How to Create a Stellar QuickBooks Online Budget

Here's how to use QuickBooks Online to create a budget that keeps your small business in top financial health.
Seth David
By Seth David 
Edited by Claire Tsosie

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When it comes to small-business accounting, the first question my clients usually ask me is, “How much money do I have?” So I show them their balance sheet. Their second question is, “How much money did I make?” And that can be explained with the profit and loss statement (P&L).

The problem with these questions and reports is that they are history reports. If the outcome is great, then my clients are happy. If the outcome is not so great, it’s too late to do anything about it. Instead of focusing on these history reports, let’s focus on some “how to make history” reports.

Making a small-business budget with QuickBooks Online

With a stellar QuickBooks Online budget in place, you're able to look at each month and what you expect to see. Then you can compare that with actuals in a budget vs. actuals report. This gives you the opportunity to course-correct, making the necessary changes if you need to, well before it’s too late.

QuickBooks Online has a budget feature that lets you map out monthly amounts for each account on your profit and loss statement. The QuickBooks Online budget tool has some nice features that make the process of setting up your budget fast and easy.

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You can fill in your QuickBooks Online budget with actual data from a prior year. In most cases, this gets much of the heavy lifting done for you.

Also, if you have a lot of line items that you want to spread evenly over the months, then you can change the view to annual and fill in the total. Then when you switch back to monthly, you’ll find the annual amount divided evenly by 12 and populated into each month. This is a small-business accounting tip that will be a big time-saver.

If you want to create a stellar QuickBooks Online budget, then you do need to set aside some time to work on it. The more you plan, the more useful it will be. It’s pointless if you don’t also set aside the time to review the budget vs. actuals report on a monthly basis.

The suggested process is that you have a deadline for each month when the bookkeeper must have all accounts reconciled. This is how you know when the actuals are complete. Then you can schedule your budget vs. actuals review to happen on a set day after that.

A version of this article was first published on Fundera, a subsidiary of NerdWallet