When it comes to budgeting, it’s absolutely essential to estimate your spending as realistically as possible. Here are three budget-related errors commonly made by small businesses, as well as some tips for avoiding them. These errors tend to throw budget estimates out of line with reality, thereby taking away from a budget’s usefulness.
1. Not setting goals: It’s almost impossible to set spending priorities without clear goals for the coming year. It’s important to know, in detail, what you want or need to achieve in your business.
2. Underestimating costs: Every business has ancillary or incidental costs that often don’t get budgeted. For example, each time you buy a new piece of equipment or software, you must budget for staff training and for maintenance of the equipment, as well as the actual cost of the equipment.
3. Lack of flexibility: Don’t be afraid to update your forecasted expenditures either several times per year or whenever new circumstances affect your business. Compare estimates to what you actually pay out, and then adjust your budget figures.
RichardL. Lipton CPA & Associates LLC, located in Florham Park, N.J.,draws on its founder’s 10 years as a stockholder and manager offamily-owned Sam’s Tire Co. in Paterson, N.J.
RichardL. Lipton CPA & Associates LLC “is structured to personally servelarge and small clients who have a need for business consultingservices as well as accounting and tax services. We have even developeda niche in the area of forensic accounting. Our clients have realizedthat this combination of skills is extremely valuable in providing thehighest quality professional services in today’s and the future’seconomy.” – Richard L. Lipton CPA
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