budget you will be able to decide what’s good for your business. And where you can cut down your cost so that your business can be more efficient.

By proper reporting and analyzing you will able to know how much your expenses are. As compared to your income. Also, you will be able to compare your business activities with your current fiscal year budget. Or budget from the previous years.

A profit plan or budget can act as a great alarm. As soon as your business outcome starts to show deviation from the actual budget. You have prepared and you will be able to take the necessary steps to correct that deviation and plan accordingly.

To report your budget please follow these steps:

• Click on Reports from the top bar of QuickBooks
• Select Budgets and forecasts.
• Click on Setup Budgets.

Types of Reports Available in QuickBooks

Budget Overview: The format of this report is similar to the format of financial statements, Here you can check if the amounts entered during the preparation of the budget are correct or not, compare the projected net income that is available in this report with your goal for the financial year or month.

Sometimes, even after the data is entered correctly. The net projected income is lower than the goal you have set for the company. In that case, you have to make adjustments.  And also get the projected net income up to your goal for the company.

Budget vs Actual: As the name suggests it compares your actual company data with the budget you have pre-defined for a certain period of time, It indicates how much amount you are actually running over your budget or how much amount you are running under your predefined budget.

All these data are also available in percentage form:

Profit & Loss Budgeting Performance:- This is the most detailed report of all, similar to the Budget vs Actual report it also shows the performance of your business as compared to the predefined budget,  but here we can choose the time period for which we want to see the report, For example in this report we can see the report for only a single month or quarter out of a whole year.

As the performance of a business can never be predicted. You may have to change your targets from time to time. So, Quickbooks profit plan gives you access to make changes to your plan. If you want to change your goal for a year according to your sales.

Profit Planning is the perfect tool for your business, which will help you to plan, grow and reach success.