What’s the Difference Between a Budget and Projections?

Many companies and sole proprietors struggle with the financial aspects of running a business.
 Budgets are one of the most common problem areas, and they’re arguably the one thing you
 can’t afford to screw up. Here we’ll run you through the differences between budgets and
 projections, and show you an easy way to keep track of your business’s future.

A budget is an aspirational plan for the financial state of your business over a given time period.
 For example, the expected income and expenditure of your business over a single fiscal year. A
 budget is made in advance and approved before the given time period that the budget will affect.
 During this time period, a business will do the best it can to stick with the budget to ensure the
 health of the business. Unforeseen circumstances may cause the financial health of the business
 to sputter, or perhaps a sudden windfall will crush the anticipated income. While it’s a good idea
 to function with the budget always in mind, it’s still a theoretical outcome, and does not
 necessarily anticipate the hazards of real life.

That’s where projections come in. Financial projections are what if statements for your business.
 What if my business doubles in size in the course of a year? What if it shrinks by 30%? What if I
 hire an extra employee? What if I lose 20 employees? It’s a theoretical overview of potential
 outcomes, and it helps to plan for eventualities that the budget can’t account for. Where the
 budget is a rigid aspirational plan of action, the financial projections are possible outcomes that
 it’s good to be prepared for.

If you’re looking for a streamlined budgeting tool that will work for your business, you can use
 QuickBooks Online. QuickBooks’s simple and straightforward user interface makes budgeting a
 streamlined process that anyone can tackle. You can create three types of budgets, for Class,
 Location, or Customers. The location category breaks down into things like region, territory,
 store, etc., and the customer category can be changed to client, tenant, donor, etc. Each budget in
 QuickBooks covers a single fiscal year, but you can opt to pre-fill certain cells with numbers
 from past years’ budgets and keep track of the totality of your ongoing operations. A
 QuickBooks budget lets you easily keep track of your budgeted finances vs. your actual income
 and expenditures, taking the added stress of manually crunching the numbers out of the equation.

There you go – Budgeting made easy by Bookkeeping Go. Now you know the difference
 budgeting and projecting, and have at least one great option to throw together a budget that
 sticks.