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Bookkeeping Spreadsheet Example for Small Business

Kaili is a small business owner who works from home. Her interests include business and finance, and retirement planning.

Bookkeeping Is Key to Small Business

If you have your own small business, keeping good records is a must. In fact, it may even be a requirement for incorporation or licensing. You need to be able to see at any given point whether your business is profitable or not. At tax time, it is even more critical to have kept good business records throughout the year, or you could possibly end up in hot water with the tax authorities.

Set up simple spreadsheets for income records and expense records. If you get into the habit of entering items into the spreadsheets on the day they occur, you will soon find that you form a new habit, and will have good business records to boot. The discussion that follows is meant as a guideline, and the examples are based on someone who operates a small services business (in this case, writing and editing) from their home, and who has no employees.

What Records Do I Need to Keep?

Requirements vary from jurisdiction to jurisdiction, so it is always wise to check with your state or provincial government, as well as the Federal taxation agency, to make certain that you understand what you need to do in terms of bookkeeping.

Generally speaking, for a sole proprietorship, a yearly balance sheet is not required, and keeping spreadsheets is sufficient. You will probably discover that, as the owner of a business, there are laws that compel you to keep your business records for a period of several years. You may also need to obtain a “business number” from the taxation agency for filing taxes applicable to the business.

In terms of keeping your records for tax purposes, you should always make sure that you retain proof to back up each and every entry in your spreadsheets. This is called an audit trail. This audit trail includes items like invoices for your services and receipts for purchases you make. If you use your car at all for your business, you need to record the mileage incurred for business use, the cost of gas, the cost of a license, and repairs/maintenance. Phone and other utility bills, including your internet provider, should also be tracked. Simple spreadsheets that you can set up using software like Microsoft Excel can help you stay on top of it all.

Income Records

There are only a few simple steps needed to set up a spreadsheet to record the income generated by your small business. You can really get into a lot of detail if you wish, but simple is generally better and will keep you from seeing bookkeeping as a chore.

Basically, all you need to do is to record your sources of income. If the income is derived from an invoice you issued to a client for providing a service, note the specifics. Your audit trail or “proof” for these transactions could include PayPal statements, bank statements, and invoices you created for your clients.

The column headings can include whatever you like, but at a minimum should have the date of the transaction or invoice, the name of the client, a description of services you provided, and your sales invoice number (so you can cross-reference and provide an audit trail), and any taxes applied.

You can also create formulas in different cells to keep running totals, or if you are very adept with spreadsheets, you can do things like a link to other sheets. The sample below is provided as an illustration for simple income records.

Income from clients showing invoice number

Income from clients showing invoice number

Expense Records

As with income records, keeping things simple on the expense side will really make this all relatively quick and easy. Record all of the legitimate expenses you incur in your business on the date they happen. Try to use descriptors or expense types like those used by the tax authorities, as this will really help you when it comes time to do your taxes. Some examples include:

  • Advertising
  • Business – use of home expenses
  • Supplies
  • Telephone and utilities

Again, the column headings can include whatever you like, but at a minimum, should have the date of the transaction, the transaction type, the name of the supplier, the amount spent, and any taxes applied. Keep all receipts and bills as proof. You can once again create formulas in cells to keep running totals of different types of expenses. A simple expense spreadsheet is shown below.

Expenses by type with taxes incurred

Expenses by type with taxes incurred

Download an App to Track Expenses

There are also many apps out there that you can download to your android or iOS device that will allow you to keep track of business expenses.

Most of these apps integrate pretty easily to packages like QuickBooks and to Excel as well, giving you peace of mind that all of your expenses are captured. Some apps even allow you to email invoices to your clients—a big time-saver for any small business.

Keep the Bookkeeping Spreadsheet Habit Going

Now, start getting into the habit of spending time on your bookkeeping spreadsheets every day. You will soon discover that it takes no time if you keep on top of it, and at tax time you will be so glad you did.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2012 Kaili Bisson


Kaili Bisson (author) from Canada on June 17, 2012:

Thank you stars. Not something any of us prefer to do, but it is so important to know where your money is going and to be ready for tax time!

stars439 from Louisiana, The Magnolia and Pelican State. on June 17, 2012:

Wonderful hub to keep up the budget. GBY

Kaili Bisson (author) from Canada on June 14, 2012:

Hi cashmere and thank you for the feedback. You are lucky about the taxes :-)

cashmere from India on June 14, 2012:

Nice spreadsheet samples. I use something similar but since I'm not really working, there are no taxes to pay:) Have yet to earn enough to be taxed...

Kaili Bisson (author) from Canada on June 13, 2012:

Hi Susan and thank you. Yes, there are always things that need doing that are way more fun than bookkeeping. I find that if I don't enter things right away, it all just gets away on me.

Susan Zutautas from Ontario, Canada on June 13, 2012:

I keep books for my husbands business and I hate it. What can I say. I tend to procrastinate and leave everything to the last minute. I know this is the worst thing to do.

Your hub is really useful though.

Kaili Bisson (author) from Canada on June 07, 2012:

Thank you Simone...I say the easier the better when it comes to things I don't necessarily want to do :-)

Simone Haruko Smith from San Francisco on June 07, 2012:

Boy, is this ever useful! I've never really been in a position to keep income records and expense reports for a business- it's good to know what the starting points are.

Kaili Bisson (author) from Canada on June 07, 2012:

Thanks greeneryday...yes, once we get at a task, it really isn't so bad :-)

greeneryday from Some tropical country on June 07, 2012:

This a habit that I should be start doing for a long time... thanks for reminding... spreadsheet is so simple... everyone can do it...

Kaili Bisson (author) from Canada on June 07, 2012:

Thank you Global-Chica. It isn't always easy to get into the habit of taking care of business everyday, but as you point out, it can get away on you if you don't.

Anna from New York, NY on June 07, 2012:

You make an excellent point about getting in the habit of updating a budget spreadsheet daily. At one point I didn't do it on a daily basis and completely lost the bubble on the spreadsheet. I had to start a new one and now updating it has become a habit and I do every day so I know exactly where my money goes and where it comes from w/out any discrepancies. Voted up and useful!

Kaili Bisson (author) from Canada on June 06, 2012:

Hi Marlene, and thank you. Many folks don't like bookkeeping, so I can understand you're having hired someone - it is a choice that individuals need to make relative to giving up some profit, and well worth it if the situation is more complicated because the business has employees, owns capital assets, has inventory etc.

Marlene Bertrand from USA on June 06, 2012:

This is excellent information about bookkeeping. It's one of the tasks that I don't like doing. So, when my daughter was in high school, I hired her to do my bookkeeping. She did a great job. But, when she went away to college, it was left up to me to do. I did it for one week and then hired an accountant. The job had to be done, and it was worth giving up a little profit to have someone else do it for me.

Kaili Bisson (author) from Canada on June 06, 2012:

Thanks long as somebody is doing it, that's all that matters :-)

Jo Alexis-Hagues from Lincolnshire, U.K on June 06, 2012:

I'm rather useless at record keeping but my husband is quiet good, just as well. a good informative hub. Voting up