This blog post is going to walk you through the pros and cons of choosing a spreadsheet or a software for your business bookkeeping.
Bookkeeping is non-negotiable if you’re a business owner. But how do we actually do it? Should we use accounting software (that can feel big and scary) or should we fire up a spreadsheet, and try to remember the formulas we learned in high school? (Erhm… =SUM(something, something)…)
Business finances (bookkeeping, taxes, IRS rules + regulations) all feel confusing enough as it is, so I’m here to help you choose the most simple and easy-to-use option!
Let’s take a look at the pros and cons of using either a spreadsheet or a software to track your transactions!
Before we check out our software pros and cons, I want to make it very clear that Xero is our preferred accounting software at Madison Dearly Bookkeeping for many reasons. So when we’re chatting about pros and cons here, we’re talking about Xero specifically!
So which do you choose? I think it varies depending on where you’re at in your business. Let’s explore some examples:
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. A spreadsheet would work perfectly for this stage of your business.
You’ve been designing for a few months, or even a year, and have grown your skills and your client list. It’s time to file for an LLC (to protect your personal assets), and open a separate bank account. This is also the time when you start to consider using Xero, because you filed your first tax return last year that included your business, and it was a huge headache trying to scramble to get everything together for your CPA. But you could also continue using a spreadsheet if you’re only doing 1:1 client work and there aren’t many transactions in your business.
You’ve been in business for a few years and you’ve thought about starting to sell website templates or digital products for some passive income. You have been doing your books yourself, but you’re not always consistent and organized. Knowing that passive income will have more transactions than just your 1:1 services, it’s 100% time to start using an accounting software (and investing in ThriveCart or Kajabi for selling 1:many).
I have an incredible option for you! One of my clients, Elizabeth McCravy, was using her own spreadsheet to do her bookkeeping before we started working together, and then she turned it into a template so other business owners could use it!
The EM Shop Profit Sheet is a Google Sheets template, and it’s simple, easy-to-use and even comes with a video tutorial! It helps track:
I’d love to hear from you on Instagram if this helps you make the choice on which bookkeeping solution to use for your business and season! (And my DM’s are always open for questions!) MDB wants this process to feel simple for you, and we’re here for you once you’re ready to outsource the whole thing!