Note from Ashley: this is an updated version of a previous post.
If you're like me - a work-at-home creative with zero employees - then the organizational, accounting side of business might suffer. I mean, who wants to fill in a spreadsheet when there are products to be launched? Unfortunately, the busy holiday season is looming on the horizon, and the end of the year will soon follow. Now, at the end of Summer - the calm before the storm - is the perfect time to get your bookkeeping skills back into shape.
I've written out a simple bookkeeping tutorial, complete with a free template for you to use.
Question: How do we keep our expenses organized? A list or spreadsheet would be nice.
To keep your expenses organized, the easiest thing to do first is look at the Schedule C on income tax form 1040, which tells you exactly which categories you can report on at tax time. Based on what the Schedule C categorizes, try to categorize your expenses in the exact same way.
If you have expenses that don’t fit into the Schedule C categories, just make up your own - there is a space for “other” on the Schedule C. The following is a tutorial, for use with Microsoft Excel or Google Documents, which has an excel feature. This Excel workbook is available for you to download and use with Microsoft Excel or Google Docs. Simply replace the expense titles and income dates as needed to accommodate your own business.
If you have expenses that don’t fit into the Schedule C categories, just make up your own - there is a space for “other” on the Schedule C. The following is a tutorial, for use with Microsoft Excel or Google Documents, which has an excel feature. This Excel workbook is available for you to download and use with Microsoft Excel or Google Docs. Simply replace the expense titles and income dates as needed to accommodate your own business.
Bookkeeping Tutorial:
The following screen caps are done using Google Documents' spreadsheet function. I chose this because it is accessible to anyone who has the internet; you do not need to pay for Microsoft Excel in order to use spreadsheets. You can access Google Docs HERE. Also, you can view my Google Docs tutorial for more assistance.
1. Open a new spreadsheet.
Start with a sheet called "Summary".
In column A, title the cells with your business name; the tax year; your gross sales; your expense categories; total expenses; and net income (gross sales minus total expenses).
Start with a sheet called "Summary".
In column A, title the cells with your business name; the tax year; your gross sales; your expense categories; total expenses; and net income (gross sales minus total expenses).
2. Open a new sheet.
Title this sheet "Income".
In column A, in bold font, title the column "Date".
In column B, in bold font, title the column "Amount". For each sale you make, you will put the date of the sale in Column A, and the total amount of the sale in Column B. At the bottom of column A will be a cell titled "Total". Next to that cell, in Column B, you will have the sum of every cell in Column B.
In column A, in bold font, title the column "Date".
In column B, in bold font, title the column "Amount". For each sale you make, you will put the date of the sale in Column A, and the total amount of the sale in Column B. At the bottom of column A will be a cell titled "Total". Next to that cell, in Column B, you will have the sum of every cell in Column B.
To arrive at a total simply click on the autosum button (looks like an "E"), and it should automatically sum every value above.
3. Open a new sheet. Title this tab "Expenses".
Let's say your expenses are Supplies, Packaging, Advertising, and Website Fees. Columns A and B will be Supplies; center and bold the title "Supplies" between the two columns. Underneath the Supplies title, Column A will be titled "Date" and Column B will be titled "Amount".
Repeat this process with the rest of your expenses, with "Packaging" centered over Columns C and D, "Advertising" over Columns E and F, and "Website Fees" over Columns G and H. At the bottom of Column A, name a cell "Totals".
At the bottom of each "Amounts" column, you will Auto Add every column in the same row as the "Totals" cell.
Let's say your expenses are Supplies, Packaging, Advertising, and Website Fees. Columns A and B will be Supplies; center and bold the title "Supplies" between the two columns. Underneath the Supplies title, Column A will be titled "Date" and Column B will be titled "Amount".
Repeat this process with the rest of your expenses, with "Packaging" centered over Columns C and D, "Advertising" over Columns E and F, and "Website Fees" over Columns G and H. At the bottom of Column A, name a cell "Totals".
At the bottom of each "Amounts" column, you will Auto Add every column in the same row as the "Totals" cell.
4. When both your "Income" and "Expenses" sheets appear to be working correctly you can simply link the totals to the "Summary" sheet.
To do this, just go back to the "Summary" sheet, and wherever you want the total type "=" and then click on the corresponding total on the "Income" or "Expense" sheet, and that amount will flow and automatically update on the "Summary" sheet any time you make a change on the other sheets.
This is the bookkeeping basics for a small, home-based, creative business. This is the exact method I use to stay organized at tax time. You can update it weekly, monthly, quarterly, or even after every sale and expense.
Have any more questions? I have easy access to a very knowledgeable accountant (Mr. She Makes a Home)and I'd be happy to help!
MAde it sound so simple thank you very much.
ReplyDelete