Tax season is an especially stressful time as a small business owner, but it doesn’t have to be! Follow these simple bookkeeping for small business practices below, and you’ll be ready to take on tax season like a pro.
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I am no expert here, BUT I have been doing my own bookkeeping since the birth of my own business in 2010. In fact, I have learned a lot about the best practices small businesses should be taking.
Unfortunately, many of the automated bookkeeping sites are subject to errors that will make you pay much more than you have to. Bookkeeping for small business in excel lets you be in control of your expenses completely. And, its great for those of you just starting out. Avoid spending too much on automated bookkeeping subscriptions.
To make things even easier, download this AMAZING Bookkeeping Worksheet HERE to follow along as I take you through all the steps!
What You Will Learn:
- 1. REVENUE
- 2. CALCULATE YOUR EXPENSES
- a. Payroll for Small Business
- b. Outside Services/Contract Work Expenses
- c. Office Supplies
- d. Cost Of Goods Sold (COGS)
- e. Advertising for Small Business
- f. Travel Expenses
- g. Accounting and Legal Services for Small Business
- h. Telephone and Internet Fees
- i. Online Selling Fees
- j. Shipping Paid
- k. Sales Tax Paid
- l. Small Business Assets
- m. Education
- n. Food
- o. Subscription Fees for Small Business
- TIPS: Bookkeeping for Small Business
Finally, Here is How to do Bookkeeping for Small Businesses…
Of course, revenue numbers come first!
There are probably a number of places you sell online, so in the spirit of staying organized let’s break them up accordingly.
Additionally, this will make it easier for you to see where revenue is being generated from.
On your worksheet:
- Etsy shop
- Amazon shop
- Dot com
- Holiday Markets
- Wholesale accounts
With things broken down this way you will be able to make hard, fast decisions.
- If you notice the Holiday Markets aren’t generating enough revenue based on the time and fees you spend for them, then ditch it for now.
a. Where Can I Find My Etsy Revenue?
- Go to Sold Orders
- Download the CSV file
- Select Orders for Type and select month and year
- Column X = order total (includes shipping and taxes)
- To ADD select on an empty cell & type: =sum(
- Click the first cell with order total amount and drag it down to the last number.
- After this, type: )
You now have your Etsy revenue calculated.
For the visual learners, Anji Long on Youtube does a great job showing how to navigate through this on Etsy:
b. Where Can I Find My Amazon Revenue?
- Go to View Payments Summary on your dashboard
- Select Date Range Reports
- Generate Report
- Click Summary – Month – Generate
- Download your report
Income Tax Total + Sales Tax Total = Amazon Revenue
You now have your Amazon Revenue calculated.
c. Where Can I Find My Revenue On Other Platforms
Finding these expenses may vary, but the same principles apply.
- Find the reports and add up your TOTAL revenue (must include sales tax and shipping)
If you are looking for revenue from other places i.e. wholesale accounts or holiday markets, it will all depend on which payment processor you used. If you used PayPal, you will need to download the statement for that month and do some simple math.
2. CALCULATE YOUR EXPENSES
Calculating your expenses will be the most time consuming part of this whole process, but it is the most important!
Here are some expenses you should be adding to your bookkeeping:
a. Payroll for Small Business
The type of business you are will determine how you will pay yourself.
For instance, if you are a corporation like me you,
- are an employee of your own company
- receive a W-2 at the end of the year
If you are paying yourself with checks, straight to your personal account,
- get with your tax accountant to find the best way for your business to handle payroll
Either way, you will need to calculate payroll expenses.
The best thing is to have your own business bank account set up, so you can,
- Pull the statement for that month
- Find the payroll expense
- Input it into your excel spreadsheet
- You’re done!
Do this for each month and you’re good to go!
b. Outside Services/Contract Work Expenses
This may include:
- Designer that regularly works for you
- Virtual Assistant
On your Excel Worksheet:
- Label each cell with the contractor in the month(s) they were working for you
- Add up expenses used
- Plug into the corresponding month
The best way to keep track of these types of small business expenses, is by making sure everything goes out of ONE account.
Moreover, by charging everything to my one business account, it helps diminish the time it takes doing bookkeeping for small business.
No looking in 5 different places for one category!
c. Office Supplies
This includes everything you purchased for your office that helps you run the business.
It can be labeled under Office Supplies for each month.
Common expenses found in this category:
- Any writing utensils used daily
- Printing Supplies (Printer, Paper, Ink, etc.)
- Organizational Tools (Folders, Binders, etc)
- Paper (notebooks, notepads, sticky notes, etc.)
- Trash Cans
IMPORTANT: Make sure these are all things that actually help you run your business. Your cute new coffee cups, or work outfits are not expenses that help you run your business.
Big items like computers, printers, and office furniture will be listed under your assets. (See l. Assets Purchased below)
Depending on the type of business you’re in, the office supplies needed will vary.
Here are some examples of office supplies that would likely fall into this category.
d. Cost Of Goods Sold (COGS)
Costs of goods sold or COGS are the expenses related to making your product.
So, if you own a stationery company like me too, you will have the following under your COGS:
- Clear boxes for product packaging
These are items that you buy that the customer will receive!
More importantly, when you purchase from a local store that has a mix of office supplies and product making items – buy it in 2 transactions.
On Your Excel Worksheet:
- List out each vendor
- Organize by type of material for your own understanding
- If you do this – you will need to know exact amounts for each material
To avoid that I purchase on separate receipts if its a different type of expense. This allows me to continue purchasing from the same vendors, as well as makes this section of my spreadsheet is less complicating.
- One vendor
- Two transaction amounts
No listing out each item and its worth.
e. Advertising for Small Business
If you are a new small business seller and haven’t gotten into advertising yet, you can skip this section.
For those of you using Etsy’s promoted listings or advertisements on Amazon too, listen up!
Etsy Ads for Small Business:
Here is how to find out how much you spent on advertising on Etsy this year:
- Go to Your Bill in the finance section of your shop dashboard.
- Select Month you are doing bookkeeping for.
- See Summary of money spent on promoted listings that month.
Amazon Ads for Small Business:
To find out how much you spent on Amazon ads, it’s simple:
- Go to your bank statement and find it there.
Mind blowing I know. Amazon must charge you the ad spend each month as a separate charge, so that makes it painless to locate.
Here is another way you can find your Amazon Ad expenses:
- Go to your Amazon Dashboard
- Click View Payments Summary
- Click Advertising Invoice History
- Find Invoices for the corresponding dates (see when it was received/billed)
- Copy number
You’ve got it!
Other advertising Expenses:
Are you advertising on other platforms like, Facebook or Google? Go you!
All you need to do is:
- Log into your ad account
- View how much was spent under account details
If it was billed during the month you’re bookkeeping for, copy and paste it into your Excel worksheet.
Now that you’ve found all your ad expenses, let’s reflect back to the main sheet under advertising.
On your Excel Worksheet:
- Go to the second sheet
- Fill out entire bill
- Fill in the promoted listings number on the second tab of the worksheet.
This is not required by tax accountants, but it is helpful when you want to see how much was spent in certain categories.
Some of this will go under expenses of online selling fees, and shipping paid as well.
- Go to final total cell
- Type: = sum(
- Go to cell with your information and type: +
- Click on all cells with advertising expense amounts
- Type: )
- Press Enter
It should bring you back to the first page of your worksheet where the total has now been added up for you!
f. Travel Expenses
- Airplane ticket to a craft show in a different city
- Uber fare while you’re there
- Things you may buy for your business while there
Be sure to only apply this to travel for your business. A mental health vacation to the spa does not count.
PRO-TIP: I highly advise against putting gas for your car here. The IRS gives you deductions if you track your mileage, so be sure to do that on a separate sheet of paper.
g. Accounting and Legal Services for Small Business
Simple and straightforward.
I usually use this area only once a year when I pay my accountant for doing my taxes.
However, if you’ve had any legal work done such as:
- Forming an LLC
- Filing for a trademark
Now is the time to mark down those expenses.
h. Telephone and Internet Fees
You can write off this expense if you use both explicitly for your business.
For example, If your home internet does not get used unless it is for business, then it can be written off.
This also applies to your phone too (with the occasional call to mom of course).
PRO-TIP: Speak to your tax accountant to see if you qualify.
i. Online Selling Fees
This is something I came up with to ensure all my bases are covered when bookkeeping for small business.
Online selling fees are broken up into sections:
- Etsy Billing
- Amazon Fees
- Website Fees (Dot com)
Feel free to customize your sections to your specific needs.
Etsy’s Additional Fees Broken Down:
- Credit card processing fee (payment processing fee)
- 3% + .25c/sale
- Transaction fee
- 6.5% not including tax
- Sell/Relisting Fee
- For every sale you make, Etsy charges you .20c to relist it.
Make sure you include this in your total when adding up all your online selling fees.
For other platforms, the additional fees will be made available to you via their website too.
j. Shipping Paid
The IRS does not require you to show how much you spent on shipping, but it is still a great bookkeeping for small business practice.
On the worksheet provided, there are several areas on the second sheet that you can input shipping for Etsy, Amazon and your website.
Feel free to tweak it any way you need to.
Where Can I Find My Shipping Expenses on Etsy?
- Go to Shop Manager
- Click Orders & Shipping
- Click top right button Get Shipping Labels
- Go to Purchased Labels
- Click Summary
Once here you should be able to sort your shipping fees paid by month and even year.
Where Can I Find My Shipping Expenses on Amazon?
- Go to View Payments Summary on your seller dashboard.
- Click Date Range Reports
- Select Generate Reports
- Select Summary – Month
- Download and go to Shipping label purchases and Shipping label refunds
- Add using equation below
Shipping Label Purchases + Shipping Label Refunds = Total Shipping Paid
k. Sales Tax Paid
Simple and straightforward you can find this expense by looking through your bank statement.
Once located, add it to your bookkeeping for small business worksheet.
l. Small Business Assets
This is important!
Your accountant will need to know how much money was spent on assets.
Assets may include:
- Office Furniture
Use your bank statement, or credit card statement to locate all major purchases.
First, type them in the spaces provided on the third page of your worksheet.
Then, find your total by adding.
Lastly, the total should now be on your first page!
In addition to my love for learning, I also love being able to write this expense off!
- You can write off my courses or any other courses you paid for that helped you further your business along.
This also may include:
- Audio Books
- Business Classes
Only write food off as a business expense if:
- You need to eat while traveling for business
- Office meeting meal – I have about 5 other employees that I will feed on occasion (this can be written off)
Above all, do not try to write off your lunch everyday!
o. Subscription Fees for Small Business
This section allows you to write in all the subscriptions you have that help you run your business.
This may include:
- Business Facebook Groups
- Cloud Storage
- Paypal Payments Pro
- Amazon Prime Fee
- Marmalead Subscription , etc..,
PRO-TIP: Input these numbers on the third sheet of your document. Organize them in a way that will allow you to understand your subscription fees at a glance.
3. TIPS: Bookkeeping for Small Business
- Have a separate bank account for your business. Keeping everything in one place makes bookkeeping easier.
- Use your bank statement and mark off things as you enter them into your spreadsheet. You will forget if you entered things if you do not have it marked off.
- Double Check Everything
- Human error is inevitable. No one is immune!
- Using a bookkeeping software?
- Audit carefully
- Double check it is inputting everything every month
- Don’t be too trusting! They are not perfect.
- Save money on taxes by filing as an S-corp. Contact your tax attorney for more information on this.
- Save ALL receipts and file them by month. Here’s what I use:
If you have further questions regarding bookkeeping for small business, I encourage you to JOIN my small business seller group on Facebook! Me, or some of my other members will answer you asap. Don’t forget to download your worksheet to absolute crush this tax season!