DIY accounting for solopreneurs


You are just starting out and have a growing small service business. Where to start ?

You know you have to follow all the money stuff; there is a thing called taxes… but how? Everyone says you should get QuickBooks – but should you? There is an easier way! Read on for instructions on how to DIY your books from a workshop I ran for freelancers, in a lot less time than you might think.

The first thing to do is to use separate accounts for your business. This will make everything so much easier to follow. Create a separate checking account in the company’s name (if you have one, or in your name if you don’t have an LLC). If you want to use a credit card, get a separate card for the business. This also counts for services like PayPal! If you have more than one business, create separate accounts for each.

Personal transactions go through personal accounts. Business transactions go through business accounts. Period.

You can transfer funds between the two accounts as needed. To fund things in your business when you start, transfer funds to the business account from your personal account. To pay yourself, transfer funds from the business account to your personal account.

Here’s a secret: you don’t need fancy software. In fact, I advise against it in many cases because there is a big learning curve and most people haven’t studied the accounting that goes on behind the scenes. I’m talking more about software choices in This article.

When your business is small and simple, try using a spreadsheet. Once you set it up for the first time, it should take you about half an hour per month. Create a file in your favorite spreadsheet program and follow the steps below.

Step 1

Each month, download a spreadsheet or .csv file from your business bank account of your transactions for the previous month. Copy and paste this into a “master” tab of your spreadsheet.

If you have multiple accounts, download activity from each account. If the export is formatted differently by account, you’ll want to make sure all amounts end up in the same column in your main spreadsheet. You really only need three columns: date, description, and amount (sometimes amounts are split into two columns).

2nd step

Categorize your transactions. Add another column on your main spreadsheet for category, then go down your transaction list and fill in the category column. Income is labeled income and expenses are broken down into categories. The goal here is to have a few broad categories, maybe ten at most. For example, all things related to marketing fall into this category. (You don’t have to separate print items, website items, and social media items.) You can fill in an additional second column for vendor/customer, which is often helpful. It should look like the image below.

There may be times when you need to split a transaction in half, for example if you have fees taken from income deposits. In this case, add a new line, copy the one that needs to be split, then adjust the amounts for each category.


Step 3

Create a pivot table to get a summary of your income and expenses. It’s not as hard as it sounds, I promise! When you do the pivot table, place a new tab, add rows by category, and add a value as the sum of your amount column. (Do this twice if your amounts are in two columns.) You’ll only have to set it up once and it will update as you add more to your main tab. Example below.

Account bookkeepingX

That’s it! Repeat steps one and two each month, adding to the main worksheet. Start a new main tab and a new pivot table (step 3) every January for the new year.

This DIY method is great if your business is small and simple, but it doesn’t always work for everyone. There are many situations where you shouldn’t use the spreadsheet or DIY method at all. Here are some of the top DIY bookkeeping mistakes we see.

Reasons to praise your accounting

  • Your business is more complicated. If you have product sales and are dealing with sales tax, I highly recommend working with someone on your books. Other examples of things that complicate your books are payroll, e-commerce, and lots of loans.
  • You can afford to outsource. I’m a firm believer in doing what you’re awesome at and getting others to do what they’re awesome at. Accounting should be on your wish list to outsource as your business grows.
  • You really hate this. If you’re not going to follow it regularly, praise it. It’s worth having your numbers in order.
  • You will need financial data for things like loans or a potential sale of your business.

You are not an accountant; you shouldn’t have to learn accounting software. Spend some time uploading and categorizing transactions each month, then work to grow your business with peace of mind that your numbers are in order!


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