The term “double-entry bookkeeping” is often mentioned as a cornerstone for managing a business’s finances.
But what does it mean, and why is it so universally adopted?
Below, we aim to demystify double-entry bookkeeping for small business owners and explain why it is crucial to your financial health – and why you might consider outsourcing this complex task to a professional accountant.
What is double-entry bookkeeping?
Double-entry bookkeeping is an accounting system that involves recording each transaction in at least two different accounts, typically as a debit in one account and a credit in another.
The underlying principle is the accounting equation, which states that assets must always equal liabilities plus equity.
Otherwise written as: A = L + E
In layman’s terms, what you own (assets) is financed either by debt (liabilities) or investments (equity).
As you can see, this is a highly complex subject and one in which many business owners find themselves lost and confused.
Why use double-entry bookkeeping?
Accountants and successful business owners use this system for good reason.
Why outsource to a professional accountant?
Most business owners outsource this system to an accountant to maximise their financial standing and efficiency. This is because double-entry bookkeeping has a few challenges:
Double-entry bookkeeping is more than just accounting jargon – it’s a key system that provides accuracy, comprehensive understanding, and ease of reporting in your business’s financial management.
Given its complexity and the expertise required to manage it effectively, outsourcing this function to a professional accountant is an investment in your business’s financial integrity and future success.
If you’re interested in ensuring that your business’s finances are in the best shape they can be, consider speaking to a qualified and experienced accountant.
You’ll not only gain peace of mind, but also free up time to focus on what really matters -growing your business.
Speak to one of our professionals about double-entry bookkeeping today.
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