Budgeting in QuickBooks

An under-used tool in QuickBooks is the Budget and this is a good time of year to set it up. I know many businesses don’t even take the time to work on a budget. But your budget is a powerful feature that can help you in a few ways. First it helps you control your costs. I realize some costs are hard to estimate especially as we see gas prices going up. But it still helps give you some guidelines in operating your business. You can also use it as an incentive when you’re looking at certain goals that you’d like to achieve in your business.  A phrase I like is you can’t hit a target you can’t see. So having a budget helps you view those goals. ..  It can also be a jumping-off point for discussions about long-term planning.

I’ll go through the steps today for setting up a budget for your company based on income, cost of goods and your expenses. But for those of you who use Classes in your QuickBooks, you may also want to do a budget for each Class.

To get started, click on the Company menu. Select Planning & Budgeting, and then Set Up Budgets. If you’ve already set up a budget, that one will appear. You’ll be able to edit it or create a new one. If you haven’t created a budget, the window shown in Figure 1 opens.

Figure 1: You’ll start working on your budget by selecting its year and content.

Select Profit and Loss to include all of the previous year’s activity and click Next.

On the next screen, you’ll also be able to include the criteria, (Customer: Job or Class),so you can budget for individual customers/jobs or classes instead of by account only. Leave this box unchecked for now. Click Next.

Determining the Content

Next, you’ll indicate whether you want to start from scratch with your own figures or let QuickBooks pre-populate your budget with last year’s numbers.  Sometimes I let QuickBooks populate just to get an idea, but you don’t have to keep it.  But I know many businesses prefer to simply start from scratch which is what we’ll do for this example.  Select Create budget from scratch. Click Finish. A window similar to the one shown in Figure 2 opens.

Figure 2: Budgets in QuickBooks are account-based, so yours will be set up that way.

Click on Rent Expense and enter 3,500 in the January column. Hit Tab. You’ll notice that the Annual Total column changes to reflect that entry. If you expect that your number will fluctuate over the year, continue to enter those figures in the month columns. If it will remain the same, click Copy Across in the lower left corner. Every column (except for Annual Total) now displays 3,500.  (If you would prefer to enter in an annual total and have QuickBooks spread the amounts across the months, click on Help> Send Feedback and let Intuit know.  It’s definitely on my wish list.)

When you’re satisfied with your budget, click Save. You can easily access and edit it anytime from the Company menu.

More Budgeting Tools

QuickBooks’ budget flexibility doesn’t end there. Let’s say that your major office supply vendor has just lowered its bulk prices by 5%, halfway through the year. It’s easy to make this change to your existing budget. Click the Office Supplies row, and then click on Adjust Row Amounts at the bottom of the screen. The window shown in Figure 3 opens.

Figure 3: Need to make a global dollar amount or percentage change to a row? QuickBooks makes this easy.

At the top of the window, you can choose to have the change begin at the first month of your budget or at the currently selected month. Check one of the two buttons below that to indicate whether you want an increase or decrease, and then enter the numerical value in the box.

Tip: Want to start over? Click on the Clear button in the lower right corner. This deletes all of the data in the current page of the budget.

To switch back and forth among budgets, click the arrow under Budget in the upper left corner of the window. A list of your budgets drops down. To build a new one, click on the Create New Budget button in the upper right corner.

Seeing the Fruits of Your Labor

Keep in mind that you can only create one budget per fiscal year for each account, customer or job, and class combination, as shown in Figure 4. This still gives you a lot of budgeting power.

Figure 4: You can create one budget per fiscal year for each unique combination of accounts, customers and jobs, and classes.

Of course, the real power of QuickBooks budgets lies in its budget reports. Using these, you can get an instant, insightful look at how your income and expenses are performing. Go to Reports | Budgets and Forecasts to find them. They include Budget Overview, Budget vs. Actual, and Profit & Loss Budget Performance. Below is a sample (I realize the numbers may not be realistic, but you can see what type of information this report contains).

If you need help working with the budget features in QuickBooks, let us know – we’ll be happy to assist.

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5 Responses to Budgeting in QuickBooks

  1. Excellent, thanks for posting.

  2. Is there no way to enter an amount for the annual budget amount to each line item, then enter each month’s income or expense? For instance, $500,000 is needed for annual income. That amount is divided among several income accounts. The income each month is then recorded in each of the accounts and then it’s clear as the end of the fiscal period approaches what the deficit or surplus position is.

  3. Unfortunately no. However, you can type in the annual amount in your first month, then use the QuickBooks pop-up calculator by pressing / then type in 12 and press enter to get the monthly (e.e. 500,000/12). Then you can copy the amount across

    You can also click on Help>Send Feedback to make your request known to Intuit

  4. Judy says:

    I have entered my budget and the profit and loss report looks good. But when I go to my memorized budget report, and change the dates to reflect the new year, the budget is not populated. The only thing I get on the report is the bottom line, with a zero balance. I realize that I haven’t spent anything in the new year, but I would like a clean copy of the budget report.

  5. When you create a budget in QuickBooks, it’s specific to the year, so if you want a budget for 2016, you have to specify 2016
    To see just the budget in a report, click on Reports>Budgets & Forecasts>Budget Overview, then select the budget you want to see
    Once the report is showing on your screen, you can change the columns to quarter or year if you prefer

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