Recent research has proven that companies of all sizes (small, medium and large) can benefit greatly by outsourcing bookkeeping. Bookkeeping, if done in-house can rob you of precious time and effort, which can be otherwise spent on core business activities. Outsourcing bookkeeping is also a great way to reduce cost, improve efficiency and get access to the skill sets of professional accountants.
Now that you are confident about outsourcing, the next step is to choose a bookkeeping system that suits the requirements of your business. Most bookkeeping services providers in India specialize in different bookkeeping methods and give companies the opportunity to choose between single entry bookkeeping, double entry bookkeeping and online bookkeeping.
The simple single entry bookkeeping system
This bookkeeping system is simple, with columns for date, description and amount. In fact, it is as simple as using a check book register. Every transaction is entered as a single line, with the positive and negative transactions recorded into one column. In this accounting system, additional columns can be effortlessly added for varied types of expenses or revenues. Though this method of bookkeeping is ideal for small businesses, it also has several disadvantages.
To start with, it is difficult to identify errors and calculate the financial position. There is no link between the income and balance sheet. Also, detailed financial information cannot be easily added. With single entry bookkeeping, it also becomes quite hard to keep a track of your assets or liabilities.
The error-free double entry bookkeeping system
Most businesses love the double entry bookkeeping system because of the advantages that it offers. If you maintain your accounts in a double entry bookkeeping style, you can detect errors with ease, prepare financial statements quickly, include assets/liabilities and make an accurate calculation of your profit/loss. Two entries are made for each transaction and every transaction is entered in two accounts (debit and credit). By entering both debits and credits, the accounting balance is kept in balance.
The double entry bookkeeping system is the best accounting system for medium to large companies who have to keep an account of external suppliers, large assets and several transactions on a daily basis. In this accounting system, for every debit entry, an equal and opposite credit entry is always entered. When the accounts are totaled the sum of all the debits will be equal to the sum of all the credits.
The secure online bookkeeping system
Online bookkeeping is very secure and is the most preferred bookkeeping system for companies who outsource. All you have to do is scan and upload your documents onto a secure web based application. Your bookkeeping service provider will then remotely access your documents and update your books. In this system, accounts can be updated as often as you need to. Online bookkeeping is also a great way to reduce time and cost. The best advantage of online bookkeeping is that you can access your accounts from anywhere, at anytime.
Now that you know more about single entry, double entry and the online bookkeeping system, which method would you prefer and why? Let us know, by leaving a comment in the box below. We would love to hear from you.