Bookkeeping Spreadsheet Example for Small Business
If You Own a Business, You Can't Ignore Bookkeeping
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.
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, 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
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:
- Business – use of home expenses
- 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, name of the supplier, 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
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.
How Long Does It Take to Form a Habit?
It actually takes at least 2 months to develop a new habit. But don't despair! A few minutes a day is all it should take to add a few entries in your spreadsheet.
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