This article is general education, not tax, legal or accounting advice. For decisions about your own taxes or records, talk to a qualified professional and check the official IRS recordkeeping guidance.
Not every small business needs accounting software on day one. A well-built spreadsheet in Excel or Google Sheets can show you what came in, what went out, who owes you, and what your bank balance might look like in a few weeks, as long as you know what to track and you keep it up. Here's what a simple bookkeeping template should include, and a weekly routine that keeps it current.
Why a spreadsheet (and when to move on)
A spreadsheet is a good fit when you have a modest number of transactions, a single business bank account (or you're working toward one), and you mainly want clarity on income, spending and cash. It's time to consider accounting software, or a bookkeeper, when transactions pile up, when you add payroll or inventory, or when your accountant asks for it.
What to track: the core tabs
1. Income log
One row for each payment received: date, client or customer, invoice number, category, amount, and payment method. Keep the record (invoice or receipt) where you can find it.
2. Expense log
One row for each expense: date, vendor, category, amount, payment method, and whether a receipt is saved. Use the same categories every time. Your tax professional can tell you which categories line up with the forms you file.
3. Categories list
A short, fixed list (for example: supplies, software, advertising, vehicle, rent, insurance, professional fees). Dropdowns built from this list keep entries consistent, which makes the summaries reliable.
4. Accounts receivable (who owes you)
Track open invoices with due dates and days overdue. Knowing who owes you, and for how long, is often more useful day to day than profit.
5. Monthly summary
Totals by category and month, income minus expenses, and month-over-month comparisons. Formulas such as SUMIFS do this automatically from the logs.
6. Cash flow forecast
Your bank balance shows today. A 13-week cash flow forecast shows the weeks ahead: starting cash, expected money in (open invoices, regular clients), expected money out (rent, subscriptions, loan payments, tax set-asides), and the projected balance each week. It warns you about tight weeks before they happen.
Excel vs. Google Sheets
- Excel: works offline and has strong formula and table features, but sharing depends on your setup.
- Google Sheets: free with a Google account, easy to share with a partner or bookkeeper, and works on any device.
Either works for the structure above. A well-built template uses standard formulas that work in both.
A 15-minute weekly routine
- Download or view the week's bank and card transactions.
- Log each income and expense line with a category.
- Save receipts (a photo in a dated folder is a start).
- Update which invoices were paid, and follow up on overdue ones.
- Roll the cash flow forecast forward one week.
How long it takes depends on your volume. The habit matters more than the tool.
Keep business and personal money apart
Mixed accounts make bookkeeping slower and less clear. If they're mixed today, flag personal transactions in the log so they're left out of the business totals, and talk to your accountant about the cleanest way to separate them going forward.
Illustration: reading the forecast
Made-up numbers: a business starts week 1 with $4,000. It expects $2,500 in client payments in week 3 and has $3,200 of bills due in week 2. The forecast shows a dip in week 2. That's the cue to chase an invoice early or move a payment date, instead of finding out from the bank.
Setting up your template in an afternoon
- Pick a start date, ideally the first day of a month or of your fiscal year, and record your starting bank balance.
- Write your category list before you enter anything. Keep it short. You can split a category later if you need to.
- Enter one month of history from your bank and card statements to test the categories and formulas.
- Check that it ties out: starting balance + income − expenses should match the ending bank balance. If it doesn't, look for missed transactions or transfers logged as income.
- List your recurring bills and expected client payments to seed the cash flow forecast.
Transfers, refunds and owner draws
Three kinds of entries trip up spreadsheet bookkeepers. Transfers between your own accounts aren't income or expenses, so record them in a way that keeps them out of both totals. Refunds you give or receive should reduce the original category rather than appear as new income or spending. Owner draws or contributions (money you take out or put in) aren't business expenses or income. Ask your accountant how they want these labeled so your records match how your taxes are prepared.
Common mistakes
- Letting the log fall months behind, then rebuilding it from statements
- Inventing new categories every month
- Treating your bank balance as profit
- Not setting money aside for taxes. Check the official IRS guidance and a professional for what applies to you.
Templates to start from
- Small Business Bookkeeping Spreadsheet & Cash Flow Forecast: income, expenses, who owes you, and a 13-week cash flow forecast in one workbook.
- Small Business Bookkeeping, Hiring & Operations Template Bundle: bookkeeping and cash flow, plus client follow-up, first-hire planning and a continuity plan.
FAQ
Is a spreadsheet "good enough" for taxes?
Many very small businesses keep their records in spreadsheets, but what counts as adequate for you depends on your situation. Check the IRS recordkeeping page and ask your tax professional.
How long should I keep records?
The IRS publishes guidance on record retention. Follow it and your accountant's advice rather than a rule of thumb.
Want this to run itself?
If entering data by hand is the bottleneck, parts of it (invoice reminders, receipt capture, weekly summaries) can often be automated. See automation services from The Collective.