These are just a few of the items that are directly affected by your sales budget:Ĭreating the sales budget first will reduce the amount of work needed for many of the other budgets. Your sales budget serves as the foundation for the rest of the budgets you’ll need to create. Preparing a master budget will require you to first prepare all of the smaller budgets, starting with the sales budget, since the numbers in your sales budget will directly affect the others.īefore you begin preparing any budget, you’ll need to decide whether you’ll be preparing master budget components on a monthly or quarterly basis.

How to prepare a master budget for your business Once completed, these smaller budgets are rolled up into a budgeted income statement format, while the financial budget consists of a projected balance sheet and statement of cash flow.Ĭreating the smaller budgets using a standard budget format makes the creation of the master budget simpler and more accurate.Ī master budget consists of an operational budget and a financial budget. The operating budget consists of projected sales revenue, the cost of goods sold, and all the separate operating expense budgets you’ll be creating. The master budget process has two parts - an operating budget and a financial budget - that are themselves made up of a series of smaller budgets. This is not a task that should be delegated to your bookkeeping or accounting clerk, but instead should involve management and ownership.Ī master budget is a comprehensive budget created from a series of smaller, specialized business budgets.

Managing multiple budgets is a time-consuming process and is best undertaken with the help of a good accounting software application that can assist you with tracking your revenue and expenses properly.

A master budget is a series of smaller budgets that are rolled up into one larger budget to provide a more comprehensive view of your business.Ĭombining an operating budget with a financial budget, a master budget is typically prepared for the upcoming year, and it can also be a useful tool when creating a strategic plan for your business.

Why do you need a budget