Pros & Cons of Excel for small business accounting

A lot of businesses worldwide, especially the newly launched ones rely heavily on the ensuing accounting process. To them Excel is a tried and tested software that is trusted by accountants and is very extensively used day in, day out. This is a blog on Excel, where we will take a thorough look at MS Excel and examine both sides of the coin, its benefits and the underlying limitations. Ranging from basic bookkeeping to storing financial data such as sales, revenue, purchases and expenses Excel finds its usage in almost every day to day accounting activity in an office. It can also be used to store other employee level accounting data. Needless to say, it makes lives much easier with its wealth of formulae and macros to execute complex calculations and present the data in the form of charts & graphs. Owing to its versatility, it is always expected from seasoned as well as budding accounting professionals to have expertise in Excel. The popularity and importance of Excel can be gauged from the sheer number of courses that are available online. They are delivered by experts who train people to use Excel more efficiently and helps you polish your skills.First, let’s see why Excel is used widely for small business accounting. Convenience in Organizing Data It allows users to conveniently store data in spreadsheets in a structured format. With time, Excel has evolved so much that now it can provide the option of using pie charts and graphical representations to show stored data and accounting results. Macros and Formulae As an accountant, you might have certainly used the Excel’s ‘macros’ feature. It makes updating a spreadsheet a lot easier. You can record your calculations using this function and apply them elsewhere simply with a click. This is a life saver when dealing with repetitive calculations, for instance updating your report every month with financial data changes. You don’t need to change the whole report every time with this wonderful function. Excel macros and formulae reduce the need to intervene manually. Yet another nifty feature is ‘what-if’ which is effective for forecasting budgets based on user preferences. Forecast Sheets Even better than the ‘what-if’ function is ‘forecast sheets’ which enable the users to estimate the upcoming trends by drawing upon historical data from over the past years. It can easily predict current or future cash flow volume. Customizable Book-Keeping Templates Excel offers the ability to create book-keeping templates for your unique requirements of receipts, invoices, and other reports that you need quite often. It saves considerable time & efforts as these templates can be reused as per your needs. Vast Array of Templates Microsoft Excel comes equipped with a huge library of invoices, ledgers, reconciliation, budgeting, and other accounting trackers. You can incorporate them as per your needs with a click. Compare Datasets with Ease You can make comparisons between different data sets quickly and easily. Excel makes it hassle free to compare financial datasets between two periods to calculate income such as analyzing year-on-year and month-on-month data. Moreover, you can compare customer base across geographies in case of a retail or reseller small business and analyze several factors like age, purchasing preferences, spending capacities, etc. This will surely give you a closer view on how your company/ organization is performing. Affordable A small or recently established business will find it difficult to manage the price of a specialized accounting software. MS Excel comes to their rescue as it comes bundled in MS office package. It does not need annual renewal, and works on several different platforms without even needing internet connection. Sounds like an ideal software after reading the benefits of Excel? Sadly, nothing in the world is perfect and Excel has its limitations too.There are some challenges that come with using ExcelCan be Complicated As you can surmise from the myriad of online courses, webinars and e-books delivered by a plethora of instructors, using Excel optimally requires one to master several formulae and syntaxes. Executing the macros function perfectly takes one to gain a certain level of expertise which many find cumbersome. Not only that, an error in data or method will ruin the whole report. Difficult to Collate Data Typically, a firm receives data from numerous sources, often from third-party vendors too. Tracing and assembling data can be time consuming. Worse, if information provided by an individual is inaccurate, then the whole consolidated report can be compromised. Security Some of your spreadsheets may contain financial information that you would want to keep protected. For such sensitive data, Excel does not provide enough security measures. Challenging to Collaborate Collaborating with people separated by geography and departments can be inconvenient especially when working on planning, forecasting, and budgeting reports simultaneously. Typically, a spreadsheet ends up being attached and forwarded to many recipients over email. This curtails freedom and agility. When time is of the essence, this can prove a severe handicap to decision making. Not Ideal for Big Businesses Diversified reporting requirements are not easily met by Excel. We have a whole other article to explain just that. For more automated and complex accounting, it comes up short in functionality Regardless of where you work, accounting, business, accounting business, or business accounting, you have to take into account all of these pros and cons. Maybe Excel is not as sophisticated or high end, and thus it cannot match up to a specialized, automated accounting software, it is however probably the most sought after tool that forms the foundation of creating every financial report that you can think of. Such software provides scalability, robustness, dynamism and will leave you with more time on hand. On the other hand, if you can afford the cost of such accounting software, it will be more reliable than MS Excel.

How to Create a Pivot Table

One of the most powerful features of Excel is “Pivot Table”. You can still do most awesome things with it even if you are unfamiliar with excel. It is like dragging and dropping rows/columns headers to create reports. What is Pivot Table Pivot table is a tool in Microsoft Excel that help to make your worksheets more manageable by summarizing huge dataset with a few clicks in small amount of time. It allows you to extract the significance from a detailed large dataset. Now you understand why the Pivot table is important, so let’s go to see how to create it. How to Create / Insert Pivot Table in Excel Here are the steps which should be followed to create pivot table – 1. Click anywhere in the dataset. 2. Go to Insert –> Tables –> Pivot Table. 3. After that a dialog box appears explaining the data set and asking where you want to create the Pivot table. a) Table/Range : based on your data set, its filled in by default. Excel automatically detect the correct range but you can change it manually if needed. b) Specify the location where you want to create PivotTable. Else a new worksheet is created with the Pivot Table. 4. Click “OK”. 5. As soon as you click on “OK”, a new worksheet is created with the Pivot Table in it. On left, you would see the Pivot Table name with a single line instruction and on the right side there is Pivot Table fields. 6. Choose the field (column) which you want to summarize. After checking this, you will get the columns with the summary of data set. In the Pivot Tabe Fields section, you have the fields and the areas (as highlighted below): Based on the backend data used, Field are created in Pivot Table. Within the areas section, you place the fields and according to that your data updated in the Pivot Table. It’s just a drag and drop things. Drag the field to that area where you want and get the result. Sort You can also sort the data within the Pivot Table. 1. Click any cell inside the field which you want to sort. 2. Right click and click on Sort. Changing Summary Calculation – Either by summing or counting the items, excel summarize data by default. If you want to change the type of calculation that you want to use, follow these steps - 1. Click any cell inside the Sum column. Two-dimensional Pivot Table You can create a two- dimensional pivot table, just by dragging a field to the Row area and Columns area.

How To Do Payroll In Excel - Simple Steps

There are several options to carry out payroll but when you are having small-medium business and you need a powerful and cost-effective tool then you should use excel for it. Using excel formulae and functions, it is easy to carry out the payroll process. The Payroll Process includes – Collecting employee data. Evaluating total hours worked. Computing pay and deductibles tax. Here you calculate employee payroll as well as each penny you spend on them. For Payroll management, excel is one of the best tool as it is versatile and easy to use. Excel comes up with several functions that allow for simple calculations within seconds. Why use Excel for your payroll process? Here are few reasons which make to use Excel for payroll. 1. Collecting and Tracking of Employee Data - Excel provides ease and many options in storing and managing employee data. You can store data in alphabetical order, by particular dates and other options. It provides control over how you manage and manipulate data. It has the advantage of not making mistakes in payroll information management 2. Visual presentation - You can represent data visually in excel and this is one of the biggest pros of doing payroll in excel. When you are dealing with figures and calculations, you can represent it in charts, diagrams, or graphs. 3. Accuracy - It’s been a complex process to deal with payroll figures and when you are having higher number of transaction then it also becomes difficult to track and analyze it, but data manipulation is simple with this tool just because of functions and formulas available with excel. It’s not only easy to insert numbers into specific locations but also excel performs automatic calculations. Steps to create Payroll in Excel – Step 1 – Launch Excel blank spreadsheet. Step 2 – In this newly created file, you will store employee payroll information then you need to create some field (column) that holds values. Create column name in the following hierarchy – Column A – Employee Name. Column B - Hourly pay – contains employee’s pay rate per hour without any currency symbol. Column C – Total number of hours worked by an employee in a day. Column D - Overtime rate per hour without any currency symbol. Column E - Total Number of Overtime by an employee in a day. Column F – Gross pay – Payable amount without any deductibles. Column G – Income Tax – Tax payable on Gross Pay. Column H - Other Deductibles - Deductibles other than Income Tax such as EPF, PT, TDS, etc. Column I – Net Pay – Payment received in hand by an employee. Step 3 – After deciding parameters relevant to your business, now it’s time to make entries. Now add the data according to the column with no formula.Step 4 – Gross pay calculation – it is easy to calculate it in excel simply by using SUM and PROD function. Step 5 – calculate Income Tax- in order to calculate it, first check how much percentage of tax your employee pays on the total gross pay. Income Tax is always calculated on Gross Pay. Step 6 – Compute deductions - Here mention deductibles for a particular employee (if any) like premium of health/life insurance, professional taxes etc. Step 7 – Now, finally it comes to Net Pay. It is the amount that comes after all the deductions from Gross Pay. This is how we create Payroll in Excel. If you are not so comfortable with the excel formulas and functions to make payroll management. You can learn to analyze payroll data in excel.

Create Dashboard In Excel - Step By Step Tutorial

When it comes to taking raw data and converting it into useful and impactful information then Excel is an incredibly helpful tool. An Excel dashboard is a place where you could track all your business’s important KPIs, metrics, and data points using visuals and charts. In short, visual representation of data is known as dashboard. It simplifies complex data and transforms it into something visually which is easier to understand. From project management or budgeting or marketing or sale reporting, everywhere it plays an important role. A good financial analyst needs to be master in creating dashboard in excel. It is an important skill which one should know. Here in this tutorial guide, we will see how to create a dashboard in excel. Here are some of the recommended steps which need to follow, in order to create an effective excel dashboard – Import data into excel – First of all, to create your dashboard in excel you need to import data. You can simply copy-paste the data or you can take help of any external app to pass data in real-time. Data can be imported in two different ways: in a flat file or a pivot table. With the available data, set up an excel table on another tab. Recognizing the elements you want to add to your dashboard will help you group similar data together and give you an idea of the layout. Dashboard layout - Once you are done with importing data into excel file, now you need to structure your workbook. Create two to three sheets in your workbook. Keep the first tab for dashboard and the other for raw data and table. Organize data – When working with data, it is important to organize data in appropriate rows and columns. Clean-up the duplicate data to keep unique one to utilize the dashboard feature, otherwise you will be double counting. Create table with raw data – Create table with the available raw data. Analyze the data – Before you start to make dashboard in excel, take some time to look at your data and figure out what you want to highlight. Once you have an idea of your dashboard’s purpose, you can use different tools for analyzing data like – Excel formulas like SUMIF, COUNT, OFFSET, VLOOKUP, GETPIVOTDATA and others. Pivot tables. Data validation. Macros. Conditional formatting. Auto-shapes. Excel dashboard widgets. Named ranges. Charts. Excel tables. Create the dashboard – This process is all about inserting the charts and visuals on dashboard. With the different visual about data. See the detailed video on Creating Excel Dashboard With Excel dashboard examples.

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