What is a line item budget?
A line item budget groups together certain categories of company spending to manage finances at a granular level. The budget may be broken down by business unit (marketing, sales, product), expense account (payroll, office costs, travel & entertainment), or other relevant categories.
Why is a line item budget important?
The line item budgeting system serves several purposes. First, it helps a business understand whether its income is sufficient to cover its expenses. Second, a line item budget makes it easy to verify when a single item exceeds the budget or comes in under budget.
Why should businesses use a line item budget template?
There are many advantages in using a line item budget, such as ease of understanding, even without a financial background. Businesses should use a line item budget template for the following reasons:
- Comprehensive expense tracking: A line item budget template allows businesses to track and monitor their expenses at a granular level by breaking down expenses into individual line items.
- Better financial planning: By categorizing expenses into specific line items, businesses can allocate funds to different areas of their operations and set realistic financial goals for each category.
- Expense control and reduction: By reviewing individual line items on the template, businesses can analyze spending patterns and identify opportunities to cut costs or optimize resources.
- Performance evaluation: A line item budget template compares actual expenses against the budgeted amounts, enabling businesses to assess their financial health and identify areas of improvement or potential risks more accurately.
- Forecasting: Businesses can use the line item budget template as a standard format for analyzing historical spending patterns to make educated predictions about future expenses and revenues.
How do I create a line item budget in Excel?
Here’s how to do a line item budget:
Step 1: Download line item budget Excel template.
Step 2: Determine your line item budget categories.
Step 3: Fill out the previous year’s spending to compare with the current year.
Step 4: Enter budgeted spend per category each month.
Step 5: Document details per line item (supplier, purpose, etcetera).
Step 6: Update actual spending as it occurs throughout the year.
You can find more detailed instructions on how to use our line item budget template upon download.
What is the purpose of a line item budget?
The purpose of a line item budget template is to break down expenses into specific line items, allowing for detailed tracking, analysis, and management of financial resources.
What information does a line item budget template include?
Key components of a line item budget include:
- Period or timeframe for he prepared budget
- Expense categories
- Line items
- Budgeted amounts
- Actual expenses
- Variance between budgeted amount and actual expense of each line item
- Totals and subtotals for expense categories, line items, and overall budget
- Detailed notes for line items
Can this line item budget template be used in Google Sheets?
Yes, download our line item budget Excel template. Then in Google Sheets, follow these steps:
- Create a new or open an existing spreadsheet.
- Click File. Import.
- Choose the Excel line item budget template file and click Select.
- Choose an import location option:
Create new spreadsheet,
Insert new sheet(s),
or Replace spreadsheet.
- Click Import data and you should have this line item budget template in Google Sheets.