“I am not going to fiddle taxes. I pay my accountant a fortune to look after me.” - Harry Redknapp

If you’re a small business owner or a sole trader, you’re probably wondering how you can do your accounting without needing to hire an accountant.

Fortunately for you, it’s never been easier to do your accounting. That said, there are still legal obligations and requirements that you have to get right before you can start doing your accounts. However, once you get these right, you can do a lot of everyday accounting tasks quite simply with the help of Excel.

Here’s Superprof’s guide to using Excel for your accounting.

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The first thing you need to know when doing your accounts is what you need to legally keep a record of.

What do accounts need to legally include?
You have a legal obligation to include certain data in your accounts. (Source: JESHOOTS-com)

Don’t panic, this information is readily available and there are checklists and guides online to help you.

When it comes to accounting, everything needs to be accurate, especially when you’re sending your stuff to the government for taxes. Good record-keeping will also help you to better manage your business’ finances and make better financial decisions. SMEs and sole traders will want to keep a record of everything they earn, are spending, and their tax contributions.

Sole-Traders

If you’re working for yourself, there are a few records that you’ll need to keep. You’ll need to keep a record of all sales and income, all business expenses, VAT records if you’re registered for VAT, PAYE records if you employ people, and records about your personal income.

Limited Companies

If you’re running a limited company, you’ll have far more records to keep and it’s generally recommended that you hire a professional accountant to help. These records can include records about the company itself, financial and accounting records.

Generally, all of these records must be kept for at least 6 years with certain records to be kept longer if they still apply.

Find out more about using Excel for accounting

Making a Cash Flow Plans and Statements

It’s always a good idea to keep a close eye on your business’ finances. With Excel, you can easily find cash flow statement templates that you can use.

How do you make cash flow plans in Excel?
The Microsoft Office Suite has other useful programs, but Excel is still the best one for doing your accounts. (Source: Pixaline)

This means you just need to fill in the relevant field and all the calculations will be done for you.

Let’s see what kind of things you can do with this kind of spreadsheet.

Start by working out income and expenses. You’ll want to make a list of things like:

  • Revenue
  • Equity
  • Transactions
  • Credits
  • Debits
  • VAT (where applicable)
  • Etc.

Essentially, you need to be meticulous when it comes to bookkeeping and ensure you have a record of what happens to every single penny in your business. Thus, you can work out your cash flow, how much money you have, how much you’re earning, and how much your business costs to run. With all this information, you should also be able to make projections on earnings and predict how much money you can expect to have and make more informed business decisions.

If you’re regularly losing money, you might want to look to professional accountants and financial advisors.

You can also use Excel for your invoices. Similarly, the totals, VAT, etc. can be calculated automatically using Excel. There are plenty of templates available online where you can just add your details and the spreadsheet will do the rest. Automating your invoices can save business owners and sole traders a lot of time.

You don’t need costly accounting software to do certain calculations. With a bit of patience and know-how, you and Excel can take care of everything.

While all this may seem a bit overwhelming at first, just take your time, study how to do it correctly, and use templates to help you. Just make sure any templates you do use include all the relevant information required for businesses or sole traders in the UK. After all, not every template is made with the practices and laws of the UK in mind.

Learn about the advantages of using Excel for accounting

Accounting with Excel

There are two main parts to accounting with Excel.

How do you do your accounts in Excel?
Rather than using a pen and paper, Excel can speed up and streamline your bookkeeping. (Source: Shutterbug75)

The first part is creating a spreadsheet. Depending on the information you’re going to need, you need to choose how to layout and set up the spreadsheet. Again, there are templates to help you with this. This is where you’ll insert the formulae and calculations.

Once you’ve created and set up your spreadsheet, you can start filling in your information. This is when you’ll take the information from the real world and put it into your spreadsheet.

Business owners and those with more complicated accounting requirements might want to ask a professional accountant to help them with setting up these kinds of systems, protocols, and spreadsheets. With a good spreadsheet, you just have to type in the numbers or import data from reports and statements and let Excel take care of the rest.

With the right protocols, you should be able to:

  • Set up financial business plans
  • Manage a bank account
  • File taxes
  • Set up payments and direct debits
  • Manage expenses
  • Manage the treasury
  • Maintain financial records

Planning and organisation are key when it comes to accounting and the right type of spreadsheet can help you with this.

Check out the best Excel accounting templates

Learning About Accounting

Not good with numbers? Have you started a business without the faintest idea about how accounting works?

Should you study accounting?
While you mightn't need a degree in accounting or finance, it's still a good idea to learn about it if you're a sole trader or running your own business. (Source: StockSnap)

Don’t panic! Even absolute beginners can learn about Excel and how to use it for their business.

Would you like to do your accounts?

It’s recommended that you get some training or learn how to use Excel to do your accounts. Fortunately, there are a few ways to do this:

  • Night classes
  • Professional training
  • Online courses
  • Online tutorials
  • Private tutorials
  • Private tutoring websites
  • Etc.

With the right training, you should be able to do your bookkeeping. You’ll quickly learn how effective Excel can be for this. Of course, your level will need to match the type of accounting that you need to do. You won’t want to be running the accounts of a multinational corporation with absolutely no training but a small business owner should be able to get by after a few lessons.

Hopefully, you now have a better idea of how accounting can be done with Excel. Just remember that you need to be meticulous and ensure that you meet your legal requirements as a sole trader or business.

Discover Excel's best features and functions

If you're interested in learning more about Excel, accounting, or finance, consider getting in touch with some of the talented and experienced private tutors on the Superprof website.

There are plenty of private tutors all over the country and around the world offering tutoring either face-to-face, online, or in groups. Since each type of tutoring comes with its advantages and disadvantages in terms of learning approach and cost, think carefully about which will be best for you and your goals.

Face-to-face tutoring allows the tutor to focus fully on their student and also allows them to tailor their lessons to the student. Of course, this bespoke service comes at a cost and one-on-one tutoring tends to be more expensive than the other types available. However, it's usually the most cost-effective since the tutor will spend every minute of every session working with their student.

Group tutorials are great for those on a budget as you can share the cost of the tutoring with the other students in attendance. While group tutoring isn't as tailored as one-on-one tutoring, it can be useful for those who learn well from their peers or prefer a more social atmosphere while they learn.

If you can't find any suitable or available tutors in your local area, you can always broaden your search to include online tutors. As long as you have a webcam and a decent internet connection, you can learn almost anything from private tutors all over the world. With academic subjects like economics and finance or computer-based subjects like IT and using Excel, online tutorials can be just as effective as face-to-face tutoring.

Don't forget that a lot of the tutors on Superprof also offer the first lesson or session for free. You can use these sessions to try out various tutors before deciding on the one that's right for you. Of course, rather than just contacting every single tutor and arranging a free lesson, we recommend thinking about what you're looking for in a tutor and only contacting those that meet your criteria.

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Joseph

Joseph is a French and Spanish to English translator, language enthusiast, and blogger.