business finances

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

How Will the Trump Tax Bill Affect my Business?

President Trump and the Republican Congress has a tax bill for you. It’s been widely discussed in the media and many analysts have been very vocal about its overall effects on individuals and the economy. But politics aside, just how will your business be affected by the bill? Short answer is, it depends on the business.


The biggest benefits are coming to pass-through entities. These compose a majority of U.S. businesses and are non-corporate entities like sole proprietorships, partnerships, S-corporations, and others that don’t derive income from dividends or have shareholders. Mostly we’re talking about business that are operated by an individual, or individual partners.


Before now, pass-through businesses were taxed at the individual level. The Republican tax plan is aiming to be kinder to businesses, and they’ve deemed that the individual tax rate is still too high at this point. So, to split the difference, the new tax bill would allow pass-through businesses to automatically deduct up to 20% of their earned income, thus saving a significant portion of their overall tax bill.


There are limits and trade-offs, of course. To qualify for the deduction, individuals must have an income of $157,500 or less. Married couples are able to deduct the full 20% with income less than or equal to $315,000. Certain professional services are also excluded from claiming this deduction. This part of the bill also includes a “capital element” that may exempt wealthy property owners from the cap. Businesses over the cap can meet the criteria for the deduction in a Twister-esque mathematical contortion. In fact, one of the biggest complaints of the bill is that it appears poised to benefit booming real estate businesses a great deal, as opposed to everyday American workers.


So what are some other trade-offs? Well, most of the itemized deductions that businesses and individuals claim on their taxes no longer qualify. Things like business expenses, mortgage deductions, and property taxes are all done away with. The standard deduction has been doubled for individuals, but it may not cover all the extra expenses going forward. In particular, health insurance costs are estimated to rise considerably now that the individual mandate has been scrapped.


If you’re an individual operating a pass-through business, then you’re likely to see at least some tax relief going forward. Just make sure to budget in advance for the deductions the bill has removed. If you live in an expensive area, make sure you keep an extra savings account for property taxes. If your business involves a lot of out-of-pocket purchases, make sure they’ll be covered by the standard deduction. If you have a high premium, shop around for health insurance on the marketplace to find a better plan. And, mostly importantly, if you find that you can’t manage on your own, then look into booking the services of a professional to maximize your financial security.