Bookkeeping is a standardised and well refined process through which individuals and organisations record history of business affairs. There are generally two methods of bookkeeping:
- single entry bookkeeping
- double entry bookkeeping
Single entry bookkeeping involves simple recording of cash or bank transactions of a particular business. This is a very easy method, especially for individuals, small business owners and start-ups. Merely recording all cash / bank transactions is in fact is single entry bookkeeping. However, this method entails complications since when financial statements are constructed from such records, professional bookkeepers have to spend more than usual time, implying, more cost to the business owner.
Double entry bookkeeping system is the most popular, standardised and widely used method. All accounting standards, both internationally and locally e.g. Australia, provide guidelines and standards based on double entry bookkeeping. Banks, insurance companies, majority of the government departments, airlines etc., they all use double entry bookkeeping. This is the most advisable method of bookkeeping.
Which method should you use? It mainly depends how many transactions are there in your business. I would suggest you meet with a professional accountant and discuss your situation to have proper guidance. It is important for you to lay right foundation at the beginning, otherwise, at a later stage it will be very difficult to rectify mistakes. Talk to an accountant if you are starting now or you can take advantage of our 1st one hour free consultation! Contact us here.