 QuickBooks Online 2023 Budgeting Overview Get ready to start moving on up with QuickBooks Online 2023. Here we are in our Get Great Guitars Practice file. We started up in a prior presentation using the 30-day free trial. We also have open the free QuickBooks Online sample company. If you want the two open at the same time we suggest using Incognito or another browser. You can open Incognito if using Google Chrome. Selecting the three dots in the browser and support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website. Broken out by category. Further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. New Incognito window then typing into the search engine QuickBooks Online Test Drive. We're going to be comparing the accounting view the one that Get Great Guitars is in and the business view the one the sample company is in. You can switch between the two views by going to the cog up top and change the view down below. Let's duplicate some tabs to put reports in by right-clicking the tab up top so we can duplicate it. Then go into the tab to the right and right-clicking to duplicate it. Back to the tab to the middle down to the report song. The left opening up one of the favorite financials that being the balance sheet noting that by now you should know you do know I'm sure that the reports under the business view are in the business overview and then reports on the left. Tab into the right open up the major other financial statements using the reports on the left that being the profit and loss or income statement close it up the hand boogie and change in the range. 010123 to 022823. I'd like to see this on a month by month side by side. Run it to refresh it. There we have it. Tab into the middle and closing up the hand boogie. Range change 010123 to 022823. Drop down looking at it by month and run it. So that's the setup process that we do every time. Now we're thinking about the budgeting process. So the budgeting process remember is we want to note it's different than the normal accounting process. Now it does of course result in a financial statement like report and therefore the accounting knowledge is crucial for creating the budget. But it's going to take more than simply the financial data in order to construct the budget. So normally when we think about the accounting process we're thinking about putting together the financial statements from financial transactions as they happen past data that we are now recording in such a way that we can construct the end product the financial statements and facilitate the transactions with the people we do business with the customers the vendors and the employees with quickbooks that's normally done by generating these reports and of course the reports will generate the transactions that create the financial statements and also create those vital links to help us track things like the invoice track in the accounts receivable the bills tracking the accounts payable and so on so we can communicate with the customers vendors and employees. When we're talking about a budget we're projecting out into the future. So we're not talking about things that have already happened that we're trying to construct in a way that will help us with the decision making now we have something that's been constructed in the past typically that's usually our starting point that we're going to use in part to help us project out into the future. So if we're doing accounting for example if we work in the accounting department or we're doing bookkeeping we can create a really simple budget we can say hey look this is the past year's data we're just going to we're just going to then project it out into the future as if the future is going to completely replicate the past but that's not usually the best kind of budget going forward because there's going to be projections or predictions about what's going to happen that means you need management involved within the budgeting process so that might be you you might be doing bookkeeping and of course projections out in your company file but if you're working as a bookkeeper or in an accounting department you're going to want to be talking to other people in the business of course the management that might be making decisions such as how much advertising are we going to do next year versus this year what's going to be the prices of our inventory are we going to change the prices of our inventory are we going to put more money in investments in fixed assets for example and an attempt to invest more and generate more revenue in the future based on past data as your starting point and those other kind of components also the economic environment what's the business environment looks like next year compared to last year we've seen a big change of course with many businesses with like covid recently and so that's an easy one to kind of look at and say yeah there's huge swings in terms of the business environment one year to the next oftentimes and so we got to take that into consideration when projecting out the future revenue so that's one thing to consider so if you're working as a bookkeeper you can't just and someone just says they want you to produce a budget that they can't just expect you to be doing a budget based on the past data it's usually going to be something added that you can provide although again you could provide a basic budget just based on the past data now when we go into the budget then we're not building it from past data which is all the information all the forms that are in the plus button you located up here in the cog up top and then we've got our cog and then we've got the budgeting information down below so we haven't set one up we don't have any budget reports yet we would be going into the budget and creating the budget from this point so let's first just think about the process of what we're going to do and then we'll actually build the budget in a future presentation the general idea that i would go through with the budget is that we're thinking normally with the budget of the profit and loss that's the budget that the quickbooks has the capacity to be dealing with and that's generally the case because the profit and loss is the performance statement so remember the balance sheet says where we stand as of a point in time so we're looking if we're looking at the year to date or February then this is as of February 28th the end of the period the income statement is the report that tells the story of how we got there it tells us the activity that got us from the beginning balance sheet that which would be you know at 12 31 22 to the ending point which would be the total income for the two months january and february income and expenses so the income statement is the performance statement and so if we're trying to think about for example we're trying to measure for example how far a car can drive in a day we're going to reset the odometer and let the car drive for a day and then we might reset the odometer at least take take a measure of where we're at and then drive the car another day and see how far we go when we're projecting we're kind of saying i'm going to try to predict how far the car is going to go in the next day you know there might be a hill tomorrow that there wasn't last time so we might not go as far due to that fact the hill in practice might be the economy is changing or what not from one year to the next and we have to take that into our projection consideration so therefore we're focused on the income statement and usually the starting point that we're going to have with the income statement will be the prior year data so notice anytime you talk to a budget in course or something like that they're always going to emphasize the fact that well you're not just taking a lot last year's data and making it into the current year information but that usually is the starting point of course you're going to say what happened last year and then we're going to use that as our starting point and then basically say okay what's going to change this year compared to last year in terms of the business environment in terms of advertising budget in terms of how much equipment we're going to purchase this year compared to last year and so on and so forth what's our capacity and then we'll we'll tweak our budget from there going forward so therefore we we're often going to start with an income statement and to construct the budget we're not usually going to construct it in QuickBooks I'm not going to build the budget by going to this budgeting tool instead I'm going to usually what I would do is export the prior year income statement to excel which we'll do in a future presentation and then tweak the income statement to to in excel projecting what's going to happen in the future in excel and then import that budget from excel into QuickBooks now why would we do that if I have it in excel why don't I just keep it in excel once it's there because QuickBooks runs reports the the main report that could be quite useful is the budget versus actual so as the periods go forward into the future we can compare what actually happened to what we projected was going to happen and we could see the difference between the two that's what QuickBooks does well QuickBooks does not do well QuickBooks is not a software that's going to help you to construct the budget per se it's a software that helps you build the financial statements from past data and then it'll allow you to enter the budget into the system so that it can do what it does well which is run reports the main one being comparing the budget versus the actual now we only have two months of data in place right here so what we're going to do in the future is basically export this two months of data into excel we'll kind of imagine that this was like a prior two months of data so that so that we can then project out what we think is going to happen a whole year into the future based on that information and then we'll and then we'll take that in excel and we'll plug it back into the system by going to the cog and then the budget down below and then we'll be able to see our reports and we'll run the reports which will be budget versus actual for these two months because we have two months of actual data here and then everything going forward we have a little bit of data in march but everything going forward we'll just have budgets because we'll be imagining that time the actual data had not passed that's in the future in our practice problem so that's what we'll that's what we'll do next time