Small Business Success — An Easy Way to Keep Track of Your Income and Expenses

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Recording all income and expenses is essential for every small business.

Here is an easy way to keep track of your business income and expenses using Excel, OpenOffice Calc or other spreadsheet software.

First of all, set up two separate spreadsheet files and name them:

  • Income for the current year
  • Expenses for the current year.

The majority of your business income will come from sales but you may also derive income from other sources.

All your income needs to be recorded.

Try to get into the habit of recording it on a daily, weekly or monthly basis, depending on your volume of sales.

If you have a lot of small sales, it makes sense to set up separate spreadsheets to record your weekly or monthly income.

If, however, you have a fairly small number of large sales over the course of a year, one spreadsheet should be sufficient to record all your income.

In each income spreadsheet, create the following column headings:

· Invoice Number

· Date of Invoice

· Name of Customer

· Amount.

You could also add other columns with additional information, such as the item(s) sold, the name of the project, or a short description of the work completed.

As soon as you raise an invoice, store a paper copy of it in a file that is separated into 12 sections, one for each month. For more information on how to organize your paperwork, see Small Business Success - an Easy Way to Organize Your Paperwork.

When you’re doing your bookkeeping, take out the invoices for the past week or month and enter the information for each invoice into the spreadsheet.

Look through your business bank account statements to check for extra income that hasn’t yet been entered into the spreadsheet. For example, you might have had some miscellaneous income, such as a refund.

If you receive income through PayPal or other online payment providers, don’t forget to include it in your records, recording the date on which you received each amount.

When you transfer your income from your PayPal account to your bank account, ensure that you transfer the exact amount in order to avoid confusion and to make it easier to track your income in your bank account.

In your expenses spreadsheet, set up twelve separate sheets labeled with the months of the year. Within each sheet, type the following column headings:

  • Date — this should be the first column on the left hand side.
  • One column heading for each type of expense you normally incur — for instance, travel, software, postage, stationery, and so on.
  • Total — this should be the last column on the right hand side.

Use the SUM function to total each column and row. Once the data is entered, you’ll be able to see at a glance how much you’ve spent in each category and your total monthly expenditure, which will be the total of the last column on the right hand side.

As soon as you incur a business expense, place the invoice or receipt into a file which has 12 different pockets marked with the months of the year (see Small Business Success — an Easy Way to Organize Your Paperwork).

When you’re ready to do your bookkeeping, take out all these paper invoices and receipts.

Open the expenses spreadsheet for the current month and enter the date and amount of each expense into the relevant columns. So, if you have a receipt for a flight, enter its date in the first column, followed by its amount in the “travel” column.

Continue in this way until you’ve recorded all your expenses.

If you’ve recently started your own business, the task of bookkeeping can seem daunting.

Setting up a system for recording your income and expenses will help you to do your bookkeeping as quickly as possible, leaving you with more time to develop your business.

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