Do You Need a Bookkeeper… or Just a Great DIY Bookkeeping Spreadsheet?

Bookkeeping is non-negotiable if you’re a business owner. But how do you actually do it? 

Should you fire up a new, blank spreadsheet and try to remember those old Excel formulas you learned in high school? Or should you hire a professional bookkeeper?

Honestly, the right answer depends on YOU and where you’re at in business. That’s why I’m about to break down when a spreadsheet is best, when it’s not, and when you might want to recruit professional bookkeeping help. 

What is bookkeeping… actually?

First, let’s talk about what bookkeeping is. Yup, I’m going back to the basics. Bookkeeping is the process of recording your financial transactions and categorizing them on a weekly basis.

Now, I know some of you are like… wait what? Did you say WEEKLY?

But the more on top of your bookkeeping you are — aka monitoring your income and expenses and account balances — the more financially healthy your business will be.

Now, one of my favorite ways to do bookkeeping is with a spreadsheet. Don’t get it twisted. It doesn’t have to be a massive spreadsheet with a billion tabs and complex formulas.

For the most part, you can keep track of your business books in a spreadsheet by including a column for:

• Revenue (what you bring in once an invoice is paid)
• Expenses (what you pay for each month)
• What’s left (cash in the business)

Now, there are a couple of instances where this is not enough, but I’ll cover those in just a bit.

But is spreadsheet bookkeeping the right strategy for you? Let’s find out. 

When a bookkeeping spreadsheet is all you need

For creatives and online business owners, the idea of paying for one more tool and learning one more system sounds exhausting. I get it, I feel the same.

This is when I usually recommend that you just start with a simple bookkeeping spreadsheet.

If you’re a brand and website designer, and you’re just starting out with some freelance work for friends and family, you’re probably wanting to simply keep track of what you’ve made and what (if anything) you’ve spent. You’re also hoping to save a bit of money and you’re OK with the learning curve that comes from using a spreadsheet.

Is that you? Then, great! A spreadsheet would work perfectly for this stage of your business.

The pros of DIY bookkeeping spreadsheets

• Spreadsheets require manual input of every transaction, which gives you a very detailed view of everything going on in your business.
• You can decide how you want it to look and how you want to use it! A blank canvas and more power to ya with how you want this to go down.
• Because you’re manually entering everything, it makes you feel the weight of each transaction. It’s very similar to the feeling of using cash instead of a credit card when you’re trying to cut back on your home budget spending.

The cons of DIY bookkeeping spreadsheets

• There is a lot of room for human error. You may forget to input a transaction, input the wrong amount, or have formulas that aren’t working correctly. This means that when you reference your spreadsheet to make decisions (think: “Can I hire a team member?” or “Can I afford that mastermind I’ve been checking out?”), you’ll be looking at inaccurate data.
• Spreadsheets can’t link to your bank account or credit card account. This is when I actually recommend a bookkeeping tool, like Xero.
• Spreadsheets also can’t automatically (or quickly) categorize your transactions. Again, this is when I recommend a bookkeeping software like Xero! 
• Using a spreadsheet makes more work for your CPA when it’s time to file your tax return (as opposed to pulling quick P&L, Balance Sheet and General Ledger reports from software).
• It’s not presentable if you’re using your spreadsheet for things like applying for a mortgage or a line of credit.
• Because of its manual nature, the whole data input process could take you longer and take away hours you could be spending elsewhere in your business.
• Spreadsheets don’t have the capability to send invoices or run payroll.

If you want to read more about the differences between spreadsheets and bookkeeping software, click here.

Don’t want to start a bookkeeping spreadsheet from scratch? Use this template.

If you’re pretty sure a bookkeeping spreadsheet is all you need, great. My friend and client, Elizabeth McCravy, used her own spreadsheet to do her bookkeeping before we started working together. Then she turned it into a template so other business owners could use it!

I love Elizabeth’s bookkeeping template so much that I recommend it to pretty much everyone! This Google Sheet template is simple, easy-to-use and even comes with a video tutorial! It helps track:

• Revenue and expenses month over month
• Quarterly profit margins
• Retained earnings
• Tax savings and quarterly tax payments
• How much you pay yourself
• Average profit & expenses for the year
• Total annual revenue, expenses and profit
• How your numbers compare month-over-month to the prior year

You can grab that template RIGHT HERE.

When to hire a bookkeeper

Now, for all of you who are thinking that a spreadsheet — or even a tool like Xero — isn’t going to work for you, let’s talk about hiring a bookkeeper.

Disclaimer: Yes, I am a professional bookkeeper, so I may be a little partial. But I really do think that bookkeeping services can be such a great investment and can even help you grow your business. 

Now, let’s talk about whether or not a bookkeeper is the right investment for YOUR business, right NOW.

You don’t want to touch your books

One of the biggest reasons to hire a bookkeeper? You never want to touch your business books but you know you need someone who will.

Some business owners know, from Day One, that they don’t want to think about their books. They don’t want to think about what’s coming in or going out, or do calculations to find out how much to save for taxes or future business purchases.

If that’s you, kudos. It’s great that you know yourself. And you should probably hire a bookkeeper sooner rather than later.

Why? Because if you know you’re not looking at your numbers, things can get out of hand real fast.

You say you’ll do your bookkeeping… but never do

We all know the struggle. We say we’re going to do something, whether it’s going to the gym more, eating better, or actually doing our bookkeeping…but then things get busy. 

You put it off and it never gets done.

Well, when it comes to your bookkeeping, I really want to caution you against this. Because if you don’t have someone looking at your numbers and really tracking transactions, you can end up in the hole really quickly.

You have a high volume of transactions

The last reason you might want to consider hiring a bookkeeper sooner rather than later? If you have a high volume of transactions.

Most service-based businesses have invoices that are paid before or after a service is provided. While they can have a pretty high number of clients, there aren’t too many transactions happening each month.

If you start selling templates, courses, or other offers with a higher volume of sales, you will have a LOT more transactions to sort through.

That’s when a bookkeeper can help because it can take a lot of time off your plate and ensure that your cash flow and profit margins are where they need to be. 

Want more bookkeeping advice like this? Subscribe to my YouTube channel!

Alright, that’s it for today. We talked about whether or not you can DIY your bookkeeping with a spreadsheet (or even a software tool like Xero), and when to hire a professional.

I’d love to hear where YOU are at in the comments below. 

I’d also love to hear how I did and what sort of bookkeeping info you’d like me to share in the future!

If you check out my YouTube channel, don’t be shy — hit that subscribe button and stay tuned for future videos.