09/12/2025 • 9 min read
How to Build a Simple Cash-Basis Spreadsheet
How to Build a Simple Cash-Basis Spreadsheet
Creating a simple cash-basis spreadsheet involves organizing financial transactions to reflect the cash inflows and outflows of a business. This method aligns with the cash-basis accounting system, where income is recorded when received, and expenses are recorded when paid. Australian accounting practices often prefer this system for its simplicity and adherence to cash flow, especially for small businesses. Here’s how you can build a straightforward cash-basis spreadsheet using Excel or Google Sheets.
What is a Cash-Basis Spreadsheet?
A cash-basis spreadsheet is a tool that helps track the cash inflows and outflows of a business. Unlike accrual accounting, which records income and expenses when they are billed and incurred, cash-basis accounting records transactions only when cash changes hands. This approach is particularly beneficial for Australian small businesses, as it provides a clear picture of cash flow and aligns with certain ATO guidelines for businesses with a turnover of less than $10 million.
How to Set Up Your Cash-Basis Spreadsheet?
- Create a New Spreadsheet:
- Define Your Columns:
- Format Your Spreadsheet:
- Record Transactions:
What Are the Benefits of Using a Cash-Basis Spreadsheet?
- Simplicity: It is easier to understand and manage, especially for small businesses.
- Cash Flow Clarity: Provides a clear view of how much cash the business actually has.
- ATO Compliance: Suitable for businesses under the $10 million threshold, as per ATO guidelines.
How to Ensure Accuracy in Your Cash-Basis Spreadsheet?
- Regular Reconciliation: Compare your spreadsheet with bank statements regularly to ensure all transactions are recorded and correct.
- Consistent Recording: Always record transactions as they occur to avoid missing or incorrect entries.
- Review and Adjust: At the end of each month, review the spreadsheet for any discrepancies and adjust as necessary.
Real-World Scenario: Managing a Small Business with Cash-Basis Accounting
Consider a freelance graphic designer in Australia who receives irregular payments from clients. By using a cash-basis spreadsheet, they can record income only when it's received and expenses when paid, making it easier to track the actual cash available for business expenses and personal withdrawals. This method aligns with the ATO’s recommendation for small businesses, simplifying tax reporting and financial management.
Frequently Asked Questions
Q: What is a cash-basis accounting method?
A: It is an accounting method that records revenues and expenses only when cash is received or paid, rather than when they are incurred.Q: Why is cash-basis accounting suitable for small businesses?
A: It is simpler to manage and provides a clear picture of cash flow, making it easier for small businesses to track available funds.Q: How can I ensure my cash-basis spreadsheet is accurate?
A: Regularly reconcile it with your bank statements, record transactions promptly, and review it periodically for discrepancies.Q: Does the ATO accept cash-basis accounting?
A: Yes, the ATO allows businesses with a turnover of less than $10 million to use cash-basis accounting for GST purposes.Q: What tools can I use to create a cash-basis spreadsheet?
A: Excel and Google Sheets are both effective tools for creating and managing a cash-basis spreadsheet.Next Steps with Fedix
If you're looking to automate your accounting processes and reduce manual spreadsheet work, consider using MyLedger by Fedix. Our AI-powered platform is designed specifically for Australian accounting practices, simplifying cash-basis accounting and ensuring compliance with ATO standards. Learn more about how MyLedger can streamline your accounting tasks by visiting home.fedix.ai.
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By following these steps, you can effectively manage your business's cash flow using a simple cash-basis spreadsheet, ensuring compliance with Australian accounting standards and enhancing financial visibility.