How to Prepare a Corporate Budget
Developing a sound corporate budget is vital to successful business operations. The budget plan establishes income and expense projections. It identifies the revenue sources and indicates whether total income exceeds total expenses that are comprised of two basic categories. Expenses that have a monthly reoccurring amount are fixed expenses. Costs that change monthly are variable expenses. Typically, budgets are based on the prior year's actual income and expenses. However, current economic and governmental circumstances influence a new operating budget.
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Instructions
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Review the prior year's income and expenses. This information is an indicator of future revenue and costs.
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Perform projected-sales analysis, considering the competition environment. This should cover a 12-month period. Sales might be trending upward or downward. If sales are trending downward, the new budget might require reduced spending.
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Project personnel cost. Include full-time and part-time employees.
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Determine cost of office occupancy. Include rent, utilities and insurance.
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Gauge equipment cost. This might include the purchase of equipment to manufacture products and equipment depreciation. (See Reference 3, pg 25)
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Estimate supplies cost. Include office supplies such as printer paper and supplies required to manufacture products.
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Calculate other costs. This might include liability insurance, advertisement and license fees.
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References
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