Capital Budgeting and QuickBooks 2016 - dummies

Capital Budgeting and QuickBooks 2016

By Stephen L. Nelson

Capital budgeting really doesn’t relate directly to using QuickBooks. In some ways, capital budgeting is about a financial management task that’s critically important and that you need to think about . . . but it’s a task that QuickBooks doesn’t directly support.

That said, do note that much of the data that you’ve collected with QuickBooks is often extremely useful for getting good estimates of the savings and costs associated with some capital expenditure.

In looking at the example of investing in an office building, for example, knowing what you’ve been paying in rent and what you may be able to save by buying your own building is exactly the sort of information that you need — and exactly the sort of information that the rich financial database of QuickBooks supplies.

In truth, your estimates of cash flows typically are much more involved than this example. If you do have a building investment under consideration, you should consider all sorts of expenses related to repairing and maintaining the building. If you’ve been leasing space in someone else’s building, you have to consider all sorts of expenses associated with that, including special insurance that the landlord makes you buy, special amounts that you spend because the space doesn’t quite meet your requirements, and so on. QuickBooks helps you with this type of information.