Know why you should budget before starting up a business
First, budgeting, is a word or formulation of plans for a given future period of time, expressed in quantitative terms. It can also be stated in a financial terms. Methods for budgeting: Budgets are used as checks on the actual results of a business. Deviations from predetermined plans are seen by comparing actual budgeted performances and costs. The subsequent analysis of the differences or variances, and the actions taken are vital part of the control mechanism. A system of budgetary control, enables members of the management team to work together according to a clearly-defined financial policy and to authorize specific expenditure to executives. Requirements more than the budget, would necessitate special authority and would have to be carefully examined. In this way, control can be centralized and responsibility and authority delegated. Note: Where budgeted and actual figures agree, no action is normally required. Only exceptions are reported, thus en