Create and Track a Budget in QuickBooks Desktop

Creating and tracking a budget is essential for maintaining financial control and planning for business growth. QuickBooks Desktop offers a robust budgeting feature that allows businesses to set financial goals, monitor performance, and make informed decisions. This article will guide you step-by-step on how to create, manage, and track budgets in QuickBooks Desktop, covering all the necessary details to help you utilize this feature effectively.

Why Use Budgeting in QuickBooks Desktop?
Budgeting helps businesses forecast income and expenses, set financial goals, and evaluate actual performance against expectations. Here are some reasons why budgeting in QuickBooks Desktop is beneficial:

Improves Financial Control: By setting a budget, businesses can monitor and control their expenditures.
Tracks Business Performance: Budgeting helps to identify areas where the business is overspending or where revenue is falling short.
Informs Decision Making: With a budget in place, you can make more informed financial decisions based on data and projections.
Prepares for Unforeseen Expenses: Having a budget in QuickBooks Desktop helps anticipate cash flow shortages and manage them proactively.

Creating a Budget in QuickBooks Desktop
Creating a budget in QuickBooks Desktop involves selecting the type of budget, choosing the fiscal year, and entering budget data for various accounts. Let’s dive into each step.

2.1 Setting Up a New Budget
To create a new budget in QuickBooks Desktop, follow these steps:

Go to the Company Menu: Click on the Company menu and select Planning & Budgeting.
Create a New Budget: Choose Set Up Budgets. If this is your first time creating a budget, the Budget Setup Wizard will open.
Select the Fiscal Year: Choose the fiscal year for which you want to set the budget.
Choose Budget Type: Select either Profit & Loss or Balance Sheet as the type of budget. If you want to track by Customer: Job, check the option.
2.2 Choosing the Right Budget Criteria
When setting up a budget, QuickBooks Desktop allows you to choose criteria based on several factors:

Profit and Loss (P&L): This type of budget is used to forecast revenue, expenses, and net income.
Balance Sheet: This option is suitable for setting up budgets for assets, liabilities, and equity.
Customer: Job: Track budgets for individual customers or projects.
Class Tracking: If you have enabled class tracking, you can create budgets by classes, such as departments or locations.
After choosing your preferred criteria, click Next.

2.3 Entering Budget Data
After selecting the budget type, you can start entering budget data:

Enter Data Manually: For each account, enter the expected amount for each month. You can click the Copy Across button to duplicate values across months.
Use Historical Data: If you want to base your budget on previous years’ performance, QuickBooks allows you to pre-fill data using past transactions.
Save Your Budget: Click on Finish once you’ve entered all the necessary data.
QuickBooks Desktop provides a visual representation of your budget, making it easy to identify patterns and make adjustments where necessary.