Bookkeeping Basics for Small Business Owners (free template!)

Gillian Perkins
1 Aug 202311:57
EducationalLearning
32 Likes 10 Comments

TLDRThis video tutorial offers small business owners a practical guide to managing their bookkeeping with ease. It recommends starting with a free spreadsheet like Google Sheets for a hands-on approach, avoiding costly software until necessary. The presenter shares a free, customizable spreadsheet template to track transactions and generate monthly profit and loss statements. Additionally, the video highlights Melio as a streamlined payment solution for businesses to pay vendors and contractors, simplifying the process and saving time.

Takeaways
  • 😀 Starting a small business bookkeeping doesn't need to be complicated or expensive; simple tools like Google Sheets can be very effective.
  • 🛠️ For new businesses, it's recommended to be hands-on with bookkeeping to better understand financial transactions and business finances.
  • 📈 The script introduces a free spreadsheet designed to track transactions and generate a profit and loss statement monthly.
  • 🔗 The spreadsheet has multiple tabs that interact with each other, reducing the need to manually enter the same data in multiple places.
  • 📋 Transactions are recorded in a dedicated tab, with expenses and income categorized according to IRS requirements for easy compliance.
  • 💡 The spreadsheet automatically updates the income statement based on the transactions entered, showing both income and expenses.
  • 💼 The video discusses using Melio as a payment platform for subcontractors and vendors, highlighting its flexibility and ease of use.
  • 💳 Melio allows for payments to be made via different methods, including credit card, bank account, or even mailing a check, to suit both the payer and payee.
  • 📊 The income statement or profit and loss is automatically generated, showing the business's financial health and profit margins.
  • 📝 The video suggests categorizing income based on products or services sold rather than payment methods for better financial insight.
  • 🔄 It's advised to update the spreadsheet daily with all business transactions to keep the financial records organized and up-to-date.
Q & A

  • What is the main topic of the video?

    -The main topic of the video is teaching small business owners how to do their own bookkeeping using free tools like Google Sheets.

  • Why does the speaker recommend starting with a free spreadsheet instead of paid bookkeeping software?

    -The speaker recommends a free spreadsheet because it's more cost-effective for new businesses and allows for a more hands-on approach to understanding business finances.

  • What is the purpose of using multiple tabs in the Google Sheets example provided?

    -The purpose of using multiple tabs is to track different aspects of the business's finances, with the tabs interacting with each other to automate some data entry and reduce manual input.

  • What is the recommended method for entering expenses in the transactions tab?

    -To enter expenses, one should input a description, date, the amount with a negative sign to indicate it's an expense, and select the appropriate expense category.

  • How does the income statement or profit and loss tab in the spreadsheet relate to the transactions tab?

    -The income statement tab has formulas that automatically update based on the transactions entered in the transactions tab, categorizing expenses and income accordingly.

  • What is the role of Melio in the context of this video?

    -Melio is a payment platform sponsored in the video that simplifies the process of paying contractors and vendors by allowing various payment methods and automating the process.

  • How does Melio benefit the user in terms of payment flexibility?

    -Melio benefits the user by allowing them to pay vendors and contractors in their preferred method while also giving the payee the flexibility to receive payments as they wish.

  • What is the significance of tracking transactions daily according to the video?

    -Tracking transactions daily helps keep the business's books organized, up-to-date, and categorized as required by the IRS, ensuring financial accuracy and compliance.

  • How can the spreadsheet be customized to fit a specific business's income categories?

    -The spreadsheet can be customized by editing the drop-down list of income categories to reflect the specific products or services the business offers.

  • What is the recommended frequency for updating the transactions in the spreadsheet?

    -The speaker recommends updating the transactions at the end of each working day to keep the records current and organized.

  • Where can viewers find the free spreadsheet mentioned in the video?

    -Viewers can find the free spreadsheet in the description of the video through the provided download link.

Outlines
00:00
📚 DIY Bookkeeping for Small Business Owners

This paragraph introduces the video's purpose, which is to teach small business owners how to manage their bookkeeping without professional help. The speaker emphasizes the use of free tools like Google Sheets over paid software for beginners, as it allows for a more hands-on approach to understanding business finances. The video promises a tutorial on setting up a basic spreadsheet for tracking transactions and generating a monthly profit and loss statement, with a free spreadsheet download link provided in the description.

05:02
🛠️ Setting Up a Google Sheets Bookkeeping System

The speaker demonstrates how to set up a bookkeeping system using Google Sheets, highlighting the use of multiple tabs that interact with each other to automate data entry. The 'transactions' tab is the primary focus for entering business income and expenses. The video explains how to input transactions with correct categorization and negative values for expenses. It also shows how these transactions automatically update the income statement, or profit and loss, with the help of embedded formulas.

10:03
💳 Streamlining Contractor Payments with Melio

The paragraph discusses the complexities of paying contractors and freelancers through various methods and introduces Melio as a preferred payment platform. Melio allows for streamlined payments, offering flexibility for both the payer and payee to choose their preferred method. The video provides a step-by-step guide on how to use Melio to pay a contractor, emphasizing its ease of use and the option to pay with no fees. A link to start using Melio for free is mentioned in the video description.

📈 Automating Profit and Loss Tracking

The final paragraph explains how the spreadsheet automatically updates the profit and loss statement as transactions are entered. It illustrates how income from clients, such as payment for services, is recorded and how it affects the business's financial status. The speaker suggests customizing the spreadsheet by adding or modifying income categories to better reflect the business's products or services. The video concludes with a reminder of the spreadsheet's efficiency in keeping business finances organized and up to date, with a prompt to download the free spreadsheet from the description.

Mindmap
Keywords
💡DIY bookkeeping
DIY bookkeeping refers to the practice of managing a business's financial records independently without the help of a professional accountant. In the video, the speaker emphasizes the importance of small business owners taking a hands-on approach to understand their business finances better, especially in the early stages. This concept is central to the video's theme, as it encourages viewers to learn how to track transactions and manage their books using simple tools.
💡QuickBooks
QuickBooks is a widely recognized accounting software used by businesses to manage their financial records. The script mentions QuickBooks as one of the many tools available for bookkeeping, noting its automation features that can save time as a business grows. However, the speaker advises against using such tools initially due to their cost and the learning opportunity of manual bookkeeping.
💡Google Sheets
Google Sheets is a free, web-based spreadsheet program offered by Google within the Google Drive service. The video recommends Google Sheets as an effective and simple tool for small business owners to start their bookkeeping. It is highlighted as a preferable choice over paid software for its ease of use and accessibility, allowing business owners to track transactions and generate financial statements.
💡Profit and Loss Statement
A Profit and Loss Statement, also known as an Income Statement, is a financial report that outlines a company's revenues, costs, and expenses during a specific period, reflecting the business's operational performance. In the script, the speaker demonstrates how to generate this statement using a Google Sheets template, which is crucial for understanding the financial health of a business.
💡Transactions
Transactions in the context of bookkeeping refer to the economic events that affect a company's financial status, such as sales, purchases, and payments. The video script focuses on the importance of tracking these transactions daily, as they form the backbone of bookkeeping and are essential for updating the Profit and Loss Statement.
💡Expenses
Expenses are costs incurred by a business in its normal operations. The script provides examples of business expenses, such as purchasing office supplies or vehicle maintenance, and explains how to record these in the Google Sheets template. It also mentions the IRS-required expense categories, emphasizing the importance of categorizing expenses correctly.
💡Income
Income, in the context of the video, represents the money earned by a business from its operations. The speaker discusses how to record income from clients, such as payments for services rendered, in the Google Sheets template. This is a key component of the Profit and Loss Statement, as it shows the revenue side of the business's financial activities.
💡Subcontractor
A subcontractor is an individual or business hired to perform work for a contractor, who is then responsible for the overall project. The video script includes an example of paying a subcontractor for website design, illustrating the process of recording such payments as expenses in the bookkeeping system.
💡Mileo
Mileo is a payment platform mentioned in the video as a sponsor. It is highlighted for its ability to simplify the process of paying bills and contractors, offering various payment methods to suit both the business and the payee's preferences. The platform is presented as a solution for the complexity of managing payments to subcontractors and freelancers.
💡Categories
In the context of the video, categories refer to the classification of income and expenses in a bookkeeping system. The script explains how to use predefined categories in the Google Sheets template to organize transactions, which is essential for generating an accurate Profit and Loss Statement and meeting IRS requirements.
💡Formulas
Formulas in a spreadsheet like Google Sheets are used to perform calculations and automate tasks. The video script describes how the speaker has programmed formulas into the spreadsheet to automatically update the Profit and Loss Statement based on the transactions entered. This automation reduces the manual effort required to maintain financial records.
Highlights

This video is a tutorial for small business owners on how to do their own bookkeeping using free tools.

The presenter advises against using expensive software like QuickBooks or Wave when starting out due to cost and the benefit of being hands-on with finances.

Google Sheets is recommended as the best free tool for beginners to track transactions and generate a profit and loss statement.

A simple spreadsheet is provided for free in the video description to help businesses comply with IRS bookkeeping requirements.

The spreadsheet has multiple tabs that interact with each other to automate some data entry and reduce manual input.

The 'transactions' tab is the primary area for entering business income and expenses.

Entering transactions involves specifying a description, date, amount, and selecting the appropriate category.

The spreadsheet automatically updates the income statement based on the entered transactions.

Milio is introduced as a payment platform for simplifying payments to contractors and vendors.

Milio allows for payments to be made via different methods while accommodating the payee's preferred method.

A step-by-step guide on how to pay a contractor or vendor using Milo is provided.

The income statement is automatically updated with payments made through Milo, reflecting in the subcontractor category.

The spreadsheet also automatically tallies total expenses for easy financial tracking.

A suggestion to track income by product or service sold rather than payment method for better business insight.

Instructions on how to customize the spreadsheet's income categories to fit the specific products or services of a business.

The video emphasizes the importance of daily transaction logging for organized and up-to-date financial records.

A final reminder to download the free spreadsheet from the video description for personal business use.

An endorsement of Milo for easy payment processing for both vendors and clients.

Transcripts

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Related Tags
DIY BookkeepingSmall BusinessFinancial ManagementFree ToolsGoogle SheetsProfit and LossTransaction TrackingIRS ComplianceExpense CategoriesPayment PlatformMileo Sponsorship