The Importance of Budgeting

Importance of Business Budgeting

What is a budget, and its Importance?

A budget is a tracking tool showing when and how you earn or spend money. Producing a budget is an essential pillar of your overall achievement that keeps you secure. Having a budget allows you to manage well and understand whether your business has enough incoming revenue money to pay all business expenses. Working with a budget can help you make more up-to-date financial judgments.

For example, if you can understand how much money you have earned and spent every week for the last several months, you will learn how

much you can afford to pay if you want to employ a new employee.

Budgeting is a continuous process rather than a one-time exercise because your business revenue and expenses are constantly changing at any time. Therefore, revisit and rework your budget monthly, quarterly, or after changes to your business or have happened to have significant expenses. This will help you stay on course so that you can achieve your goals.


A budget can assist you:

 Set short- and long-term targets for progressing your business

 Track revenue, cost, and cash flow

 Cut costs to avoid overspending

 Getting organized for busy seasons and unforeseen slowdowns

 Maintain a record of finances

What should a budget include?

Understanding these key factors will help as you begin to create a budget:

Revenue – The actual amount of money received from business activities includes selling products, investments, interest savings, dividends, and other sources.

Expenses – All costs related to managing a business, including direct costs for materials or supplies. Recurring payments for rent or electricity, long-term assets that will help a business for years but are hard to sell buildings or equipment. Whereas financial expenses, such as a loan or interest payments. Expenses can be

categorized into two groups:

 Fixed expenses

That remains the same from month to months, such as rent, salaries, insurance, and accounting services.

 Flexible expenses,

That alters from month to months, such as obtaining product or service prices and transportation expenses.

Profit or Income – The amount left-over after subtracting revenue from expenses.

The vital key to creating an effective budget is to add up all your revenue resources over 12 months, forecast your expenses to estimate your profit, the difference between your revenue and costs, and regularly review your budget by monitoring it monthly.


1. Add up your revenue

To produce a monthly budget, you should first establish how much money you make by recording sales, investments, and other revenue sources.

2. Estimate your cost

The appropriate way is to check on how much you spend in a month. Then, divide your expenses into fixed costs that don’t change from month to months, such as rent, salaries, and insurance payments. The flexible expenses are costs that change, such as raw materials and commissions. It is required to be as exact as possible, as expenses can vary significantly from month to month.

3. Figure out the variances

once you have totalled up your revenue and estimated cost by subtracting the revenue total from the revenue total to show the variance. It is an effortless step that can disclose how much

profit you could be generating. If the outcome has is a positive amount, congratulations — you should be on track to make a profit. If the result is a negative amount, your expenses are greater than your revenue. You

will need to drop your costs or increase revenue; better still do both to be profitable.

4. Track it

By producing a budget is just the first step. It is important to

continue following your revenue and cost to make sure you stick to your targets. Suppose you find this challenging by adhering to the budget you produced, keeping in mind that it will take a while and ongoing adjustments to finetune the correct balances. Success will also alter from month to month. During months when your business is slow, you will need to lower your flexible expenses. Then, you can adjust your budget again during more profitable months.


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Bookkeeping

You can create any structure you want by using the same tools as in the regular workflow. Add buttons and forms or anything else you'd want.

Being experienced with an accounting background, we can offer a wide range of reliable and accurate bookkeeping services. A common question often asked is, "What exactly does a bookkeeper do? "The answer to this question is shown below for our services as specialist bookkeepers. We can,of course, modify our services to suit the needs of your business whether you need a few of these services or all.

·      Accounts Receivable*-Invoice preparation and follow-up with the client

·      Accounts Payable* - Suppliers' invoices are processed and paid when due.

·    Bank Reconciliations -Reconciling Bank and Credit Card accounts with daily bank feeds

·     GST Filing                        - Timely filing of Bi-Monthly or Six-Monthly returns

·     System Training               - Training is required whenever you choose new software. We provide free training.

·    Accounting Software conversions – With our expertise, we can switch your accounting information to XERO/MYOB

·        Payroll

·        Unlimited Email Support

*Note:- Accounts Receivable and Accounts Payable are closely monitored to ensure that your business has no issues with cashflow

Payroll Management

Business Pillars offers all-inclusive payroll services that help your business run efficiently. We are committed to being legally compliant. Our services are built to simplify payroll processes for small to medium-sized businesses throughout New Zealand.

PAYROLL processing made easy

We provide the most updated payroll solutions tailored-made that is affordable to your requirement. We are committed to taking care of all the work demanded, allowing you to focus your time and energy on more essential things you love to do.

Our payroll services are:

·        Employees pay, On-time payments including benefits, reimbursements, deductions, Weekly/Fortnightly/Monthly

·        Employee PAYE

·        Payday Filing   – Timely filing returns to IRD

·        Leave entitlements– Accruals for each type of leave

·        Leave Payment - As per Holiday Act 2003

·        KiwiSaver contributions

·        Maintaining payroll records – payments and documentation

GST Filing

Timely Processing

We ensure that we file all GST Tax returns two weeks before the due date. We keep our clients informed before we proceed. This ensures that the client is at ease.

·        GST Filing        - Timely filing of Bi-Monthly or Six-Monthly returns

Monthly / Quarterly Advisory

The clients are in a position to process their reports from the software chosen. Based on the service requested, additional reports are also given that are not available in their chosen software. These reports enable the client to make corrective business decisions. Business Pillars reaches out to clients who require more assistance.

Monthly Management Meetings

The primary purpose of a monthly management meeting is to get the business to grow. This is either done through a phone call, zoom, or meeting in person.

Cash flow Management

Managing cashflow is a significant responsibility faced by most small businesses. We reach out to businesses making it stress-free to ride on the highs and lows of the cash flow throughout the year.

We assist in producing a cashflow statement which is a financial statement that summarizes the amount of cash entering and leaving the business. The cashflow statement measures how well the business can manage its cash position, meaning how well the business can generate cash to pay its debt commitments and fund the day-to-day operating expenses.

Budget Forecasting

Small business budgeting and forecasting

We need to get some relevant numbers to know what the future will look like regarding a business. Budgeting and forecasting will help to support this vision. Business Pillars can work alongside you to understand these basics so you can build a financially sustainable business.

What is a budget?

The budget estimates how much money will come in and go out from your business over time (usually a year). Budgeting and forecasting normally benefit all businesses and first-time startups to see if they can afford to run the business and compensate for all their hard work with a good return for their initiative.

What are the main principles of having a budget

Budgets forecast the money-making possibility of a business. It will also highlight things like:

  • How much will it cost to startup?
  • How much money is needed to borrow?
  • When will be the breakeven point?
  • How much should the customers be charged?
  • How many staff are needed?

Monthly / Quarterly Advisory

The clients are in a position to process their reports from the software chosen. Based on the service requested, additional reports are also given that are not available in their chosen software. These reports enable the client to make corrective business decisions. Business Pillars reaches out to clients who require more assistance.

Job Management

Job Management is software that supports project managers and teams to complete client requests and projects efficiently. Most professionals depend upon this job tracking software which assists them in supervising multiple sections of a business. Business Pillars are here to assist in setting up this service to track income and expenses related to service jobs.

XERO and MYOB both have the capability for Job Tracking

These are the advantages:-

·        Create quotes immediately

·        Easily track jobs from quote to invoice

·        Schedule the jobs on the go

·        Get paid quicker