How to Create a Budget in QuickBooks Desktop

To create a budget in QuickBooks Desktop, go to Company > Planning & Budgeting > Set Up Budgets, click Create New Budget, choose your fiscal year and budget type (Profit and Loss or Balance Sheet), then enter your monthly amounts. You can build it from scratch or start from last year's actual numbers.

Let me ask you something. Do you actually know whether your business is on track this year — or are you just hoping?

Most small business owners run on gut feel. Revenue looks okay, the bank account isn't empty, so things must be fine. Right? Then December arrives and the tax bill is a nasty surprise, or you realize you've been bleeding money on expenses for six months without noticing.

A budget fixes that. It turns "I think we're doing okay" into "we're $4,200 under budget on payroll and $1,800 over on supplies." That's the difference between steering your business and just riding in it.

One clarification before we start, because people mix these up: a budget is your plan for what you expect to earn and spend. A forecast is QuickBooks' projection of where you're actually heading based on current trends. This guide covers budgets — the plan. (QuickBooks Desktop can do forecasts too, from the same Planning & Budgeting menu.)

Before you start: two things worth checking

1. Is your fiscal year set correctly?

Your budget follows your fiscal year, so if that's wrong, your budget will be wrong too.

• Go to the Company menu and select My Company.
• Click the pencil icon (Edit), then choose Report Information.
• Check the first month of your fiscal year. Most businesses use January, but if yours starts in, say, July, make sure that's what's set.
• Click OK to save any changes.

2. Review last year’s numbers

The best budgets aren't guesses — they're informed by history. Take a quick look at last year's actuals before you start typing numbers.

• Go to Reports > Company & Financial and select Profit & Loss Detail (or Balance Sheet Detail if you're budgeting the balance sheet).
• Change the date range to Last Fiscal Year and refresh.
• Skim through it. Which expenses were bigger than you remembered? Where did revenue actually come from? Those observations are the raw material for a realistic budget.

How to create a budget, step by step

Step 1: Open the budget setup window

• Go to the Company menu, hover over Planning & Budgeting, and select Set Up Budgets.
• The budget window opens. If you've created a budget before, QuickBooks shows the most recent one — don't worry, you're about to make a new one.

Step 2: Create a new budget

• Click Create New Budget in the Set Up Budgets window.
• A setup wizard walks you through the choices below.

Step 3: Choose your fiscal year and budget type

• Select the fiscal year this budget is for — usually the upcoming year.
• Choose the budget type:
• Profit and Loss: The most common choice. You budget your income and expenses month by month. This is where most businesses should start.
• Balance Sheet: For budgeting assets, liabilities, and equity. More advanced — useful if you're planning major purchases or tracking loan paydowns.
• If you picked Profit and Loss, you can add extra detail: budget by Customer:Job or by Class (if you have class tracking turned on). Budgeting by class is great if you want to see which product line or location is pulling its weight.
• Click Next.

Step 4: Start from scratch or from last year’s actuals?

QuickBooks gives you two starting points:

• Create budget from scratch: A blank grid. Every number is yours to enter. Best when last year was unusual — a startup year, a pandemic year, a year you'd rather not repeat.
• Create budget from previous year's actual data: QuickBooks pre-fills the grid with last year's real numbers, and you adjust from there. For most established businesses, this is the smarter starting point. It's much easier to tweak real numbers than to invent them.

Pick one and click Finish. The budget grid opens.

Step 5: Enter your monthly amounts

Now the actual budgeting. The grid shows your accounts down the left and the twelve months across the top.

• Click into a month cell for an account and type the amount. For income accounts, enter what you expect to earn; for expense accounts, what you expect to spend.
• Work through the accounts that matter — you don't need to budget every tiny account. Focus on the big ones: revenue, payroll, rent, cost of goods sold, marketing.
• Don't just copy one month across the whole year if your business is seasonal. A landscaping company in December looks nothing like a landscaping company in June. Adjust month by month.
• When you're done, click OK to save.

Tip: it's better to have a rough budget for the important accounts than a "perfect" budget you never finish. Done beats perfect here.

Step 6: Actually use it — run budget reports

Here's the uncomfortable truth: a budget you never look at is just a spreadsheet with extra steps. QuickBooks has built-in reports that compare your plan against reality.

• Go to Company > Planning & Budgeting and look for Budget Overview and Budget vs. Actuals reports.
• Run Budget vs. Actuals monthly. It shows your budgeted amounts next to what really happened, with the variance. That's where the insights live.
• Big variance on an expense line? Dig in. Consistently under budget on revenue? Time to adjust the plan or the strategy.

Make it a monthly habit — ten minutes with this report will tell you more about your business than an hour of staring at your bank balance.

And since budgets and cash flow go hand in hand, you may also want to read our guide on [tracking cash flow in QuickBooks Desktop](/track-cash-flow-in-quickbooks-desktop/) — because a budget tells you the plan, and cash flow tells you whether you can actually afford it.

Common mistakes to avoid

• Budgeting with the wrong fiscal year. If your fiscal year starts in July but your budget runs January to December, every comparison report will be nonsense. Check the fiscal year first (see "Before you start" above).
• Putting annual totals in January. The budget grid is monthly. If your annual insurance premium is $12,000, don't type $12,000 into January unless you actually pay it in January. Spread costs across the months they really hit.
• Creating the budget and never opening it again. The number-one budgeting mistake isn't a wrong number — it's building the thing and ignoring it. Schedule a monthly budget review. Put it on the calendar like any other meeting.
• Budgeting every account to the penny. You'll burn out. Budget the accounts that move the needle — revenue, major expense categories — and leave the small stuff alone. Precision on ten accounts beats guesswork on a hundred.
• Forgetting that budgets can change. A budget isn't carved in stone. If halfway through the year your reality looks nothing like the plan, update it. A budget that reflects the real world is useful; one that doesn't is decoration.

If you ever want to analyze your budget outside QuickBooks — say, in a spreadsheet you can share with your accountant — check out our guide on [exporting reports as Excel workbooks in QuickBooks](/export-reports-as-excel-workbooks-in-quickbooks/).

Conclusion!

That brings us to the end of this guide on creating a budget in QuickBooks Desktop. We hope the steps explained above helped you set up a budget, enter realistic numbers, and start comparing your plan against actual results. If you run into any difficulty while following the steps, consider consulting a qualified and experienced QuickBooks professional for further assistance.

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