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Bookkeeping 101: Understanding the Basics

Bookkeeping 101: Understanding the Basics

Bookkeeping can be a daunting prospect for the uninitiated. Even for seasoned business owners, it’s easy to get overwhelmed with the various terms and concepts around bookkeeping. This is especially true when you consider the number of regulations, laws, and taxes that must be considered.

However, understanding bookkeeping basics doesn’t have to be complicated or intimidating. Here at Protea Financial, we will discuss what bookkeeping is, how it works, why it’s essential, and how you can start your bookkeeping today.


What is Bookkeeping?

Bookkeeping is the process of tracking and recording financial transactions. This information is used to produce financial statements and reports, which can be used by businesses like yours to make decisions about where to allocate their resources.

Bookkeeping is an integral part of any business, as it provides a clear record of what has been spent and earned over time. This information can be used to make informed decisions about where to allocate resources in the future.

Bookkeepers ensure that financial records are kept accurate, up-to-date, and in line with accepted accounting principles. Bookkeeping is often done using computer software, but there are still many businesses that rely on manual bookkeeping techniques.


What Are the Elements of Bookkeeping All Business Owners Need to Know?

As a business owner, it is important to have a strong understanding of the basics of bookkeeping. The elements of bookkeeping include:

  • Income: This is money your business brings in, such as sales or services rendered.
  • Expenses: This is money that your business spends, such as on inventory, rent, utilities, or payroll.
  • Assets: This is anything of value your business owns, such as cash, equipment, or real estate.
  • Liabilities: This is any debt or financial obligation that your business owes, such as loans or credit card balances.
  • Accounting Principles: This is the set of rules and regulations that guide your bookkeeping.
  • Financial Statements: These are regular reports that show the financial position of your business, such as balance sheets, income statements, and cash flow statements.
  • Tax Requirements: This includes federal and state taxes that your business must pay or report annually.
  • Auditing: This is an independent review of your bookkeeping records to verify accuracy and compliance with industry standards.

Protea Financial Understanding Bookkeeping Basics

The Different Types of Bookkeeping

There are three different types of bookkeeping: single-entry, double-entry, and triple-entry. Here is an overview of each:

Single-entry bookkeeping is the most straightforward type, and it involves recording financial transactions in a single ledger, where each transaction is listed only once without balancing. This type of bookkeeping is suitable for small businesses that don’t require complex financial tracking.

Double-entry bookkeeping requires more effort and time to maintain but is more accurate than single-entry bookkeeping. Double-entry bookkeeping involves recording financial transactions in two ledgers, called the “debit” and “credit” sides. Each transaction must be recorded on both ledgers so that any changes made to one ledger will be reflected in the other. This helps maintain accuracy and ensure that all transactions are balanced correctly.

Triple-entry bookkeeping is the most complex type of bookkeeping, and it requires three ledgers or books to keep track of financial transactions. In triple-entry bookkeeping, each transaction is recorded in three separate ledgers: debit, credit, and third-party ledger. This helps provide an additional layer of security by requiring an independent third party to verify all transactions before they can be considered complete. Triple-entry bookkeeping can be used for large companies


The Benefits of Bookkeeping

Bookkeeping is an important part of any business, and it can offer several benefits to both the business owner and the employees. With proper bookkeeping, businesses can keep track of their income and expenses, which can help them make better financial decisions.

Additionally, bookkeeping can help businesses identify areas where they may be overspending or underspending, and it can also provide valuable information for tax purposes. Furthermore, well-kept books can be valuable if a business is ever audited by the IRS or state tax authorities.

Lastly, good bookkeeping practices can help businesses avoid penalties and interest charges on late payments. This simple practice can help businesses save money over time.


How to Get Started with Bookkeeping

To get started with bookkeeping, you’ll need to set up a system for tracking your financial transactions. This can be as simple as creating a spreadsheet or using specialized bookkeeping software. Once you have a system in place, you’ll need to start recording all your income and expenses. This may seem like a daunting task, but it’s important to keep track of your finances so that you can make sound business decisions.

If you need help figuring out where to start, plenty of resources are available to help you get started with bookkeeping. You can find books, online courses, and even software that will walk you through the process step-by-step. However, the best approach if you are unsure where to start or what information to track is hiring an in-house or outsourcing to a virtual bookkeeper. Virtual bookkeepers are typically more affordable than in-house bookkeepers and usually know just as much, so your business finances are still safely being tracked.

Protea Financial Basic Bookkeeping for Small Businesses

Tips for Staying Organized

Assuming you’re starting from scratch, you first need to create a system for organizing your finances. This can be as simple as setting up folders in your email inbox or computer desktop or using a physical filing system. Whatever system you choose, ensure it’s one you can stick with.

Once you have a system in place, start by creating folders for your income sources and expenses. If you have multiple bank accounts, credit cards, or loans, set up a folder for each. Then, start sorting your transactions into the appropriate folders. As you do this, you may want to create sub-folders to organize your finances further. For example, you could create a folder for “Utilities” and then sub-folders for “Gas,” “Electricity,” and “Water.”

As you organize your finances, remember that some items may span multiple categories. For instance, your mortgage payment will likely include principal and interest payments, which could go into separate folders. Similarly, if a business expense is used for personal purposes (like a home office), track both aspects.

By staying organized from the start, you’ll save yourself many headaches down the road. Not only will it be easier to find information when needed, but you’ll also be less likely to overlook important details.


Let Protea Financial Help You Understand Bookkeeping Basics or Track Your Expenses For You

Bookkeeping is essential to managing your finances and running a successful business. With the help of the Protea Financial experts, you can better understand bookkeeping basics.

Whether you choose to do it yourself or outsource the work to a professional, having accurate records will help you make better decisions and maximize profits. If you are serious about succeeding in business, take some time to learn more about bookkeeping and understand how it can benefit your organization. For more information on hiring a bookkeeper, contact Protea Financial!

Protea Financial Is Here to Help with Bookkeeping Basics and More!

Reach out to the experienced professionals here at Protea Financial today and let us help you with anything from understanding bookkeeping basics to hiring us as your company’s bookkeeper!

Maximizing Profits in the Wine Industry through Financial Planning

Maximizing Profits in the Wine Industry through Financial Planning

The wine industry is a complex and competitive market where businesses must constantly innovate and optimize their operations to stay ahead. Effective financial planning is a crucial element for the success of any wine business. 

As with any business, financial planning is critical for success, but it’s necessary for the wine industry, where production cost, distribution, and marketing can be significant. Proper financial planning can help wineries increase revenue, reduce costs, and improve profitability. 

Here at Protea Financial, we understand the importance of financial planning for the wine industry and provide our customers with actionable tips to optimize their financial strategies. By implementing sound financial planning practices, wine businesses increase profits while improving overall business operations.

Effective Cost Management

Wine producers can create a budget that considers the costs associated with grape production, winemaking, packaging, and distribution. This budget can help identify areas where costs can be reduced without sacrificing quality, such as optimizing supply chain processes or negotiating better deals with suppliers. 

By keeping a close eye on expenses, wine producers can allocate resources to high-margin products and streamline operations. Moreover, investing in innovative techniques can improve efficiency and reduce costs over the long term. In addition, financial planning helps wine producers to forecast sales and manage cash flow. 

Therefore, ensuring they have sufficient funds to cover expenses and invest in future growth opportunities. Ultimately, effective cost management can help wine producers increase their profitability and remain competitive in a crowded market.

Protea Financial Financial Planning in the Wine Industry

Developing A Strong Brand

It involves understanding the financial aspects of the business, including revenue streams, costs, and cash flow. This information is vital for making informed decisions about pricing, marketing, and branding strategies to increase profitability. 

Effective brand building involves planning to identify the preferences and characteristics of the target market. By utilizing this information, it is possible to devise a marketing strategy customized to meet the specific requirements of the intended audience. 

By investing in the ideal marketing channels, such as social media or wine festivals, a brand can reach a wider audience and increase brand awareness. Financial planning can also help to identify areas where costs can be reduced without compromising quality to increase profitability. 

Additionally, you can identify new opportunities for growth, such as expanding into new markets or launching new products. With a comprehensive financial plan, a wine company can develop a strong brand that resonates with consumers and maximizes profits.



Diversification is important because it helps to spread investment risk across multiple assets, reducing the potential impact of any one asset performing poorly. This could mean investing in multiple vineyards with different grape varieties or producing still and sparkling wines. 

Investors may choose to invest in a mix of wine-producing companies, wine futures, and vineyard properties to spread their risk across different industry segments. A well-designed financial plan can help identify the right mix of assets to invest in. All while considering factors such as market conditions, consumer preferences, and production costs. 

Through investment diversification, wineries can increase their profitability while protecting against downside risk. Financial planning can also help wineries manage cash flow, control expenses, and optimize pricing strategies, contributing to better financial performance.


Improving Distribution

When aiming at increasing sales and profitability, it is essential to ensure that the product is available in the right places at the right time. This can involve analyzing the current distribution channels and identifying areas for improvement, such as expanding the network of distributors or retailers or optimizing inventory management. 

By improving the distribution channels, wineries can reach a vast customer base, expand their market share, and increase sales revenue. This can be achieved through various methods, such as partnering with distributors, developing e-commerce platforms, and creating an active online presence through social media and digital marketing. 

By ensuring that the wine is easily accessible to consumers, businesses can increase their sales and revenue while reducing the risk of overstocking or understocking. Moreover, effective distribution can help wineries manage inventory levels, reduce storage costs, and maintain optimal pricing strategies. By incorporating distribution improvement strategies, wineries can achieve greater profitability and long-term success.


Forecasting And Planning

Accurate forecasting of demand, supply, and market trends allows wineries to make informed decisions about production levels, pricing, and sales strategies. Accurate forecasting of market trends, demand for different types of wine, and pricing fluctuations are essential for the success of any wine business. 

A robust planning process can identify cost-saving measures, optimize cash flow, and allocate resources effectively. In the wine industry, planning must account for seasonal variations, quality fluctuations, and inventory management. 

Furthermore, financial planning in the wine industry can support the evaluation of investment opportunities, such as expansion, equipment upgrades, or marketing campaigns, by projecting their potential impact on the financial performance of the winery. Ultimately, by utilizing forecasting and planning, wineries can make informed decisions to maximize profits and maintain long-term sustainability in a competitive industry.

Protea Financial Financial Paperwork in the Wine Industry

Managing Cash Flow

The wine industry has unique cash flow challenges, such as long production cycles, high upfront costs, and seasonality in demand. Cash flow management involves monitoring the inflow and outflow of cash. Moreover, identifying potential cash shortfalls and developing strategies to address them. 

This includes forecasting cash flow needs, managing expenses, and monitoring accounts receivable and payable. By effectively managing cash flow, a winery can ensure that it has enough funds to cover its expenses during production cycles and avoid running into cash shortages. 

Additionally, it can leverage surplus cash to invest in growth opportunities that can increase profitability, such as expanding production capacity or entering new markets. Managing cash flow can help wineries maximize profits by ensuring they have the resources they need to sustain and grow their operations.


Analyze Customer Demand

Understanding consumer preferences, behaviors, and trends can help wine businesses make informed decisions about their product offerings, pricing, marketing, and distribution strategies. By collecting and analyzing data on customer demand, businesses can identify which products and price points appeal most to their target market and adjust their operations accordingly. 

This can include developing new products or product lines, adjusting pricing to meet consumer expectations, and targeting specific customer segments with tailored marketing campaigns. A thorough analysis of customer demand can help wine businesses optimize their operations, increase sales, and maximize profits.


Monitor Inventory Levels

Keeping track of inventory levels helps businesses to know how much stock they have on hand and when to reorder to avoid stockouts or overstocking. Overstocking ties up cash that could be used for other investments, while stockouts can lead to lost sales and dissatisfied customers. 

Effective inventory management also allows wine producers to make informed decisions about production, purchasing, and pricing strategies, which can help maximize profitability. Moreover, monitoring inventory levels can also help identify slow-moving products or areas of high demand, which can inform the winery’s marketing and sales strategies, ultimately increasing profits.


Marketing And Promotion

Effective marketing strategies can help wineries establish brand awareness, target their ideal customers, and increase sales. By understanding customer preferences and behaviors, wineries can create marketing campaigns that resonate with their target audience and ultimately increase their market share. 

On the other hand, promotion can include various tactics such as discounts, sales, and events that encourage customers to purchase. By combining effective marketing and promotion strategies with sound financial planning, wineries can optimize their profits by maximizing revenue while controlling costs. 

This includes setting prices that reflect the product value, controlling inventory levels, and managing production costs. By integrating marketing and promotion into financial planning, wineries can achieve sustainable profitability and long-term success in the wine industry.


Investing In Technology

Investing in technology can maximize profits by improving efficiency and productivity in various business segments. For example, with technology, you can monitor and optimize the production process, from vineyard management to bottling and packaging. 

Automated systems can also streamline inventory management and reduce waste. Additionally, technology improves sales and marketing efforts through e-commerce platforms and digital marketing campaigns. 

Furthermore, investing in precision viticulture technologies, such as drones and sensors, can help optimize vineyard management, leading to higher-quality grapes and, ultimately, higher-quality wine. By investing in the right technology solutions, wine businesses can reduce costs, increase revenue, and ultimately maximize their profits. 

When your business stays up-to-date with technological advancements, you can gain a competitive advantage and improve your bottom line. However, it’s essential to balance technology investments with other financial considerations, such as managing cash flow and maintaining a credible balance sheet.


Let the Experts at Protea Financial Help You Maximize Your Profits!

In conclusion, maximizing profits in the wine industry requires careful financial planning and strategy. The industry is highly competitive, and companies must stay ahead of the curve to succeed. 

Contact Protea Financial because we understand the unique challenges of the wine industry and can help you develop comprehensive financial plans to achieve your goals. By partnering with us, wineries can access various financial planning tools and expertise to increase their profitability and achieve long-term success. 

Protea Financial Can Help with Financial Planning

Protea Financial is here to help with your financial planning, and help your winery thrive. Call us today to find out how!

The Basics of Wine Costing

The Basics of Wine Costing

The cost of making wine can vary greatly depending on several factors, such as the type of grape used, the region where it’s produced, the size of the winery, and the production process.

For example, the cost of producing a bottle of wine can range from a few dollars for a low-end bulk wine to hundreds of dollars for a premium bottle of wine. The cost of grapes, labor, and equipment all contribute to the overall cost of making wine. Additionally, marketing and distribution costs and the winery’s profit margins can also affect the final price of a bottle of wine.

Generally, the cost of making wine is higher for small, premium wineries that produce high-end wines. The price is lower for large wineries that produce lower-end wines.

Protea Financial Wine Costing Basics

As a business owner who owns a winery or wine business, it is essential to know your wine’s actual cost. It is the most critical part of your business and the reason you decided to enter the industry.

Knowing the cost of making wine is vital for several reasons:

  1. Profit margins: Wineries need to clearly understand the cost of production to determine their profit margins. This information is crucial for setting prices and making business decisions.
  2. Budgeting: Knowing the cost of making wine allows wineries to budget accurately for future production and make informed decisions about expanding their operations.
  3. Cost control: Understanding the cost of production can help wineries identify areas where they can reduce costs, increase efficiency, and improve their bottom line.
  4. Competitive pricing: Wineries must be aware of the cost of production to set competitive prices in a crowded market.
  5. Sustainability: Knowing the cost of production can help wineries ensure that they are operating sustainably. They can identify areas where they may be overspending and make changes to reduce waste and lower costs.

Overall, a clear understanding of the cost of making wine is essential for ensuring a winery’s long-term success and profitability. If we all agree that getting the actual cost is critical, then we should all agree on what needs to be included in the cost of this wine.

The costs that are included in the cost of making wine are:

  1. Grapes or juice: The cost of purchasing or growing grapes is a significant component of the cost of making wine. In most cases, it will make up the most significant cost of each bottled wine. Being as specific as possible is important. All your wine should only have the same juice cost if you have one SKU. The information you need to allocate these costs is already being tracked for compliance. Use this information to allocate costs correctly.
  2. Dry goods: The cost of bottles, corks, labels and other packaging materials is another component of the cost of making wine. This is a fairly obvious cost as it is a cost you can see. A few complexities can arise, specifically with smaller wineries where minimum order quantities can create a scenario where the per-wine price is higher than the per-unit cost due to wastage. This is an area that can inflate on the balance sheet, so remember to do at least annual counts and flush out any additional costs building up on the balance sheet.
  3. Overheads: Depreciation on equipment, costs to run the winery, and other overhead allocations are often forgotten costs that tend to sneak up on winery owners. Including these costs based on monthly production will provide you with a true cost of the wine being produced.
  4. Labor: The cost of labor, including wages and benefits for winemakers, vineyard workers, and other employees, is another significant component of the cost of making wine. We often see the cost of the winemaker missing from the calculation as this is the owner, and they need to pay themselves. This can lead to a false sense of margin or create a situation where the wine has been priced incorrectly, leading to a situation where they never get paid.

Protea Financial The Basics of Wine Costing for Your Winery

It is important to obtain the correct costing and include all the relevant costs. Getting the costing wrong can have severe implications for the business, especially if you use these costings to develop your pricing. Another benefit of costing is understanding your margins and providing insight into areas where you can reduce costs.


Protea Financial Can Help Make Wine Costing Easier

Costing is critical for all businesses that sell inventory, but in a complex environment with long inventory cycles like a winery, it is important to hire an expert. Find someone with the expertise and experience to help you cost your winery accurately. For help, contact Protea Financial today!

Protea Financial Can Make Wine Costing Easier

Let Protea Financial teach you the basics of wine costing so that you can begin pricing wine properly for yourself. If you want help, our professionals can do that, too!

Wine Accounting 101: Understanding the Basics

Wine Accounting 101: Understanding the Basics

Wine accounting is an essential part of the wine industry, but it can often be daunting and confusing, especially for those new to the business. Protea Financial offers wine accounting services tailored to meet your needs and help you understand the basics.

Our goal is to help break down the complexities of wine accounting into simple terms so you can make better-informed decisions. We want to share the basics of wine accounting, what it entails, and why it’s important in today’s competitive market. Read on to develop a strong understanding of wine accounting and take advantage of our expert advice.


What is Wine Accounting?

Wine accounting is the process of tracking and managing the financial information associated with a business within the wine industry. This includes vineyards, wineries, retailers, and distributors. Wine accounting can be a complex and challenging task due to the unique nature of the wine industry. However, it is essential for businesses in this sector to maintain accurate financial records to make sound business decisions.

Protea Financial is here to help you navigate the world of wine accounting. We have a team of experts who are familiar with the ins and outs of this industry. We can provide the tools and resources you need to manage your finances effectively. Our team can confidently answer your questions and guide you through the process easily, and we are here to help wherever we can.


Accounting Basics Every Business Needs to Remember

You don’t need to be an accountant to understand your business’s accounting basics. Whether you’re just starting or have been in business for years, keeping track of your finances and making sure your books are in order is essential. Here are a few accounting basics every business needs to remember:

  • Income: This is money that your business brings in, also known as revenue. Money can come in from sales, services, interest, investments, and more. It’s important to keep track of all income, so you know how much money your business is making.
  • Expenses: This is money that your business spends, also known as overhead. Expenses include rent, utilities, inventory, supplies, advertising, and payroll. Keeping track of expenses helps you see where your money is going and where you can cut costs.
  • Profit: This is the difference between your income and expenses. If your income is greater than your expenses, you have a profit. If your expenses are greater than your income, you have a loss. Your profit (or loss) determines whether or not your business is successful.

By tracking your income and expenses and knowing your profit (or loss), you’ll have a better handle on the financial health of your business. Since the wine industry can be fickle, it is essential to make sure you track everything carefully. Prices can change for each item, season, and even each batch of wine.

Protea Financial accounting for wineries

The Different Types of Wine Accounting

There are three types of wine accounting: cellar accounting, production accounting, and tax accounting.

  • Cellar Accounting: This type of accounting tracks the inventory in a wine cellar. This is important for individual wine collectors and commercial businesses selling wine. Cellar accounting can help track how much wine is being consumed, how much wine is being bought or sold, and the value of the wine cellar’s contents.
  • Production Accounting: This type of accounting tracks the costs associated with producing wine. This includes things like the cost of grapes, barrels, and labor. Production accounting can help wineries keep track of their expenses and make sure they are making a profit on each batch of wine they produce.
  • Tax Accounting: This type of accounting deals with the taxes associated with selling wine. This includes excise taxes, import/export taxes, and sales taxes. Tax accounting can be complex, but businesses must understand the taxes they will need to pay on their wines.

Knowing which category or categories you fall into will help ensure that you track the correct numbers. That way, you can price your products correctly and avoid having a loss for your business.


The Basics of Wine Accounting

Wine accounting is a complex and ever-changing process. Protea Financial is here to help you understand the basics of wine accounting so that you can make informed decisions about your business.

The first step in wine accounting is understanding the different types of wines. There are four main types of wines: red, white, sparkling, and fortified. Each type of wine has unique characteristics that must be considered when creating financial statements.

The second step in wine accounting is understanding the cost of goods sold (COGS). COGS includes the cost of the grapes, the cost of production, and the cost of packaging and shipping. All these costs must be considered when calculating your final price per bottle.

The third step in wine accounting is understanding inventory valuation. Inventory valuation is used to determine the value of your stock at any given time, which is important for making informed decisions about buying and selling inventory.

Protea Financial has a team of experienced professionals who can help you navigate the complexities of wine accounting. We will work with you to create accurate financial statements and provide guidance on making sound business decisions.


Common Mistakes Wine Businesses Make in Their Accounting and How to Avoid Them

There are several common mistakes businesses make regarding their accounting and bookkeeping. Here are some of the most common mistakes and how you can avoid them:

  1. Not knowing your numbers. This is perhaps the most serious mistake you can make. You need to know your numbers to make informed decisions about your business. Keep tabs on your income and expenses, and ensure you understand where your money is coming from and going.
  2. Not keeping accurate records. This ties in closely with needing to know your numbers. If you don’t have accurate records, it won’t be easy to get a precise picture of your financial situation. Make sure you keep track of all income and expenses, no matter how small.
  3. Not staying up-to-date with changes in tax laws. Tax laws change regularly, so it’s important to stay on top of any changes that could impact your business. This includes keeping track of deductions and credits available to you.

Protea Financial wine accounting basics

Protea Financial’s Wine Accounting Services

Protea Financial is a leading provider of wine accounting services, and we can help you with all aspects of your wine business, from grape to glass. We understand the unique challenges that wineries face and have the experience and knowledge to help you overcome them. We offer a full range of financial services, including:

  • Financial statement preparation
  • Tax planning and compliance
  • Grape-to-glass inventory management
  • Cost analysis and margin optimization
  • Cash flow management
  • Winery financial modeling and forecasting
  • Business valuations
  • Exit planning


Turn to Protea Financial for Help with Your Wine Accounting Needs

If you are in the wine industry and have questions about accounting or bookkeeping, Protea Financial is here to help. We understand the unique needs of the wine industry and can provide expert guidance on all financial matters. Whether you need assistance setting up your books or preparing for tax season, we can help you navigate the complexities of the wine business. Contact Protea Financial today to learn more about our services and how we can help you run your business more efficiently.

Protea Financial Is Here to Help with Your Wine Accounting and Bookkeeping

Reach out to Protea Financial if you need help with your wine accounting or bookkeeping, or even if you aren’t sure what the next step for your business should be. Our experienced professionals are here to help. 

How To Create A Budget

How To Create A Budget

We are entering the new year, which means many people are setting goals for the new year. As a business owner, you should be doing the same thing. Creating a budget is one of the best practices you can start for your business.


What Is a Business Budget and What Are Its Benefits?

A business operating budget is a financial plan that outlines a business’s projected expenses and revenues over a specific period, usually a year. A budget is a key tool for business owners and managers to understand the financial performance of their business, make informed decisions, and plan for the future.

A well-thought-out and designed budget will allow you to make better business decisions and feel more in control of your future. If you are still not sure you need a budget, here are some of the key benefits of having a budget:

  1. Improved financial planning: A budget allows you to plan for the financial needs of your business, including projected expenses and revenues, if you need to hire, if you need to invest in new assets, and, more importantly, if you have the cash flow for your business goal. By creating a budget, you can identify potential financial challenges and opportunities and take steps to address them.
  2. Enhanced decision-making: A budget can help you make informed decisions about allocating resources and making trade-offs between different priorities. The budgeting process should inform you what you are limited to doing by your current business setup and if you need to take action if you want to expand or grow.
  3. Increased accountability: A budget can help you hold yourself and your team accountable for meeting financial goals and targets. By regularly reviewing your budget and comparing it to actual performance, you can identify areas where you are over or under budget and take corrective action. It will also provide the road map on how your team can spend and give them direction to execute their goals.
  4. Improved communication: A budget can help you communicate your financial goals and plans to your team and stakeholders, such as investors or lenders. This can help ensure that everyone is aligned and working towards the same financial objectives. It can act as an early warning system for potential issues and provide guidance on financial needs if you are planning for growth or expansion.

Now that we have established that a budget is important and a worthwhile exercise, the question is, how do I create a budget?

Protea Financial Creating a Budget for Your Business

Budget Creation Basics

Here are the basics of building a business budget:

  1. Determine your budget period: For most, this will be the next calendar year but the first step is to choose a budget period that aligns with your business goals and objectives. For example, if you are starting a new business, create a budget for the first six months, the first year, the remainder of this calendar year, and the next. Setting the budget period allows you to think about a period and focus on those goals and expectations.
  2. Identify your budget categories: You will need to determine the categories of expenses and revenues relevant to your business. Common types of expenses include payroll, rent, utilities, marketing, and supplies. For income, the categories include sales of products, service fees, and grants. There may be subcategories under each of the main categories. By know which revenue and expenses you plan on budgeting for allows you to become more granular and focused in your approach to building this plan.
  3. Gather financial data: Collect financial data from past periods or other sources, such as market research or industry benchmarks, to help you estimate the amounts for each budget category. For most businesses, starting with historicals is a great place to begin. Your history will give you an idea of your future and allow you to adjust based on the information you have or the new projects you plan to implement.
  4. Create a budget template: Use a spreadsheet or budgeting software to create a budget template that includes all the budget categories and subcategories relevant to your business. You can either build your own, hire someone to build a template, or download one from a reliable source.
  5. Estimate expenses and revenues: Using the financial data you have gathered, estimate the amounts for each budget category for the budget period. This is the work part. Once you know what you plan to budget for, you can do the hard work. Most good budgets will take into account information from your team. Gathering insight and information from the people who are meant to execute the goal will allow you to gain buy-in. Also, most good budgets will take a few rounds. This is a necessary process and not one that should be rushed. Once all information is gathered, it should be reviewed with all stakeholders and adjusted as necessary. Obtaining insight from others will help get everyone’s approval that it is achievable and ensure everyone is working towards the goal of execution. 
  6. Monitor and update the budget: Budgets are a tool that should be used to drive the business towards its goals. It is important to regularly review and see how you are performing towards these goals. The review should provide insight into where you need to improve and where you are doing well. It is also necessary to update the budget as required. Your business environment might change, and different opportunities and pitfalls may arise. It is critical that the budget stays accurate and reflects these changes in your business’s financial position or goals.

With these steps, you can create a comprehensive and accurate business operating budget that will help you understand and manage the financial performance of your business. A well-executed budget will provide you and your business insight to move toward your goals.

Protea Financial Business Budget

Protea Financial Can Help You Create a Budget for Your Business

Now, remember, the budgeting process takes work. Sometimes you will need to get help. If you do not have the capabilities internally or want additional insight into the process, consider outsourcing your needs. Reaching out to an outsourced option like the professionals here at Protea Financial might be a great way to get the best out of your budgeting process by bringing in experts. Contact us today and we can help!

Let Protea Financial Help You Create a Budget for Your Business

If you want help learning how to create a budget for your business, or you need someone to do it for you, contact the professionals here at Protea Financial.