How to Use Google Sheets as your Free Accounting Software for a Small / Start-Up in theUK

This is ideal for a start-up business and maybe a small side hustle where you are testing out a new idea, product or service and don’t want to shell out on an accounting software like QuickBooks or Xero in case the idea does not work out as planned but you want to know how much you have spent and made.

When you have just started a business and are still getting to grips with setting it up, then it makes sense not to jump straight into using an accounting software that will cost money and cost time to set up and learn to use. Hopefully your business will soon become well established and you will be making some income. When that happens, then it will be time to invest in an accounting software like QuickBooks, Clear books or Xero. These dedicated accounting software for small businesses will make your bookkeeping and accounting easier and will handle all your taxes such as VAT, Income Tax. Corporation tax for you easily. They will also meet the statutory requirements by all the required bodies such as HMRC and Companies House (if you operate your business as a Limited Company).

But for now, the one free way of doing your bookkeeping Is to use Google Sheets. If you have a Google Account then this is free (as at the time of writing this ) As an accountant I have to say I don’t find it as powerful and easy to use as Microsoft excel but it will do what you need it to do well at this stage.

So you need to create the a way of capturing all your expenses and income so you can know how much you have spent, how much is coming in and what your profit is.

On a Google sheet create 5 tabs and name them as below:

• Business Details

• Bank Transactions

• Chart of accounts

• Transactions

• Income statement

On the Business details tab you put your business name, the month you started the business or if this is not your first year in business put the accounting period start date. Also include your end date which will usually be 12 months. But it does not have to be. If this is a test project and you are only testing for 3 or 6 months then that will be your accounting period. Example below.

Then you need to create a Bank Transactions Tab. This will be useful if you have a dedicated bank account for your business. Downloading all the bank transactions into this tab will mean that you can link this tab to the transactions tab saving you having to manually enter data reducing errors. This tab is not necessary if you don’t have a dedicated business account.

The 3rd tab will be your chart of accounts and will detail your sources of revenue and what your expenses are. For example, if you provide services such as marketing consulting, mentoring, business presentation etc then those are your streams of revenue / income and you will list them as such.

Or you if you have productize your services then you can list your revenues as products

The 4th tab is the transactions tab that pull all the transactions from your business into one place and help you categorise them. All the category name will pull from the data you entered in the on the chart of accounts tab like below.

The layout out of your 4th tab – Transactions is as shown below with 4 columns : Date Category, amount and description. The description column is free form and you can add as much detail as you need. The positive values should be set up to show in black ink and the expenses as red.

Then you have the 5th and final tab where it all comes together and all see all your income and expenses and your profit at the bottom of the page. The set up is as shown below with all your streams of income at the top and all your expenses at the bottom and the difference between the two will be your profit. The set up on this tab is such that it pulls all the information from the transactions tab. You will need some excel spreadsheet skills to get this set up and pulling properly but it is nothing difficult.

You will see that from our example, this business made a profit of £651 in February.

That is how easy and simple it is to set up a simple Google sheet template in less than a day that you can use as a new business without the monthly costs of an accounting software.

Better still you could even save yourself more time by downloading for a free a ready set up template that you can start to use right away.

You can save time by downloading a free version of the Free Accounting Template Here that you can use immediately.