Accounting management plays a vital role in an organization. Managing accounting for a small business organization can be easy with Google Sheets. Google Sheets is used in accounting tasks such as organizing income and expenses, creating invoices, and performing financial analysis, making it a versatile tool for basic bookkeeping. Accounting in Google Sheets makes your data store secure without any stress. In this blog, we will discuss how to use Google Sheets for accounting purposes.
Top Methods for Using Google Sheets in Accounting
Google Sheets can help with your accounting tasks. whether you are freelancing or simply managing personal finances. Below are some key points to use Google Sheets for accounting:
1. Track income and Expenses
Tracking income and expenses of the business is the fundamental use of Google Sheets for accounting. You can easily see cash flow and understand where your money is coming in and out.
How to Set Up an Income and Expense Tracker
- Create categories, categorize expenses and income into different categories such as bills, wages, sales, etc.
- Input date, description, amount for each transaction you have to include the date, description and the amount of that transaction. You can also add extra columns for payment method or account.
- Summarize totals, Use functions to calculate the total income, expenses and balance for each month.
2. Create Budget
Creation of a budget is essential for keeping your finances in check. The Google Sheet is the best tool for creating budgets. You can input your expected income and planned expenses and easily compare them with your actual numbers to see how you performed in your financial goals.
Easy Steps to Create a Budget Using Google Sheets:
- List Income Sources: You have to add all expected sources of income like salary, investment, etc.
- List expenses: Divide your expenses into the different categories like transportation, food, utilities, etc.
- Set your budget amounts: now you have to add your estimated amount for each category.
- Input actual spend: after making the spending of money, input the actual amount spent in each category.
- Do a comparison: make a comparison table by performing subtraction.
3. Manage Accounts Receivable and Payable
In the business industry the accounts payable and accounts receivable are important factors. Google Sheets helps you manage and create them.
Setting Up Accounts Receivable
Make a tracking table for pending invoices: in this table, you have to include columns for client name, invoice number, due date and payment status.
Track Payments: Mark the payment in the payment status column.
Due Dates: Highlights the overdue payments or you can set up reminders using Google Calendar.
Setting Up Accounts Payable
Make a table for bills: This table will show you the bills that you need to pay. You can track the bills, like vendor payments or loan repayments.
Alerts: The User can use conditional formatting to highlight bills that are close to due dates.
4. Use the Accounting Template Google Sheets
In Google Sheets, you can use templates designed for accounting purposes already made for the users. Using these templates, you can save your time, especially if you’re not familiar with setting up formulas and tables from scratch.
How to use a template:
- Primarily, go to the template gallery in Google Sheets.
- After that, you have to select a template according to your use.
- After that, you can customize the template according to your data.
5. Generate Financial Statements
You can use Google Sheets for the generation of the basic financial statements like the income statement, balance sheet report and cash flow statement.
Set up of the income statement
- Revenue: List your total revenue or sales.
- Cost of Goods Sold: Subtract the cost of production.
- Operating Costs: Deduct the operating costs like rent, utility bills, etc.
- Net Profit: Final result after all expenses are subtracted from revenue, that is net profit.
Balance Sheet
List all your assets on the left and liabilities on the right, and ensure the accounting equation.
6. Monitor Cash Flow
Google Sheets helps you monitor your cash flow with simple tracking and forecasting.
How to Track Cash Flow
- Make a Cash Flow Statement: Track where the cash is coming from and where it is going in an organization.
- Use Formulas: You can use basic functions to aggregate cash movements over time.
- Forecasting: You can create a future prediction of cash flow based on the historical data.
7. Perform Financial Analysis with Charts
In Google Sheets, you can view your financial data in a visualization form, as Google Sheets provides its users with charting options. View charts to identify the trends, monitor cash flow or track budget vs. actual expenses. There are three types of charts: bar or column charts are used in comparing income and expenses, Line charts are used for tracking data over time and pie charts are used for visualizing expense categories.
Creation of the Chart
- Select the data you want to chart.
- Click on the insert chart button.
- Choose the type of chart in which you want to see your data.
Conclusion
Google Sheets is a great tool that manages basic accounting tasks mainly for small businesses. With the help of Google Sheets, users can perform many tasks in a single tool, manage accounts receivable and payable, create budgets and track income and expenses as shown in this blog. Google Sheets helps you stay in control of your financial health and make informed business decisions. Hopefully, reading this blog, your doubts about how to use Google Sheets for accounting are solved.