How to Make Double Entry Accounting Error-Free

Are you someone with a small business setting who have to do accounting and make business decisions on their own? So, what is the best system to follow for your accounting system? Well, there are 2 systems available, which are double entry and single-entry. In this content, you will get to know how double-entry accounting is suitable for your business-

What is Double-Entry Accounting? 

Double-entry accounting method in bookmarking calculate where does the money go and where it comes from. Since every transaction involves debit and credit amount, a business has to keep track of which account the money is being transferred to and from. Recording transactions this way by pro accountants in Bracknell can provide you with a comprehensive and detailed view of financial status which you can’t get with single-entry. 

How is it Different from Single Entry? 

In the single entry, you have to write all the business transactions in a single ledger. In this system, you can’t track the assets or liabilities. Hence, there are plenty of chances to make mistakes. Even, in this method of accounting, you won’t even get to know the state of your business. On the contrary, the double-entry system provides accountants with enough information with a major financial statement that may reflect the balance sheet, cash flow, statement of retained earnings and more. With a pro bookkeeping service in Reading, you can even itemise the profits in each account to get a detailed view of which products are doing well and which weren’t. 

When Should You Use Double Entry? 

Are you running a business with sole proprietorship that have a lack of inventory, no debts and a few employee and accounts to keep track of? If yes, then single entry accounting can match your needs. However, to keep track of the complex business process, you are recommended to switch to double-entry. Why? Well, with double-entry, you can get a complete 3-dimensional view of your finances, where you can get the insights into the profitability and health of various parts of your business. This, in turn, can help you in making a better business decision. 

The bottom line is double-entry accounting decreases the risk of bookkeeping errors while increasing the transparency of finances that generally adds a layer of accountability which a single-entry method can’t provide. So, if you want your business to be taken seriously by the banks, investors or potential shareholders- then start using double-entry accounting method today.