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Spreadsheets Versus Accounting Software: Which Is Best to Track Business Expenses

Updated: Sep 15, 2021

When I first started talking to one of my clients, she told me she was using a spreadsheet to track everything and I immediately started breaking out in hives. The problem with tracking expenses through a spreadsheet is that you have to manually update it each time you add a line item to your expenses in or out. It’s nothing more than a digital ledger. It doesn’t tell you anything about your income, late invoices, cash flow, etc.

And if you hate using spreadsheets, why use them!? It is no wonder you’re stressed and anxious about money if you’re using a system that frustrates you! Let’s fix that in today’s post with a quick review of why spreadsheets are not it when you want to take your expenses seriously and a few recommendations on what to use to track expenses instead.

Why Spreadsheets Have Limits for Expense Tracking

Once my hives settled down, I was able to get a gander at the spreadsheet my client was using.

And while it was nicely laid out and it wasn’t horrible, it still was not the best option for her business. Here’s the catch… It was a template she purchased. So even though it wasn’t a total DIY (which I fully recommend you don’t do), it was still never going to work for her because someone else built it.

Professionally created spreadsheets are tricky for anyone, especially folks who are not fans of spreadsheets because there could be complicated formulas that you don’t understand inside of them. What happens if you break the formula? What happens if you need to add rows? See, it’s not very flexible.

Further, someone else decided what was important to track and built the spreadsheet around that. It could align with what you need to know, but there is a high probability that it won’t.

Clearly, I don’t recommend spreadsheets because A) If someone else built it for you, it could have the limitations I just mentioned, B) If you built it for yourself from the ground up, it’s probably pretty rudimentary and doesn’t have what you really need to be tracking to show a complete picture of your finances, and C) You may not have any idea how to take the info you’re keeping in a simple spreadsheet and turn it into info you’ll need for tax time or to make decisions based on your profit margins, P&L, etc.

The Easier Way to Manage Expenses: Accounting Software

Now, I love spreadsheets but not to house the accounting system for your business! Which brings me to… You’re duplicating your efforts when you use spreadsheets! Let’s say you take that same data that you popped into a spreadsheet, but you keyed it into accounting software instead. You’ll automatically get info populated in a P&L statement, on your balance sheet, and so forth.

Then, you can slice and dice those reports by time, client, project… just so many ways to look at things! And because you’re getting a report that’s actually meaningful for your business, you can use data to make informed decisions to grow your business! For the effort of keying info into a spreadsheet, you can take the same effort keying it into accounting software and you’ll get a more robust return in terms of helpful, usable data.

Picking an Accounting System

Alright, I came down pretty hard on my main squeeze (spreadsheets. Sorry, hubby!), so let’s move on to the fun stuff: Picking an accounting system to help you track your business expenses and other business numbers.

I always recommend doing a little bit of research before diving in to make sure it is the best fit for where you are in your business. Try Googling things like “accounting software for [my industry]” or “Quickbooks versus Wave [current year]”. Set a timer to do some quick, high-level research and when it goes off, make a selection. Don’t belabor this! If you don’t like this one, move onto the next one on your list.

Recommended Software

Wave - A popular accounting tool with entrepreneurs is Wave because they have a totally free option and it gives you the basic things you’ll need in a tool. It allows you to port in your bank account (you did set up a separate business bank account, right?), send invoices, create reports you’ll need for tax time, and more.

QuickBooks Online - My most recommended tool for business owners is, not much of a surprise here, QuickBooks Online (or QBO). QBO is the Cadillac of accounting systems for entrepreneurs and can grow with you as your business grows. The other reason I love QBO is because almost every other financial-related tool has an integration with them, so you can keep all your business information flowing in like sangria on a warm summer night.


While spreadsheets could work if you’re just starting out and have simple revenue and expense models, they do come with a host of limitations (including the fact that you’ll grow out of it pretty quickly). Further, spreadsheets aren’t able to give you the data you need as you grow your business. Tracking expenses and doing your bookkeeping requires a touch more sophistication.

Another thing to consider… Data will help you see what you’ve done and project into the future so you can make decisions with tangible, accurate data. You’ll be able to confidently make investments because you’ll know what your business can support. And you get that data from… accounting software!

If you’re still using spreadsheets, you may also be guilty of the other two money blunders I see almost every entrepreneur doing. Don’t worry - I’ll show you exactly how to correct these mistakes so you can feel confident when it comes to your numbers and have peace of mind that your numbers are in order so you can get back to doing what you do best!

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