How to Do Bookkeeping for Small Business in Excel: 6 Methods

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Liabilities refer to money you owe that will leave your business and get paid to another party at a future date. As procrastination-worthy as it may seem, bookkeeping is a necessary example of small business bookkeeping part of successfully running your business. With this type of service, you can communicate completely by email or phone without having to set aside time to meet in person.

Accounts Receivable

Your accounting data can be tightly integrated with numerous related apps and functions, like CRM, customer service, and email. Single-entry bookkeeping is great for small businesses and functions flawlessly in Excel. In such cases, a double-entry bookkeeping system is necessary for tracking cash flow and reducing the possibility of fraud and errors. Simply put, single-entry bookkeeping revolves around recording one side of transactions, unlike double-entry accounting, which records debit and credit. A cash account is one where all of your business transactions pass through to track all of your financial activity.

Think of this account as one that represents the money that your business owes in the form of bills and invoices from vendors.
All you have to do is fill in the blanks and select from lists of variables like customers and items.
You can look back, see patterns, and even draw comparisons with previous business years.
It’s packed with useful tips on how to get started, what to look for when choosing the right software and much more.
As a small business owner, you have the option of hiring an accountant, recording transactions by hand or using an accounting software to record your business transactions.
If you’re planning to do your small business accounting with Excel, this is one of those times.

How Do I Set up a Small Business Accounting System?

Maintaining bookkeeping tasks is essential for the stability and success of small businesses.
Bookkeeping is how businesses, entrepreneurs, and decision-makers monitor a company’s overall financial health and activity.
If you’ve used Excel before and know how to get around it, you can build your Excel bookkeeping template from scratch.
Small business accounting software can generate them, but you may need an accounting professional to analyze them and tell you in concrete terms what they mean for your company.
At the end of the accounting period, take the time to make adjustments to your entries.

For example, you can create an Excel spreadsheet for accounts payable, accounts receivable, employee salaries, revenue and expense transactions, etc. Bookkeeping in Excel involves using Microsoft Excel to record transactions and financial data https://www.bookstime.com/ for your small business. With the Excel bookkeeping system, you can record different types of transactions to and from your business bank accounts. Keep in mind, single-entry bookkeeping’s simplicity doesn’t allow for GAAP conformation.

Best for Larger Small Businesses

The accounts are extracted from the ledger and arranged in a report. To prepare a profit and loss statement, first include all the revenue your business made during that period. Finally, subtract your total expenses from your total revenue to get your bottom line. The double-entry bookkeeping method, on the other hand, is usually used by businesses that want to expand or do need more nuanced reporting.

Once you fill in the blanks to create a customer record, for example, you never have to look up their ZIP code again. When you need to reference a customer in a transaction, they appear in a list. Wave, also sometimes known as Wave accounting, is the best free accounting software, although it’s not as free as it used to be. It now costs $8 per month if you want the ability to scan and upload expense receipts, a feature many other small business accounting apps offer for free. Wave’s core accounting features are free, and they’re good enough for many small businesses.

Best for Very Small Businesses

Business accounting software and modern technology make it easier than ever to balance the books. A platform like FreshBooks, specifically designed for small business owners, can be transformational. Despite the importance of accurate bookkeeping practices, most people don’t feel entirely confident with maintaining detailed business finances. Whether it’s a lack of interest or knowledge, many businesses outsource this process to a professional bookkeeper to ensure accurate and healthy finances all around. A small business can likely do all its own bookkeeping using accounting software. Many of the operations are automated in the software, making it easy to get accurate debits and credits entered.

Some CPAs and bookkeepers require a retainer if you want monthly assistance, but many simply charge by the hour. When starting your small business, chances are that you will need to borrow money at some point. When we talk about offline payments, we are referring to payments done with a check, or cash.

Compile a Chart of Accounts

Bookkeeping over the course of a few years also makes it easier for you to estimate how much tax you’ll owe.
Accounting software can streamline your bookkeeping process and make your financial management more efficient.
This bookkeeping example is just for one type of income and one type of expense.
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Ideally, you also want to find a bookkeeper or accounting firm that has experience in your industry.
Under double-entry bookkeeping, all transactions are entered into a journal, and then each item is entered into the general ledger twice, as both a debit and a credit.

Very small businesses can use it for basic money management, like sending invoices, monitoring financial accounts, accepting payments, and tracking income and expenses. More complex companies can add advanced tools that include projects and proposals, mileage and time tracking, and reports. This basic cash flow statement tracks the movement of money in and out of your business and compares financial data between time periods. The template lists example cash receipts, payments, operating expenses, and additional costs. Use this template to review each item and determine the overall month-end cash position for each time period.