When your business creates a budget for the year, you must try to predict extra expenses. You cannot be sure exactly how much money you will spend, but you can predict a few extra expenses based on the past year, how your projects have gone, and what your business does every day. Use these tips to predict business expenses, save money, and avoid any problems that occur when your team runs out of money.
Check Last Year’s Ledger
When you have listed your expenses, you should read your ledger from the year before. You can see how much money you spent on certain projects. You can check the overages, and you can predict any extra expenses in the same departments.
Plus, you may need petty cash for the office, extra money for contractors that you will use during the year, and money for projects that have not yet started. You can base the cost of new projects on your past projects, and you can add money to account for inflation.
Plan For Employee Bonuses And Paid Days Off
You can add employee bonuses and paid days off to your ledger, and you can plan for an average number for each employee. You can add about 10% to this number to be safe, and you can afford to pay all your bonuses. Plus, you should account for any extra benefits the employees get.
Calculate Your Office Expenses
You should calculate all your office expenses for the year. The amount of money that you pay for coffee is an office expense. You can calculate everything from your heating bill to your power bill, and you can calculate your ISP charges for the year at the same time.
Use Your Accounting Program To Print Reports
You can use reports from your accounting program to show how much your expenses have risen from one year to the next. You can add this amount to your expenses, and you will know how much you should add to account for the new year.
Your accounting program can tell you how much you paid in taxes last year, and you can add that amount to your budget. You can add 10% to protect yourself, and you might ask your accountant if there is anything that can be done to reduce your tax liability.
Calculate Salaries For The New Year
You should provide a raise to all your employees at the beginning of the new year. You can raise everyone’s pay based on the cost of living scale, and you should add those expenses to your budget. You might have changed the salaries for certain people, and you must account for those salaries. Also, make sure to review any minimum wage changes in the upcoming year and prepare for those changes.
When you want to calculate your budget for the new year, you can forecast your additional business expenses accordingly. You should dd all the expenses listed above, and you should meet with your accountant if you have questions about your ledger or taxes. You can make changes to your ledger, and you can create a budget that will cover the year’s expenses. Also, you must try to forecast any changes in sales that might reduce your budget or leave you with extra income at the end of the year.