Do you want to transfer historical records and data into the business accounting software or only include new business transactions going forward?.If you start using an Excel bookkeeping system and later switch to accounting or bookkeeping software as your business grows, you will need to make two key decisions: Switching from Excel bookkeeping to accounting software is a hassle. For each transaction, you would need to manually enter the data twice, greatly increasing both the completion time and the opportunity for human error. However, this level of detail is very difficult to maintain with a simple spreadsheet. Most businesses should use a double-entry system: Unlike single-entry accounting, double-entry records give sufficiently detailed information to build key financial statements. For example, in double-entry accounting, if you pay a vendor $100, you would record it as a $100 debit to the liability you owe the vendor and a $100 credit to the business’s cash. Double-entry accounting (or, double-entry bookkeeping) records each transaction twice, as both a credit and a debit.Single-entry accounting (or, single-entry bookkeeping) only records each transaction once, with income transactions recorded as a positive amount and expense transactions recorded as a negative amount.There are two main approaches to keeping financial records: single-entry and double-entry. Performing double-entry accounting is extremely difficult in an Excel bookkeeping system. In comparison, accounting software can automate many bookkeeping processes, allowing you to spend less time (and money!) on manual tasks and keep more accurate records. Manual work is much more error-prone than automated processes, so you will also need to factor in time to review your bookkeeping and fix errors, such as data entry errors or missing records. Formulas can automatically calculate some values, but you will still need to manually enter most data into the Excel sheets.įor growing businesses that are processing increasing numbers of transactions, this can quickly mean spending several hours each week on data entry alone. Managing an Excel bookkeeping system takes a lot of manual work.Īlthough you won’t need to spend time learning a new system, Excel bookkeeping actually creates more work for you or your bookkeeper on a day-to-day basis. Creating all the necessary records and setting the right formulas is a significant time investment. Even with Google Sheets and Excel templates available to download, you still need to customize your bookkeeping spreadsheets there is no one-size-fits-all Excel bookkeeping template for every startup or small business. If you manage your bookkeeping with spreadsheets, you have to build each of these manually. Accounts receivable, including sales invoice tracking.Income statement, or Profit and Loss statement (P&L).Creating an Excel bookkeeping system is time-consuming.Ī number of records, reports, and organizational methods are essential to a startup bookkeeping system, including: ![]() However, Excel bookkeeping can limit the growth of your business in four key ways, so we recommend implementing business accounting software as soon as possible. If your startup is in the very earliest stages and only needs to handle a few cash transactions, Excel can be a useful stop-gap while you’re choosing and setting up specialized accounting software like QuickBooks. Plus, spreadsheets are common tools with which most people already have some experience, so you won’t need to spend much time learning how to use them for bookkeeping. Because most Microsoft Office packages include Microsoft Excel as standard, and Google Sheets are free to any person with a Google account, it likely won’t cost your business any extra money-and you won’t need to commit to an additional contract. ![]() When you’re just starting a business, using Excel spreadsheets to build your bookkeeping system can seem appealing. Why A Complete Excel Bookkeeping System Isn’t The Right Choice Read on to learn how Excel bookkeeping measures up against accounting software and which tasks it does make sense to manage with spreadsheets. While Excel is useful for some specific bookkeeping tasks, we strongly recommend against building an entire bookkeeping system in Excel: It won’t provide your business with a good foundation to scale, and you’ll likely find that this method causes more problems than it solves. If you’re thinking about using Excel for your company bookkeeping, there are a few things to know.
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