Wyoming Entrepreneur Blog

How to Create an Effective Budget

This blog post was written by Doran Fluckiger, Wyoming Entrepreneur SBDC, Southwest Wyoming  Regional Director.

A small business owner faces a list of struggles every day just to stay in business. Small businesses find themselves working hard to generate revenue and make a profit. In order to address the financial struggles of small business owners, you must first understand and identify the problem.  Budgets can be an effective way to quickly pinpoint where expenses are high and revenues are low. 

Goals
Small business owners want to know that every aspect of their business is functioning correctly. As a result, some may try to set goals for every aspect of their business. Instead, set one goal to quickly measure the same result.  For example, instead of creating a goal to know if inventory sales increased, and how much the inventory costs increased; combine both goals into how much profit was created from inventory sales. If profits decrease then costs may have increased, and if profits increased sales most likely increased as well. Fewer goals are easier to manage and if done properly can give you the same result as several goals. To be most effective goals must be measurable and obtainable.

Consistent Record Keeping
Measuring success of a small business is dependent on consistent and accurate record keeping.  Bookkeepers must assure that they record transactions the same way for every entry.  If transactions are coded differently from month to month it will change the outcome of your results.  Management cannot implement the correct changes to the company if the data is recorded inconsistently. 

Time Management
Budgets tracking every detail of the company are great.  However, if the budget cannot be updated on a regular basis because it is too large to maintain, it will not help your company. Simple budgets should be created to pinpoint problem areas that may need improvement. This saves time and helps create budgets that quickly and clearly reflect results.  Be sure it is easy to read, allowing business owners to quickly understand if the business goals have been met.   

Implement Changes
The end result of a budget should provide the guidance to make immediate changes that will generate greater profits.  If a budget does not provide information to improve business operations it is useless.  Overall the budget should capture areas of strength and weakness allowing small business owners to implement cost saving changes.

Electronic Payment of Taxes - Probably Not an Option Anymore!

    Previously, once your business’s federal tax liability (including all taxes) during a calendar year exceeded $200,000 or your payroll tax deposits exceeded $50,000, you were required to use EFTPS or Electronic Federal Tax Payment System, in the second succeeding calendar year.  However, under a proposed rule from the U.S. Treasury (REG-153340-09), any business with a tax deposit requirement would have to make deposits electronically as of January 1, 2011.  The Financial Management Service (FMS), a Bureau of the Treasury Department, beginning in 2011, is eliminating the system that enables the processing of Federal Tax Deposit (FTD) coupons.  Accordingly, these proposed regulations require the use of EFTPS for all FTDs, effective January 1, 2011, which is not that far away.  Designated federal taxes include employment taxes, corporate income taxes, social security taxes, FUTA tax, excise taxes and various other types of non-payroll withholding.
    EFTPS, or Electronic Federal Tax Payment System, is provided FREE by the U.S. Treasury Department for payment of federal taxes via the Internet or by phone 24/7.  It is handled by a secure government website that uses the highest level of security.  The system can only be accessed through a secure Internet browser with 128-bit encryption.  When you enroll or to gain access to your account, you must provide three forms of unique information – a taxpayer identity (EIN or SSN), EFTPS Pin#, and a password.  They claim it is secure, fast, accurate, convenient, easy to use and reduces penalties.  Once enrolled, business taxpayers can use the system to make all their federal tax payments via the Internet or by phone.  Both methods are interchangeable.  Via the Internet you can initiate a tax payment 24 hours a day, 7 days a week.  Also, you can conveniently schedule tax payments up to 120 days in advance of a tax due date.   It takes about two weeks after you enroll to receive an enrollment confirmation, so plan ahead.  For more information about enrolling in EFTPS, visit www.eftps.gov to get started.
    So get ready to make the change and (maybe) get rid of those paper FTD coupons, you probably won’t be able to use them after the first of the year.