Business compliance keeping you awake?
Cleartax's wide range of compliance services is here for you
Explore Now

How to Create a Bookkeeping System in Excel

By Mayashree Acharya


Updated on: Jun 9th, 2024


4 min read

Every business needs to have a proper bookkeeping system. A bookkeeping process involves recording, classifying and organising books of accounts. The books of accounts of a business need to be maintained accurately, chronologically and systemically. They form the basis of accounting and help the business to arrive at decisions for the future business and ascertain their profits.

The bookkeeper maintains the books of accounts. The bookkeeper maintains the journal, ledger and prepares the financial statements of a business. The bookkeeper used to maintain the books of accounts manually by recording transactions physically. 

However, with the growth in technology, the books of accounts can be maintained through bookkeeping software, tally or excel sheets. The booking in excel can be done through maintaining excel sheets on Google excel sheets or Microsoft excel sheets.

Process of Bookkeeping in Excel

The process of bookkeeping in excel sheets are as follows:

  • Prepare an excel sheet to record all the invoices. It will help to track the paid invoice and the invoices pending payment.
  • Create an excel template for recording financial transactions according to the requirement of the business. Separate templates can be made for recording each transaction like account payable, account receivable, inventory, employee salaries, etc. 
  • Post journal entries on the excel sheet to record the transactions.
  • Prepare a ledger for recording all the accounts from the journal entries. 
  • Prepare the income statements from the ledger to arrive at the gross and net profit for a period. 
  • Prepare the cash flow statement for ascertaining the financial position of the business.

Using Formulas in Excel for the Bookkeeping Process

Templates created on the excel sheet will have cells for filing data and built-in formulas and macros to calculate the business transaction data. The formulas and macros help to record and calculate transactions. The bookkeeper can reuse the template with the formulas and macros every month, which saves the time and effort of the bookkeeper. 

The bookkeeper can use built-in formulas and macros in the excel sheet for common calculations. However, the bookkeeper might have to create macros and formulas for the business transactions based on the requirements and add the bookkeeping/accounting formulas to maintain the books of accounts on the excel sheet.

Once the templates with the bookkeeping/accounting formulas are created, the bookkeeper can build upon the template to develop advanced versions for account-related tasks such as receipts, forms, invoices, basic financial statements and reports. 

Advantages of Bookkeeping in Excel

  • Bookkeeping in an excel template is an easy way to maintain books of accounts as it does not require any special skill. 
  • It is less expensive as the excel sheet can be accessed on every computer or laptop for free.
  • Excel helps to prepare various graphical presentations like bars, charts, pie, etc.
  • Many users in an office can access the excel sheets by sharing them in a readable mode, allowing others only to view the data and not make any changes. 
  • Excel sheet facilitates easy tabulation and comparison of financial data between different periods for evaluating the business’s operations by scrolling through different sheets. 
  • Excel has functions like macros and formulas, which helps to perform basic and advanced calculations.

Disadvantages of Bookkeeping in Excel

  • Bookkeeping in excel is less secure compared to data maintenance in bookkeeping software. Hackers can easily hack the excel sheets on a computer/laptop.
  • It is time consuming when a large amount of data is to be entered into an excel sheet.
  • Bookkeeping in excel is a great tool for the single-entry bookkeeping system compared to the double-entry bookkeeping system. It is easy where there is only one entry for each transaction to be made. The double-entry bookkeeping system requires making two entries for each transaction which can be challenging in excel. 
  • Preparing templates is not always easy as they need to be altered to meet the business requirements.
  • The excel entries need to be appropriately saved. Malware attacks on the computer or laptop can cause data entry loss and work in the excel sheet. 

Bookkeeping in excel sheets is an easy way to maintain transactions. It does not require any special skill to maintain bookkeeping on excel sheets. It is helpful for businesses that are in the initial phase. However, maintaining a massive amount of transactions on the excel sheet of big businesses may be challenging. 

About the Author

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

Public Discussion

Get involved!

Share your thoughts!


Quick Summary

Bookkeeping involves recording, classifying, and organizing business accounts using manual or software methods like excel. Excel bookkeeping process uses templates, formulas, and macros for transactions recording and calculations. Advantages include accessibility, cost-effectiveness, and graphical presentation features, while disadvantages involve security risks and limitations for large data entries.

Was this summary helpful?

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use


ISO 27001

Data Center


SSL Certified Site

128-bit encryption