Making More Money

Bookkeeping is a crucial aspect of the financial system in any business. This process involves recording all transactions like sales, earned interest, tax paid, and other operational expenses in a business — all within a specific period. 

Excellent bookkeeping allows you to budget and meet your business' tax requirements. This article highlights three common types of bookkeeping services to help you understand your options.

Single-Entry System

Single-entry bookkeeping involves recording business expenses and cash sales in real-time. For this bookkeeping system, you won't find the records of your business liabilities or assets. Such records are mostly recorded as notes or memorandums.

This bookkeeping service is suitable for small businesses or sole proprietorships since they often have fewer transactions. Also, if your company has fewer physical assets, this method might be a good fit.

Nevertheless, a single entry service is prone to fraud and errors due to its brief nature. Therefore, single-entry bookkeeping may not give the correct picture of the financial position of your business.

Double-Entry System

The double-entry method is an extensive bookkeeping service that demonstrates the concept of debit and credit in every transaction. It operates on the principle that you'll have to give up something else when you receive one thing. As a result, a single transaction can affect two or more business entities.

The main advantage of this bookkeeping service is accuracy. Therefore, double-entry can be a dependable source of financial data and a fair assessment of your company's status.

With a second record, you can trace single transactions related to specific accounts after posting them as either income or expenses. For instance, if you receive money from your customer, you will record this as income and link the entry to your customer's account.

Companies with complex transactions are more likely to benefit from the double-entry option. This method is also suitable if your business collects revenue through receivable accounts or gets items on credit.

Bookkeeping Software Systems

Nowadays, businesses use software such as QuickBooks and Sage for bookkeeping. The software is user-friendly, and you don't need any special skills to use it. All you need to do is enter your transactions as they come, and your software will balance everything for you.

Bookkeeping software can be simple or advanced, depending on how much use you want to get out of it. If you run a small business, the basic level will suffice. You need to use the more advanced software for a large–scale business, but you'll still need a bookkeeper to organize your financial records.

For more information on bookkeeping, contact a company near you.