Source : cchst.net
Creating and maintaining a budget is important for any small business. This is because budgets estimate both the revenue and expenses of a business over a certain period of time. Budgets can help small business owners determine where to cut costs, invest, or take risks based on their cash flow.
Since small businesses don’t have many departments, accounting professionals do not typically receive many financial reports. However, there are still a lot of factors they need to consider. Small businesses often have to take every dollar into account when creating a budget. They also have to decide whether they will expand by hiring more employees, or if they will instead hire temporary workers.
Once you start your career, you’ll be responsible for a range of tasks including bookkeeping and payroll management. Accounting and payroll will teach you to slightly overestimate when you help create budgets during your career. This means that you will be budgeting slightly above anticipated costs, so that if the business does go over budget, nobody is completely unprepared. Another benefit to overestimating is if a project’s costs come in lower than anticipated, there’s more revenue at the end of the day.
During your accounting and payroll career, you’ll notice that there unexpected expenses can pop-up quite often. This is because utility prices can rise, the business owner might need to hire temporary employees for a certain project, or a printer might require an expensive repair. Although most companies have a cash flow, these types of occurrences can put small businesses temporarily behind.
For this reason, many accounting professionals use part of a business’s monthly budget to set money aside—creating what’s referred to as a “cash cushion.” When a small amount of money is put aside, it can “cushion” the blow of unexpected costs for small businesses.
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