How to Create a Simple Bookkeeping Spreadsheet for Your Business

How to Create a Simple Bookkeeping Spreadsheet for Your Business

In businesses and other organizations, bookkeeping, or the practice of recording financial transactions, is a part of accounting. 

Source documentation is required for all business deals, transactions, and other occurrences. 

By checking receipts, making bank deposits, and keeping neat records, bookkeeping ensures that all financial information is available when needed. 

Since a business requires precise financial records to be successful, bookkeeping is crucial.

By monitoring your company's finances and activities, you can make sure that it continues to operate within the set budget. 

Each transaction will influence the financial resources your business uses. Using a spreadsheet, you can see every one of your transactions in one place. 

Keep a few things in mind, especially if you want to make your bookkeeping spreadsheets.

Start by using a template that contains a chart of accounts, transaction sheet, and income statement page if you wish to utilize Excel to manage your basic accounting. 

You may modify, download, and use this template to organize and keep track of your routine transactions while developing your own Excel bookkeeping system. 

Because performing your company's bookkeeping in Excel will take a lot of time and effort, many business owners might want to consider investing in bookkeeping or accounting software solutions.

Why Should Excel Be Used for Bookkeeping in Your Small Business?

Even though Microsoft Excel has been around for a while, businesses still use it because it is easy to use. 

Excel may be used for a variety of tasks, including bookkeeping. Businesses throughout the world employ spreadsheet-based technologies. 

Online Excel training is furthermore easily accessible if you and your company want it. 

Another advantage of Excel is the chance that it is already installed on your computer, as mentioned. 

If not, you may download it for a small fee. Excel is less expensive than widely used accounting programs or hiring a bookkeeper.

One of your business's most important financial responsibilities is maintaining accurate records. 

Other essential financial tasks include consolidating transactions and meticulously documenting everything. 

Bookkeeping, which keeps you in charge of your money, organized, and ready for any growing financial commitments, is the primary accounting technique for businesses.

However, if your company is small or brand-new, you can use Microsoft Excel, a program you probably already own, to develop an excel bookkeeping system. 

While some business owners prefer to use accounting software or hire a professional bookkeeper, you can choose to manage this yourself if your company is small or new and established.

You'll be glad to know that Microsoft Excel is fairly user-friendly and that many templates are available to aid you if you decide to use it for your basic bookkeeping. 

So, to help you get started, we'll explain how to manage your small business bookkeeping in Excel, what the limitations of the spreadsheet system are, and then specifically, how to set up your accounting system in Excel.

After defining what Excel bookkeeping entails, let's talk about the steps you'll need to take to create your strategy for your business owner.

1. As a first step, develop an accounting Excel sheet template.

You can build your own bookkeeping Excel file from scratch if you've used Excel before y making a Blank Workbook in Microsoft Excel. 

In the section at the bottom of the open Excel worksheet, you may add new Workbooks. 

If your objective is to keep track of your costs and revenue, diaries should be a component of your strategy. 

You should also include certain fundamental details in the template's top row, such as the transaction's date, account description, amount, and purchase. 

Double-entry spreadsheets feature extra sections because they report diverse commercial transactions.

2. Purchase Records

When recording the transactions each month, don't forget to add to the type lists you need. 

It is useful to include a section for bills in your workbook. Even if you can discover this in other programs like Microsoft Word, you may copy and paste the numbers into your invoice sheets for even more information to refer to.

Make sure your bookkeeping procedure is as straightforward as possible before looking at your company's financial accounts. 

The simplest method to achieve this is to use a business checking account to separate your personal and work finances. 

If you keep your personal and corporate cash in the same place, you risk overcomplicating your financial situation. 

Differentiating between personal and corporate activities may be difficult, making bookkeeping more difficult and heightening tension and concern before tax season.

You can monitor your company's cash flow if you have a separate business account. 

This provides access to finance that is exclusively available to businesses, asset protection, and tax advantages. Additionally, clients will think well of your company if you have a corporate checking account.

3. Choose the accounting technique you want to employ.

Businesses utilize both accrual accounting and cash accounting extensively. 

When you reveal your company's revenues and expenses, it matters. When implementing cash accounting, receipts and expenditures must be recorded as they are incurred. Revenues and expenses are tracked as they are incurred using accrual accounting.

A third, more contemporary accounting method is Profit First. The Profit First accounting system offers to distribute money in the other direction, completely upending the concept of current accounting. 

The primary premise of profit-first accounting is that businesses should pay themselves first before determining how much they can spend on operating expenses.

4. Make an accounting chart.

You need to make a chart of accounts as your first spreadsheet. The accounts that have been set up in your bookkeeping system are listed below. 

A chart of accounts may be used to keep track of all financial activities. When you submit transactions, they are grouped into one of the groupings that each account displayed on this page stands for. 

Most designs have fully specified accounts, but you'll need to make some adjustments to make it work for your unique business. 

Each account requires a sort and a number (revenue, spending, or cost of goods sold).

5. Make a statement of income and expenses.

The next step is to create a cost and income sheet. These might be kept on different pages or on the same page (or tabs on the same spreadsheet). 

Using this form can assist you in achieving your aim of maintaining accurate records, which is essential to a robust bookkeeping system. 

Transaction revenues should be recorded on this sheet as they come in. Paper and digital receipts are the two most used types. 

Making file systems for them both seems logical. Paper receipts should be kept in a file that is alphabetized or organized by date. 

They can also be photographed and digitally stored alongside your other e-receipts. Choose a strategy that works for you and be steadfast with it.

6. The creation of optional accounting reports

Depending on your business type, you should expand your accounting by creating more Excel spreadsheets to help you assess your company's financial health. 

There are several corporate reports, but these three are the ones you should first consider including in your Excel bookkeeping system.

7. Describe the cash flow predictions in the report.

Once more, Excel is an excellent tool for managing bookkeeping for small businesses. 

You cannot create an accurate cash flow statement to present to potential investors using a spreadsheet tool like Excel. 

You may still forecast your cash flow from month to month using a straightforward spreadsheet for the sake of your company planning.

You may copy and paste a cash flow monitoring template onto a new page you make in your master document, just like you did with the tracking invoice sheet. Better still, you can design your particular tracking sheet.

8. On your computer, the file has to be saved in a secure location.

Once you've edited and added to each of the individual pages in your main Excel bookkeeping document, be sure to save the file in a safe location on your computer or CD.

In contrast to many cloud-based software tools that retain your data and let you log in and out of the platform using any web browser, using Excel for basic bookkeeping limits your access to your system to this one file.

As a result, you must ensure the file is secure and yet accessible when you need it to do routine bookkeeping tasks.

Excel Bookkeeping Tools: How to Use Them

You must start utilizing the Excel-based accounting system you created for yourself. Let's explain how that process operates:

1. Entry of Transactions and Categorization

You may have noticed that we omitted to update the transaction page while discussing how to set up an accounting system in Excel. 

How accurate is this accusation? Contrary to the other pages, the transaction page won't need to be changed until you start using your system.

In reality, maintaining your basic bookkeeping in Excel will largely include entering and classifying transactions. 

In light of this, you must use the below procedure to record and classify each transaction:

2. Obtain a copy of the transaction's history

To gather the data required for your Excel bookkeeping system, you'll need a record to consult every time a transaction occurs. 

This document might be a credit or bank statement, data from your PayPal account, or a cash payment receipt.

Enter the date. You should enter the date the transaction was recorded in the relevant field by the information you have.

Give the transaction details and a category. The next step is to include the relevant account in the appropriate column. 

By the categories you've chosen for your chart of accounts, you should input the type of transaction, the amount, and the category. 

Please verify that the category appears in the accounts chart exactly as entered.

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Therefore, as we've shown, any business owner may set up their accounting system in Excel by following a few simple steps. 

Despite this, we still advise utilizing a template containing a chart of accounts, activity sheet, and net income page and tailoring this document to suit your business if you want to handle your basic accounting using Excel.

Nevertheless, bear in mind that maintaining your Excel bookkeeping solution will require a significant amount of time and work. 

Therefore, if you're looking for a simpler and more efficient way to manage your company's cash, we advise looking at a variety of bookkeeper or accounting software options and choosing the one that will work best for you.

FAQ’s related to How to create a simple bookkeeping spreadsheet for your buisness

1. Can I use Excel instead of QuickBooks?

Due to the fact that Excel's equations are substantially more reliable than Quickbooks', you may also utilize Excel to perform complex calculations.

2. What spreadsheets do you need for a small business?

  • Microsoft Excel.
  • Google Workspace.
  • Apple Numbers.
  • Quip.

3. What are the five fundamental accounting accounts?

Your finances are organized using a chart of accounts into five categories: assets, liabilities, equity, revenue, and spending.

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