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Don’t pay more in taxes than you have to. Take full advantage of all deductions and credits available. Planning is the key to successfully and legally reducing your tax liability. The author, Juanita Farmer, is the Managing Partner of J.D. Farmer & Associates, LLC, a public accounting firm, located in Germantown. Rely... Read more

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Small Business: Budget vs. Actual Reports

What if there were a tool that helped you create crystal-clear plans, provided you with continual feedback about how well your plan was working, and told you exactly what’s working and what isn’t?

Well, there is such a tool; it’s called the Budget vs. Actual Report, and it’s exactly what you need to be able to consistently make smart business decisions to keep your business on track for success.

Be Clear About Your Business Plan

The more clear you are about your business goals, the more likely you are to achieve them. Creating a budget forces you to examine the details of your goals, as well as how even a single business decision affects all other aspects of your company’s operations.

Example: Let’s say that you want to grow your sales by 10 percent this year.

Does that mean you need to hire another salesperson? When will the business start to see new sales from this person? Do you need to set up an office for them? New phone line? Buy them a computer? Do you need to do more advertising? How much more will you spend? When will you see the return on your advertising expenditure?

Sound Business Decisions Help You Reach Your Goals

Once you clarify your goals, then you start making business decisions to help you reach your desired outcome. Some of those decisions will be great and give you better than expected results, but others might not.

This is when the Budget vs. Actual Report becomes an effective management tool. When you compare your budgeted sales and expenses to your actual results, you see exactly how far off you might be with regard to your budget, goals, and plans.

Sometimes you need to adjust your plan (budget), and sometimes you need to focus more attention to areas of your business that are not performing as well as you planned. Either way, you are gleaning valuable insights into your business.

It’s like steering a ship. You may be off-course much of the time, but having a clear goal and making adjustments (both small and large) helps you reach your destination.

Ready to Turn Your Dreams into Reality?

While it may seem like an inconvenience to create a budget and then create a Budget vs. Actual Report every month, it is crucial. And, as with any new skill, it does get easier especially with a trusted tax advisor on your side who can help you set up your report quickly and efficiently, as well as help you navigate any difficulties you may encounter.

Call the office today to set up a consultation to get started. You’ll be glad you did.

 

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Juanita Farmer, CPA

About Juanita Farmer, CPA

Juanita Farmer. CPA is the Managing Partner of J.D. Farmer & Associates, LLC, a Public accounting firm, located in Germantown, Maryland. Ms Farmer has been practicing in the field of accounting and tax for over 27 years.

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