Budget: Difference between revisions

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{{DriveIcon|1=http://budget.mcgilleus.ca}}{{CustomIcon|link=https://drive.google.com/file/d/1PcPnuDZowUH8Q0UkJ8c7oiFl0KPT2TTk/view|color=#5FB56E|icon=fal fa-file-spreadsheet|popup=Budget Template|hover=View Template}}{{FinanceBar}}

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 record]]s, and the [[EUS record]]s.

==How to Budget==

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==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.

'''''Always budget pre-tax for expenses and post-tax for revenues.''''' 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. ''

:''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 expenses 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). Tax, i.e. 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.

:*What’s left is the post-tax revenue 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.

</tab>

===Food and Entertainment Exception (50% tax rule)<span id="50% Tax Rule"></span><span id="Food and Entertainment Exception"></span>===

When [[EUS Groups|a group]] is providing '''''free''''' food / entertainment (restaurants, hotels, beer, pizza, etc.), there is an exception to the pre-tax rule ([[Budget#Revenues and Expenses|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.

<tab name="50% Tax Rule Example" collapsed>''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, [[banquet]]s, and most big events don’t need to worry about the 50% rule.''

<tab name="50% Tax Rule Example" collapsed="">''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, [[banquet]]s, 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.''

</tab>

===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.

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.

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::*''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.

:*Follow the [[Committee_Member_Spending_Guidelines|member spending guidelines]] when budgeting

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]]===

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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.

@@ Line 1: / Line 1: @@
+{{PolicyIcon|1=Budget Review Policy}}
+{{DriveIcon|1=http://budget.mcgilleus.ca}}{{CustomIcon|link=https://drive.google.com/file/d/1PcPnuDZowUH8Q0UkJ8c7oiFl0KPT2TTk/view|color=#5FB56E|icon=fal fa-file-spreadsheet|popup=Budget Template|hover=View Template}}{{FinanceBar}}
 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 record]]s, and the [[EUS record]]s.
 ==How to Budget==
@@ Line 13: / Line 15: @@
 ==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.
+'''''Always budget pre-tax for expenses and post-tax for revenues.'''''  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.
-<tab name="Budgeting for Tax Example" collapsed>
+<tab name="Budgeting for Tax Example" collapsed="">
-:''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. ''
+:''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 expenses 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). Tax, i.e. 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.
+:*What’s left is the post-tax revenue 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.
 </tab>
 ===Food and Entertainment Exception (50% tax rule)<span id="50% Tax Rule"></span><span id="Food and Entertainment Exception"></span>===
 When [[EUS Groups|a group]] is providing '''''free''''' food / entertainment (restaurants, hotels, beer, pizza, etc.), there is an exception to the pre-tax rule ([[Budget#Revenues and Expenses|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.
-<tab name="50% Tax Rule Example" collapsed>''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, [[banquet]]s, and most big events don’t need to worry about the 50% rule.''
+<tab name="50% Tax Rule Example" collapsed="">''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, [[banquet]]s, 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.''
 </tab>
 ===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.
+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. ''
-<tab name="Taxable Sponsorship Example" collapsed>
+<tab name="Taxable Sponsorship Example" collapsed="">
 ;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.
@@ Line 55: / Line 58: @@
 ::*''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.
+:*Follow the [[Committee_Member_Spending_Guidelines|member spending guidelines]] when budgeting
 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]]===
@@ Line 62: / Line 66: @@
 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.
+{{Financebox}}