Page 77 - Budgeting for Managers

Budgeting for Managers
60
rent leases and also have plans to get a lot of new equipment.
Or perhaps you’re looking at office supplies and it’s easy to
estimate the amount of money spent for the regular coffee, but
you don’t have good records for parties and open houses where
your customers meet the staff, because people spent cash and
got reimbursed.
If something like that happens, split the item. For the leas-
ing, calculate current lease costs, then go to Chapter 5 and cre-
ate a project budget for getting new equipment. For the open
houses and parties, create a marketing plan and build a budget
for it. If your company uses account codes, you can use sub-
codes to track these separate items and the accounting system
will generate the totals for you, for both the estimates now and
the actual figures during the year. See Chapter 2 for details on
account codes and Chapter 9 for budgetary tracking. In Chapter
7, we’ll show you how to combine different parts of your budget
into one spreadsheet.
Also, don’t hesitate to create new line items or divide line
items into sub-items if that helps you make a better estimate. If
accounting doesn’t want you to make too many changes to line

Sometimes, Names Matter
Sometimes, the names of line items matter. For example,
two line items you will often see on expense budgets are
“publications and subscriptions” and “dues and memberships.” Running
a small business, I often join associations and get free newsletters or
magazines with the membership.When I was inexperienced, I worried
about which category to use.Then I got bothered, because items
would go into one category or another and I really couldn’t keep
track of things.Then I spoke to my accountant. I learned that if an
expense could go into either category, it was better to put it into
“publications and subscriptions.” It turns out that the IRS requires that
companies put country-club memberships into “dues and member-
ships,” and then watches the category closely to see if the company is
spending too much on executive perks that should be counted as
salary. I don’t belong to a country club, so I moved everything into
“publications and subscriptions” at the beginning of the new year.