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Embarking on the journey of managing your own business finances can feel daunting, especially when it comes to bookkeeping. But we’re here to make it more simple. With the right tools and knowledge, you can master the art of DIY bookkeeping right from your Excel workbook. Let’s dive into the essential steps to get you started on the right track.


Step 1: Create Your Template


The foundation of effective bookkeeping lies in a well-designed Excel template. Start by setting up two distinct tabs:


  1. Income and Expenses Summary: This tab serves as your financial statement, summarizing all income and expenses by category. It saves you time by automatically calculating totals, ensuring accuracy and efficiency.


  1. Transaction Categorization: Here, categorize each transaction according to predefined categories listed on your summary tab. Utilize formulas to match transaction categories with those on your summary tab, maintaining consistency and organization.


Don’t have the time to create your own template? No worries! We’ve got you covered with a ready-to-use template available for download. Check the description of the YouTube video for the link.


Step 2: Download Your Transactions


Now that you have your template ready, it’s time to populate it with data. Download transactions from all your business accounts, including bank accounts and credit cards. Most financial institutions offer options to download transactions in Excel or CSV format, making it convenient for Excel users.


Step 3: Categorize Your Transactions


With your transactions imported into Excel, it’s time to categorize them. Copy the downloaded transactions into your bookkeeping workbook and assign appropriate categories to each transaction. Ensure consistency in category names to maintain cleanliness and organization.


Common Categorizing Issues and Solutions


Navigating certain categorization challenges can be tricky. Here are some common issues and solutions to consider:


– Loan Payments: Only a portion of loan payments constitutes an expense, typically the interest portion. Be mindful of accurately categorizing loan payments to reflect this distinction.


– Owner’s Contributions and Distributions: Distinguish between personal transactions funded by the business and withdrawals made by the owner. Ensure clear categorization to avoid confusion and maintain accurate financial records.


– Payroll vs. Owner’s Distributions: Separate owner’s wages from distributions to ensure clarity in financial reporting. Additionally, distinguish between payments to employees and contractors to streamline categorization.


– Meals and Travel Expenses: Deductible meals and travel expenses must have a legitimate business purpose. Maintain documentation and ensure that business-related activities dominate travel days to qualify for deductions.


Seeking Assistance


While DIY bookkeeping can be empowering, don’t hesitate to seek assistance when needed. Utilize resources like Google or even the video below to navigate complex issues and ensure compliance with tax regulations.

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