A budget is created based on estimated income and expenses for a specific period of time such as a month or year. A small business can benefit from using a budget as it helps with planning how to use the money coming in to cover the payments going out.
A budget can help small business owners plan how money coming into the business (income) can be best used to pay the bills generated by the business (expenses). A well-designed budget will contain information about anticipated sources of income as well as expected fixed and variable expenses which can be compared to actual dollar amounts over a defined period of time. Budgets are useful management tools designed to help control spending and assist with planning.
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