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Here's how to create a General and Administrative Expenses Budget in six easy steps

by , 29 September 2014
A General and Administrative Expenses Budget is very important when it comes to dealing with the day-to-day expenses of running your business. It helps you monitor and control all those little expenses that can quickly add up and leave you short of cash.

But how do you create an effective General and Administrative Expenses Budget?

If you follow these six easy steps, you can do it correctly each and every time.


Use these six easy steps to create a General and Administrative Expense Budget 

Step # 1: Determine the specific type of expenses you need for production
This is normally all the fixed expenses and variable expenses you need to pay to successfully operate the business.  
Step # 2: Determine the amount you plan to pay for each expense
You can do this by using the current inflation rate as an indicator. 
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Step # 3: Use inflation when you calculate your expenses

Determine the budgeted general and administrative expenses for the period by calculation using the 6% inflation rate as indicator. The minister of finance determines this inflation rate and it varies depending on the economic climate. 
Step # 4: Input the actual expenses for the previous month into your current budget spreadsheet
Determine the actual general and administrative expenses for the period by keeping track of your invoices and supporting documents.
Step # 5: Determine if you're sticking to your budget
Subtract the actual expenses from the budgeted expenses. Why? It's important to have the total amount of each column to determine if the business is sticking to the budget. 
Step # 6: Brainstorm with management on how to reach your budget
Investigate the differences between the actual and budgeted expenses. Discuss with management about how to reduce the variance.
No matter how well you budget, you may actually end up paying more money to general and administrative expenses than you budgeted for. It's best to have cash available in case you run up against unplanned expenses. The best way to do this is to have a good look each period at your budget and try to cut costs where possible.
There you have it! Follow these six steps and you'll create perfect General and Administrative Expenses Budgets every time. 

PS: We strongly recommend you check out the Practical Accountancy Loose Leaf service.  It will show you how to improve your cash flow, eliminate simple accounting mistakes, analyse your financial statements, identify errors, slash your audit fees and eliminate fraud in your company.

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