 QuickBooks Online 2022 Budgeting Overview. Get ready because it's go time with QuickBooks Online 2022. Here we are in our Get Great Guitars practice file. We set up with a 30-day free trial holding down control, scrolling up a bit to get to the 125% currently in the home page. Otherwise, no one is going to get things done. Page in the business view as compared to the accounting view. If you want to change to the accounting view, you can do by going to the cog up top, switch to the accounting view down below. We're going to be changing back and forth between the two views, either here or by jumping over to the sample company file currently in the accounting view. Back to Get Great Guitars, we're going to open up a couple tabs to put reports in by right-clicking on the tab up top and duplicating that tab. Back to the tab to the left, right-clicking again, duplicating again as that is thinking. Let's jump over to the sample company file just to look at where the reports are located in the accounting view, which of course is in the reports on the left-hand side. Jumping back on over to the business view in the Get Great Guitars, we're going to see the reports in the second tab. The business overview is where we want to be at this point. We're going into the reports on the right. I'm going to close up the hamburger, open up our favorite two, that being the balance sheet, and of course the income statement or P and L. Let's do the range change up top. I'm going from 010122 to 022822. Let's see the month-by-month comparison, going to the month-by-month, and then I'm going to run that one. There we have it. Let's go to the tab to the right, tab to the right. Go into the business overview, the reports, closing the hamburger, and opening up the profit and loss or the income statement, doing the range change up top from 010122 to 022822. And then we'll change that to the side-by-side, the months, and run it. So now we got Jan Feb and the tote there. Now we want to look at the budgeting process, overview of the budgeting process, and kind of how it fits into the QuickBooks here. So first of all, to get into the budget, I'm going to go to the first tab. You could go to the cog up top and it's housed and we'll actually drill down on the budget a lot more in future presentations, but it's in the cog and then into the budgeting here. Note where it is not. It's not under the new tab or on the side panel. These being the areas where you do your normal accounting stuff. So when I think about my normal accounting, day-to-day financial transactions, those things which create the financial statements and result of the balance sheet and the income statement, I go into this item and I enter these forms down below, typically, or I go into the related area on the left-hand side. Normally the cog up top is where we're going to put things like the settings, the kind of settings that we're going to put in place, and also those things that are going to be the underlying foundation on which we're going to put everything else, the actual transactions, lying them on top of the foundation to create the financial statements, the foundational things like the lists, which include the chart of accounts and the product and item lists, for example. So it's kind of telling that they put the budget over here as well. That's an indication that it's not part of the normal kind of accounting process. And that's what we basically want to emphasize here. The QuickBooks does have the budgeting capability, which has some great stuff including allowing us to compare and contrast the actual versus the budget. But to actually create the budget, that's something that's not really thought of as kind of part of the normal accounting day-to-day data input, which is to record transactions to get to that end result process. So we'll actually dig into the budget in the second or in another presentation. For now, let's just kind of think about how the budgeting process fits in to the accounting process. So normally, when we think about the budget, let's jump on over to the income statement. We usually kind of think about an income statement type of process or form from a budgeting standpoint the end result being that we want a performance statement, typically an income statement or possibly a cash flow type of budget. Or if you had a more comprehensive budget, we would like both, right? We would like the income statement on an accrual basis looking at our performance, possibly also a cash flow kind of budget that we would be thinking about going out as well. And then possibly after that, thinking about where we're going to be, where we will stand at the end, which will be our balance sheet at the end of that timeframe. So usually, we're thinking, what did we do last year? What was our performance? When you're thinking performance, you're thinking income statement because the income statement represents what has been done, meaning how far did we get? How much revenue did we get within a timeframe, within a month or within a year? And then can I project or take that prior information in the past, project it out into the future? So note again, the accounting process, QuickBooks is designed to do the accounting process, which is to take past transactions. That's what the accounting department does. We're taking past transactions, things that have happened or are in the process of happening and recording the financial transactions using the double entry accounting system into some accounting software like QuickBooks, which then is compiled and used to create the financial statements, which can then be used for decision-making purposes or for reporting purposes for external and or internal users at that point. The budgeting process kind of crosses over from accounting to other kind of areas as well, including decision-making, which you could think about in, is like the, you could think about it more as finance. So if you had a rigid kind of change or thought process of what accounting is versus finance versus like economics, there's a lot of overlap between those topics, but the accounting, you could think of a more rigid definition would generally be the recording of transactions that have happened in the past or are happening. Finance, you could think about the area of we're going to be projecting into the future. Obviously, they're being overlapped because I'm going to need the accounting data in the past as a major component to project into the future, but we're also going to take other components involved, including what's my current market, what are my changes that I'm going to plan on having, for example, advertising. Am I going to increase advertising or not? Am I going to increase production or not? What am I going to plan to do differently in the future to change the results, possibly increase the results from the past? And as I think about that, there's going to be overlap into, say, economics because economics is going to get into markets. What's my current market? What's the overall market going to be doing? What's the environment that I'm thinking about? So all of those three kind of things kind of blend together when you start thinking about projecting out into the future using the financial statements which record past history to try to project into the future towards what's going to happen in the future. So that's not normally if you're accounting department or if you're in the bookkeeping process, then your normal job is not to do the projections because you need more information than just the past financial data to budget out into the future. That's what the owner of the business, if it's a small business, or the management is going to do. Now, again, you could call that you could say that that's in the realm of accounting because there are things, for example, managerial accounting is kind of blending together accounting concepts and, of course, like managerial decision-making processes and finance kind of concepts together. So again, there's a lot of overlap between these areas but just note that from a strict standpoint, the accounting is recorded in the past and then the management or decision-making process is going to take that and think about how they're going to do it in the future. Now, as you think about projections into the future, one of the major components is the past data, the accounting data. So as an accountant, who knows how the accounting data is formatted, that's obviously very useful. I know if you know what an income statement is, what a balance sheet is, how they work, how they're put together and basically what goes into them, that's going to be helpful when you're kind of projecting out and what's going to happen into the future as future or projected future financial transactions will take place. What's going to happen then to the financial statements, where will we be in terms of our financial statements in the future? That will clearly be important and then, but it's only one component, the past data is only one component, then we take into account the other components and put it into place. So we can't just make the budget from the past data. We could basically make a very basic budget from past data. We could say, here's the past data. I'm going to take last year's numbers, for example, and just simply divide it by 12 and say that's going to be my monthly budget going forward and we could take that information, but to make a more complex budget, you'd want to be thinking about other factors that would be involved. So typically from a QuickBooks standpoint then, what we might do with the budgeting process is take possibly last year's numbers export them to Excel and then actually work the budget in Excel. And so we would work the budget in Excel taking into consideration starting point last year's numbers, what did we make monthly last year and then think about differences in the current year that we're going to change and basically make changes that we think are going to be impacted based on what we're going to do in the current year and the economic conditions. Once we have the budget, then it would be nice to take that completed budget and put it back into QuickBooks. That's where the data input or the software comes into play again because once you get it back into QuickBooks, QuickBooks can then run nice reports as time passes. So what you want to do as time passes with the budgets is to look at what actually happened versus what you budgeted to happen and have the difference between the two be calculated. That's what QuickBooks will do well. QuickBooks, once you have the data in the system will allow you to do those side-by-side comparisons and budgeted side-by-side comparisons. So that's what we'll do in future presentations. We're focusing on the income statement. Remember if you got into a more complex budgeting process then you would be thinking about the income statement and possibly going into your production process and so forth and then thinking about where you would be at the end of that point which means you would then take your income statement and create the budgeted balance sheet at the end of the income statement process and then you might do a cash flow budget as well. But the starting point on the budget and the thing that QuickBooks does quite well is the performance budget here in terms of reports will be the budgeted income statement. So in future presentations that's what we'll do. We'll export the income statement to Excel. We won't go in too much detail on how to make budgets in Excel. That's a whole topic in and of itself. But we'll make a budget in Excel that we can then put back into QuickBooks so that we can then generate reports within QuickBooks which is what QuickBooks does well.