When you hire an accountant to review or help create your budget, they will likely use several tools to make financial predictions and maximize the efficiency of your budget to meet your organizational goals. However, in your initial meetings, the accountant will assess your budget for three key factors: completion, accuracy and legality. Only once these three factors are fully explored will your accountant be able to move on to more complex analysis and suggestions.
Completion
Often, budgets made by people without financial experience lack some of the necessary line items. Sometimes this is because you may consider the item to be small and unnecessary to include in your budget. Other times they are expenses that you do not think about while making your budget. Either way, these expenses can wreak havoc on your budget when they pop up unexpectedly. An accountant will sit down with you and ask you several questions about common expenses that are not currently included in your budget to make sure you have everything in place before your budgeting period begins.
Accuracy
When making a budget, it can be tempting to estimate or round numbers. Sometimes you do not know the exact cost of something, and it is easy to fill in a rough number instead of taking the effort to perform an analysis and reach a more accurate number. When performing a basic analysis, your accountant will look for areas where you may have estimated expenses or incomes and help you find the tools necessary to have a fact-based budget as opposed to one based on your intuition.
Legality
While accountants are not lawyers, they know a lot about labor laws when it comes to payroll as well as taxes. Your accountant will go over your budget and make sure that everything you propose covers the legal minimums and does not exceed the legal maximums for each category. This will ensure that your business is operating legally throughout the year. It will also allow them to recommend ways you can legally accept payments or provide payouts to stockholders and employees.
Once you have sat down with your accountant and performed this thorough, three-prong analysis and possible rebuild of your budget, your accountant will then be able to further analyze your budget and find weak spots or areas where you can cut expenses. This will allow them to maximize your budget and help make your business more successful. For more information, contact a professional such as Heller David.
