Small Business Bookkeeping Everything You Need to Know

how to use excel for small business bookkeeping

Sole proprietors don’t legally need a separate account, but it’s definitely recommended. Collaborating with people separated by geography and departments can be inconvenient especially when working on planning, forecasting, and budgeting reports simultaneously. Typically, a spreadsheet ends up being attached and forwarded to many recipients over email. When time is of the essence, this can prove a severe handicap to decision making.

If you’re already using Excel and are ready to upgrade, check out our accounting software directory where you can filter by desired feature to build a shortlist. Excel comes with ready-made templates for all sorts of accounting functions, such as invoices, budgeting, and more. In contrast to accounting software, which can automatically bookkeeping for small business import data from other software, it is impossible to import data from bank software or other software into Excel. Therefore, after adding and deducting income and expenses over the period, we will arrive at a closing balance of $2564. One of the biggest benefits of automated bookkeeping is that it eliminates manual tasks.

Free Small Business Bookkeeping Templates

Master excel formulas, graphs, shortcuts with 3+hrs of Video. It is necessary to enter the correct formula because, in excel, the formula needs to be entered manually. Therefore, if there is any mistake in a procedure, the result will change, which will affect decision-making.

Can Excel be used like QuickBooks?

It's inconvenient for accountants and bookkeepers to work with Excel. Often, they need to input Excel data into bookkeeping software like QuickBooks. It's not a tool for longterm accounting. While an Excel sheet can be incredibly useful for analyzing data, it's not a practical tool for ongoing use.

Each template is free to download, printable, and fully customizable to meet your business needs. If you’ve posted journal entries and general ledger activity correctly, total debits should equal total credits. Post each account’s ending balance from the general ledger into the spreadsheet. Each time that you post a journal entry, post the activity to the general ledger. If you post a journal entry that impacts cash and inventory, you also post the activity to those accounts in the general ledger. At the beginning of each month, post each balance sheet account’s beginning balance in a blank general ledger template. Income statement balances are adjusted to zero at the end of each month.

Accounting basics for small businesses

Go through your check register and find the checks that aren’t included on the bank statement. List the check number and amount in the Minus Outstanding Checks section. Go through your check register and find any deposits that aren’t included on the bank statement. List the deposit date and amount in the Add Deposits in Transit section.

There are plenty of professional bookkeeping systems available, though some businesses may not need the advanced features. If you run a small business with a low volume of transactions, the free accounting software in Excel may be all you need to keep your books in order. Many small businesses who depend on Excel for bookkeeping struggle with cash flow management. You may be earning money but find it tough to forecast and budget that cash within Excel. Excel does not come with reliable cash flow projection tools that you’d find on more advanced bookkeeping platforms. Since poor cash flow management can put you out of business, this is a major drawback. Modern accounting software is more secure for your financial data.

What is an Excel accounting template?

Chances are you already have access to the computer program. Here’s a look at how to do small business bookkeeping in Excel like a professional. Many sites will have free balance sheets to help you keep track of your bank account and credit card statements. Many more will have slots to enter credit card expenses, balance sheets, and simple entry accounting. A balance sheet template is a pre-made accounting statement that looks at all of your company’s total assets and liabilities — as well as shareholder equity. Balance sheets are all about demonstrating the “book value” of your company. To figure out your book value, you need to list all your company’s assets, liabilities, and equity for a given reporting date.

She also regularly writes about travel, food, and books for various lifestyle publications. If you are missing data when you open the report in Excel, it’s likely that the file is in protected view.

Discover how Excel can help transform your small-business accounting.

Accounting spreadsheets require manual entry, so your risk of error is high. Business owners who use spreadsheets may use an outdated version of the program and risk losing documents altogether. And if spreadsheet links contain errors, your data may be incorrect. The benefit of the general ledger is that you can review every journal entry that impacted a particular account. Unfortunately, creating a general ledger using Excel is time-consuming.

how to use excel for small business bookkeeping

Start your business budget by exporting an income statement from your accounting software to Excel. Clear out the numbers and add columns for each month of the period for which you’re budgeting. You want to automatically generate complex financial reports rather than entering data manually on a cash flow or balance sheet template. Generate an income statement and manually create other financial statements like a balance sheet and cash flow statement. One of the most important aspects of bookkeeping is the day-to-day recording, tracking, and reconciling of all of your business transactions.

Why monday.com’s built-in Accounting Template is the only template you’ll ever need

As a business owner having such control over your financial information is an invaluable service. To use excel for bookkeeping, you’ll have to enter everything by hand. This can take a great deal of manpower and working hours.

  • It is worth noting that smaller businesses in the US usually have and use considerably less financial data when than large enterprises.
  • And if you sign up for anExcel course for advanced functions, you’ll be surprised at how much you can accomplish using a spreadsheet program.
  • Before you get started with Bench’s Income Statement template, make sure you understand the differences between single-entry and double-entry bookkeeping.
  • But that can be pretty hard to keep track of — especially if you’re leading a small team and wearing many different hats at any given time.
  • Post debit entries on the left side of each journal entry.

Ask your accountant to verify that you’ve added net income to the equity account correctly. The chart of accounts lists every account number and the account’s description.

Bank Account Reconciliations

The projection tools provided with QuickBooks help small businesses stay organized by helping you quickly see everything you owe and everything others owe to you, all in one location. Accounting software records all your transaction data accurately, providing you a realistic mind frame of business goals. The analytics report gives you a practical idea to plan achievable goals. The historical data, past transactions saved in the accounting software gives you a better idea to fabricate your new profit targets easily. Get a snapshot of your monthly profit and loss report by entering your financial data and selecting the month that you want to view in the dashboard. Review revenue, expenses, and net income before and after taxes with this income statement template. The template accounts for all revenue sources and business expenses when calculating net income.

  • The spreadsheet includes monthly columns for recording forecasted and actual cash flow.
  • Single-entry bookkeeping relies on one-sided accounting, meaning you only record each transaction once.
  • It’s also not possible to automatically categorize transactions in Excel bookkeeping templates.
  • This simple but comprehensive template allows you to create a 12-month cash flow forecast for your small business.

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