Here is the final part of How To Building The Budget, Remember that we already discussed the Budget elements like: budgeting cost of sales, Budgeting revenues, and Budget Types at Part1, part2, part3.
7- Start-up Requirements:
Budgets are not all the same, and there is no standard format. Different types of budgets can be prepared for different purposes. One way to start, especially for a new business, is to prepare two separate budgets – one for start-up costs and capital expenditures, and another for the initial operating phase.
8- Organization costs:
Part of a small business's start-up costs are organization costs to get the business set up. Organization costs may include legal fees and expenses, notary fees, licenses and registrations, tax consulting and others. These costs will depend on the legal structure you select for your business, and your line of business. For example, setting up a sole proprietorship will probably not involve significant legal costs, since it is not necessary to set up a separate legal entity. But legal costs may be more significant for a partnership, and even more so if the business is set up as a corporation. Attorneys should be able to estimate the cost of setting up a partnership or corporation.
If your business requires a commercial license or other type of operating permit, information about the cost should be available from the municipality or other legal jurisdiction in which the business will operate.
9- Capital expenditures:
In preparing a budget for capital expenditures, you may want to start by making a list of all the property, plant and equipment you will need to get the business started. These items could include real property, machinery, equipment, vehicles, furniture, fixtures, and installations. Once you identify the items you need to acquire, you can start putting together cost information from catalogs, price lists, auctions, want ads, quotes, bids, offers, and appraisals. If the business involves building or remodeling a facility, a budget for the work could be prepared based on bids for the job.
The documentation you collect in putting together a capital expenditures budget will serve as good, solid support, and you may want to keep it together with your budget and business plan to present to potential lenders and investors, and for your own reference purposes.
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1 comment:
I agree with you that for a new business, is to prepare two separate budgets...
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