Small Business Accounting`s Using Guide on Excel Spreadsheets

Managing daily expenses is one of the most crucial duties for every small business. The practice of tracking everyday commercial activity is known as bookkeeping. A sound bookkeeping system helps keep your company’s finances structured all year. 

Some companies use accounting software or a bookkeeper to handle their bookkeeping. You may save money by creating an accounting system in Excel if you’re a small company owner now or are just starting one. 

Most likely, you already have access to the software. Here’s a look at how to use Excel to handle small company bookkeeping like a pro.

Increase Your Knowledge of Microsoft Excel

These are extremely fundamental accounting ideas and Excel applications, and they should provide you with enough knowledge to start your small business’s accounting operations. Excel does, however, include a wide range of other accounting-related capabilities. 

As you gain experience with the software and accounting, you’ll be able to utilize it to create reports, anticipate spending, and create your financial sheets for reporting and analysis.

Excel Bookkeeping: How to Create It

Create an entity that may seek the assistance of accounting specialists while creating an excel template for documenting transactions by the requirements. 

If you quickly learn how to do this, then you will never have a problem with deducting a 100 dollar instant loan that you may have to take someday.

Create an accounting chart for logging and classifying transactions by the kind of company. 

A chart of accounts often falls into one of three categories, which are:

1. Income

To determine how much money your firm has made and spent during a certain time frame, utilize the data from your transactions spreadsheet in this section. 

As a result, a cash flow statement and subsequently additional financial reports like an income statement and balance sheet may be produced using the information.

2. Transaction

Here you should keep track of every transaction your company does. The date, description, account, and transaction amount are only a few pieces of data to record. 

One worksheet can contain all of your transactions, or two worksheets — an income report and an expense report — can contain all of your transactions. 

Our free Excel bookkeeping template consolidates all transactions onto a single sheet for ease of use.

3. Chart of Accounts

All of the categories for your transactions go here. Your income, expenses, and sale charges are all kept in this account, in essence. In addition, the U.S. The Small Business Administration provides detailed advice on this.

These products differ across companies. For instance, a firm that has borrowed money for its operations will incur interest costs. 

Contrarily, a business with no loans won’t have any interest payments to make. As a result, you wouldn’t anticipate it to incur interest costs.

Enter all the categories that apply to your business in this section. All you have to do is create a list of all the revenue streams, cost of sales, and expenses for your business.

Remember that because various businesses have different sorts of transactions, your chart of accounts won’t be precisely like the one shown above. In light of this, feel free to add or delete accounts as needed. 

Overall, you may use this page as a reference to help you remember how to classify all of your transactions.

Formulas and Accounting Formats

Excel has built-in formats and algorithms that may be used to assist in accounting. When you highlight the cells you’re working with and then left-click on them, a menu will appear. 

Select the “Format” option, then select the “Accounting” option from the “Number” tab. With a dollar sign added automatically, this formats the cells you marked in an accounting format.

Additionally, it surrounds negative amounts with parenthesis so that you may input them while lowering any accounts. 

Of course, this requires a very good accountant who can do everything competently. For example, according to Statista, 65% of entrepreneurs are going to buy accounting services.

Which services are you most likely to use in 2019?


You may add your total assets, total liabilities, and total equity using the sum function. This will assist in balancing your accounts utilizing double-entry, accrual-based accounting, where assets are equal to the total of liabilities plus equity.

Advantages of Excel For Accounting

Improved Data Input

You won’t find a tool more suited to bulk data input than Excel, and I don’t mean to diminish the simplicity of use that has come to be expected in small company accounting software.

Excel experts are aware that macros may complete hours of labor in a matter of seconds. 

The creation of macros by business owners helps automate processes including formatting, filtering, and performing simple analyses.

To take advantage of Excel’s features, a macro setup is not necessary. Excel continues to be one of the finest ways to import huge transaction datasets into your accounting software, as we’ll see below.

Financial Analysis

The financial analysis doesn’t always include calculating a set of accounting ratios to determine how profitable your business is. 

If you learn best visually, use Excel to make pie charts that display the financial activity of your company.

Visuals are frequently used in yearly reports from nonprofit organizations to explain how their funds are used. Similar reports may be prepared by for-profit businesses when courting investors.

Simple sharing

Excel is the de facto standard for accounting. Sending a PDF or Excel file to a lender or investor is the best option when you need to share financial information with them.


  • Since accounting staff members may customize data preparation in Excel, they run the risk of presenting management with biased data.
  • The right formula must be entered since it must be manually inputted in Excel. As a result, if a technique is done incorrectly, the outcome will vary, which will have an impact on how decisions are made.
  • Hackers can quickly breach Excel bookkeeping at a business since it is less safe than data upkeep in accounting software.
  • When a significant volume of data is input into Excel, the procedure takes a long time.
  • Data from bank software or other software cannot be imported into Excel, in contrast to accounting software, which can do it automatically.


For firms in the early stages of operation who don’t want to increase their costs by hiring competent personnel or acquiring accounting software, bookkeeping with Excel is beneficial. 

Compared to entering transactions into accounting software, maintaining accounting transactions in Excel is simpler. 

However, because there is a greater likelihood of mistakes, it is less secure and invalid for many transactions.

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