Budget

From EUSwiki
Jump to: navigation, search

A budget is a plan of expenditures and revenues for the year. It is not a request for funding – it is a forecast of where money is coming from and where it is leaving. A budget should be as accurate as possible, and should be binding (unless something unexpected comes up – in that case you must get the appropriate approvals to deviate from the budget). There should be some flexibility built into budgets to avoid overspending. Note the difference between a budget, Internal records, and the EUS records.

How to Budget

  • Always budget conservatively.
  • You should slightly overestimate expenses and slightly underestimate revenues.
  • When it comes to revenues, like sponsorship, which you have not received in the past, or fundraisers that you have never done before, underestimate incomes significantly. Remember, always think “worst case scenario;” underestimate attendees, sales, and so on.
  • Use enough budget categories that you have a meaningful picture of where money goes and where you might be able to cut costs.
  • You don’t need to budget down to the penny though, because you need some flexibility
  • Budget slightly higher on individual items than you expect, but not too much higher, especially on large items.
  • If you expect to spend $16 on a power bar, budget for $20.
  • For a larger expense, like $2000 on a dinner, don’t budget more than say $2100
  • If you are unsure, talk with the VP Finance.

If you are part of a very large group where unexpected expenses are likely, add a small contingency of 5%, and discuss the budget with the VP Finance or the EUS Finance Director.

Taxes

Revenues and Expenses

Always budget pre-tax for both revenues and expenses. This is not because the government is necessarily giving the tax back to the EUS, but because we must track tax separately in a tax account, since we need to remit money to the government if we collected more sales tax than we spent. So in effect we are subsidizing all our groups for the sake of making accounting easier.

You’re collecting money for your department’s clothing sale. You get the invoice for pre-tax amount of $1,000. Since the EUS budgets everything pre-tax, $1,000 will be the amount the department is charged. The financial officer collects $1,000 and deposits it. The $1,000 deposited includes sales tax (your Gross Revenue). 14.975% (5% GST + 9.975% QST) is deducted from all Revenues.
  • $43.49 is taken off and put into the GST tax, $86.76 is taken off and put into the QST tax account, for a total of $130.25 being remitted.
  • What’s left is the pre-tax amount of $869.75 (your Net Revenue) to be deposited into your EUS account.
The department just lost $130.25 because they budgeted their taxes wrong on the collected revenue.

In order for the department to break-even, it would have needed to collect 14.975% more. Therefore, the VP Finance should have collected $1,149.75 because a GST amount of $50 and QST amount of $99.75 would be taken off the deposit and a total of $1,000 would be left to break-even.

Food and Entertainment Exception (50% tax rule)

When a group is providing free food / entertainment (restaurants, hotels, beer, pizza, etc.), there is an exception to the pre-tax rule (see above. In these cases, 50% of the total tax amount will be charged as well. You still fill out the cheque req normally, with the pre-tax amount written, but the amount you will see in your accounts will be the average between the pre- and post-tax amounts.

  • The very important distinction is that this is only for FREE food or entertainment. It only applies to completely free events
  • If there was a fee for your event that involved food and entertainment (such as a banquet), you should indicate on the cheque req that tickets were sold or that the participants somehow paid a fee for the event.
If students paid fees to participate in MEC, then food served during the event would be charged all pre-tax. You just need to indicate that there was a fee associated to the expense, and our bookkeeper will charge you the pre-tax amount. This is why Blues Pub beer, banquets, and most big events don’t need to worry about the 50% rule.

If a wine and cheese is being provided for free, unrelated to any paid event, the expenses would only save 50% tax.

Sponsorship and Donations

Revenues that fall under the category of a “donation” are exempt from sales tax. Funding from the EUS, MESC, the departments, SSMU, and some sponsors are not taxed. *Whether sponsorship is taxed is sometimes hard to determine, and you should always ask the VP Finance if you are not sure.

Taxable
  • Any service being rendered to the sponsor (e.g. ticket booth; space for them to solicit patrons, whether it's directly for sales or not; luncheons/ conferences/ presentations). Essentially, anything that gives the sponsor face time.
  • Advertisements in regular publications (Ledger, Faucet, Yearbook, Handbook, Pipeline, Station; NOT the O-Week handbook, MEC competitors package, etc)
Non-taxable
  • Logos on mostly anything
  • In-kind donations (like food or supplies)

Out of Province

Expenses made out of province are charged at the total price of their purchase, as we cannot claim sales tax from outside of Quebec, except for GST where GST is listed separately on the receipt.

  • If you do not submit a proper receipt with GST and HST sales tax numbers, we will charge the total amount to your account

International expenses

If team members are paying fees to offset expenses for a trip outside of Canada, you do not need to budget for losing the sales tax from those fees. If you did, then it would have been cheaper to receive cash from those students and spend it directly in the US, where you have to budget post-tax since EUS cannot claim US sales tax back.

  • When you are depositing funds that are specifically to offset expenses incurred from US purchases, you should clearly indicate on the deposit slip, “To offset expenses in USA – do not remit sales tax”.

Requirements

Committees

As an EUS Committee or Service, you are required to request a budget from the EUS. This budget will be reviewed and approved by the Board of Governors , and it will subsequently be presented to EUS Council. The VP Finance or Finance Director will contact you when it is time to have your budget prepared.

Pro Tips
  • It is possible that expenditures and revenues varied from what was budgeted last year
  • Talk to the VP Finance well in advance if you believe that total revenues or expenses will be significantly different.

For some committees, it is acceptable to run a budget deficit. The EUS is not-for-profit, and providing student services through committees and other means is how we give back to students. That being said, we are not overflowing with money, and it is expected that every committee does as much as possible to keep expenses reasonable and to seek revenues.

Clubs and Design Teams

Clubs and Design Teams are responsible for maintaining their own internal records. They are not required to submit a budget to the EUS, except when applying for funding or when applying for club/design team status for the first time. The EUS’s main requirement is that they do not spend more than what is in their accounts. However, because they handle their bookkeeping through the EUS, they should liaise with the VP Finance and monitor their activity in the EUS accounts to ensure that their activity is being recorded properly.

Departments

Departments are similar to clubs and design teams in that they are not required to submit a budget to the EUS (at least not normally), and are responsible for maintaining their own internal records.

It should be noted though that departments are more “internal” to the EUS than clubs and design teams, and the EUS VP Finance may request any information from the departments provided that adequate notice is given (such as End-of-Year Financial Reports, or even End-of-Semester Reports). The EUS has this power because departments are legally a part of the EUS, meaning that their finances are EUS finances.