What are the basics you depend on preparing budget for the first time?

In the startup phase, you will have to make reasonable assumptions about your business in establishing your budget. You will need to ask questions such as:

• How much can be sold in Year 1?
• How much will sales grow in the following years?
• How will the products and/or services you are selling be priced?
• How much will it cost to produce your product? How much inventory will you need?
• What will your operating expenses be?
• How many employees will you need? How much will you pay them? How much will you pay yourself? What benefits will you offer? What will your payroll and unemployment taxes be?
• What will the income tax rate be? Will your business be an S corporation or a C corporation?
• What will your facilities needs be? How much will it cost you in rent or debt service for these facilities?
• What equipment will be needed to start the business? How much will it cost? Will there be additional equipment needs in subsequent years?
• What payment terms will you offer customers if you sell on credit? What payment terms will your suppliers give you?
• How much will you need to borrow?
• What will the collateral be? What will the interest rate be?

You have to be realistic in approach in projecting not just the expenses but as well as the company/business' Financial income.

The first step will be gathering information as much as possible about the product or services. This should be done when we are going for budjeting for the first time as we dont have past recod or date to refer from our end.futher we may come accross the expected expenses and incomes. 

Gathering information, Record all information, list of monthly expense,Break expense into catagory (Fixed&Variable),total monthly income and e xpenese.

preparation of budget for the first time should be conservative approach in the sense that it is realisable and reasonable.

Your budget tybe is Zero Based Budget, you should to start to ask for Sales budget first then production budget then cost budget after that you can to start in finance budget depending on these departments budget it inclode capital, resources and cash flow.

previous years data must required for budget preparation 

Budgeting has to do with preparing a financial plan on how fund is being expected to flow into the enterprise and how expenses are expected to be incurred.  The whole essence of budgeting is to ensure control, i.e that only expenses provided for in the estimates are incurred especially in the areas of expenditure budgets; and sales targets are exceeded.

Another essence of budgeting is to ensure good monitoring of sales budgeted for  and sales actually realized. Such that where there is a major variation, an investigation could be carried out to see the reasons for the major deviations.

The determination of the financial plan allows one to determine in advance whether the entity will have enough resources to do the things needed to be done.

However, the basis one depend on preparing budget for the first time will be

Availability of resources (material, labour, sales)

The past records  of sales (if any)

The present trend of events (New expectations based on advertisement / marketing)

Government policies in place affecting the business.

Past records of expenses

Current trend of expenditure

New government policies

first of all i have to gathered the information ( Sources of Income). Then create the list of expenses which will be incured during the period. then break down all the fixed & variable expenses.

There is a trend today in many companies to do zero base budgeting i.e. to ignore historic data. I believe the historic financial data is basic to any budget then you additionally need to make provision for those factors like current economic trends in the country to make the budget meaningful.

We should have projected income, list all expenses * break expenses into categories*, make adjustments to expenses, cut spending , review the monthly budget, lastly , balance your budget.