Last time I talked about 3 good habits that could ruin freelance writers. But there are plenty of bad ones, including bad accounting.
You can bite the bullet and buy Quickbooks or Freshbooks. But what about if you’re just starting out and you aren’t sure how much you’ll make? Or if you want to keep a second record of your income and expenses?
I’ve been a bit of obsessed with using Excel and Google Spreadsheets. I’ve used them to test forecasts, ROI on Facebook ads, social media analytic reviews, and more. But I’ve found it most helpful when tracking my income, estimates taxes, and expenses. Since I found it so useful in 2019, I’d like to share with you an updated version of my Simple Accounting Spreadsheet!
You can go ahead and download it here, but read on to learn more about how to use it!
Getting Started in Freelance Accounting
But you may be asking, why keep a spreadsheet when there are so many options out there?
You can better gauge your own needs and you can keep money aside for quarterly taxes. Besides that, I’m sure your personal accountant will be grateful that you’ve kept clean records of your transactions!
When using the template or creating your own sheet, here’s what you’ll need to keep in mind:
- Your Gross amount (how much you make from a job)
- Your net income (how much you make from a job after taxes and expenses)
- Your expenses (how much, when you spent it, where, etc, with receipt information)
- Other projected income (investments, etc)
- Your possible deductions (including Upwork and PayPal fees!)
While you can count many things as a deduction, I personally don’t factor it into my final income. To be honest, since I’m not entirely sure how deductions are calculated, I don’t play around with it. I’d rather be pleasantly surprised with a lower rate than disappointed with a higher one. Consider this planning for a worst-case scenario.
Using The Super Accounting Spreadsheet
The spreadsheet file you’ve downloaded actually contains 7 sheets! In addition to tracking your overall hours, client, income and expenses in the Source Data sheet, you can also list investments, write in your bank balance, list your personal expenses and business expenses, and your monthly goals. In addition, there’s another sheet just for Notes. This includes tax rates, common fees (like Paypal and Upwork), and formula information.
Formulas are used to make computing the data faster. I didn’t use many of them, because I prefer to keep things simple. But nonetheless, it’s crucial you understand them.
In order to use this spreadsheet effectively, you really only need to understand one major formula:
Almost all important data is listed in the Source Data sheet. Almost all other sheets pull some value from the information here. This formula is actually very simple. You simply write the equal sign (=), followed by the sheet name, and exclamation mark and the cell you want to use. Why does the second example have single quotations? Because the sheet’s name is more than one word. Let me give you an example:
On the Source Data sheet, your gross income for January is summarized under cell T4. If I want to use this value in the Income sheet, I would simply write:
What if I wanted to multiply that number? Maybe by 12 so I can estimate my annual income? Then I’d write:
There is only one other major formula I use throughout the spreadsheet. If you’ve ever worked in Excel before, you probably know it:
This formula will add together the values of cells A1 through A5. So if each cell had 1 written in it, the formula written in A6 will show a 5.
Again, if you forget any of these formulas, they are written in the Notes sheet! 🙂
Income and Conditional Formatting
The Income sheet is meant to give you a quick view of your annual clients and how much work they give you a year. It’s basically a refined version of the Source Data sheet. At the bottom, you’ll notice the cells of the Net Income row change depending on the value. This is because they are using conditional formatting.
Conditional formatting will change a cell if it meets – or doesn’t meet – certain criteria. All of the cells in the Net Income row will become red if your net income is less than 3000. But they will become green if the amount is more. You just have to glance at the row to see if you’re on target.
You can easily adjust this by clicking on the “condition formatting” tab in the ribbon bar:
More About the Template
In addition to these features, I’ve also left a special sheet for investments – whether that be to your SEP or a separate portfolio. Tracking your investments is important as well – that way you really understand where your money is going. It’s a very simple and preliminary sheet, as everyone has different needs and strategies. You can track the date you buy and sell your investment, and you can input what kind of investment it is: Bond, ETF, index, SEP payment, etc.
I’ve also included a special spreadsheet for monthly professional and financial goals and a separate sheet for your business expenses. While you can list it in your source data as well, I find it easier to keep track of it in another sheet altogether.
In 2018, I used this spreadsheet at least once a week. I found it an amazingly cost- and time effective solution. I hope you find it useful as well!