What is Double Entry Bookkeeping
Double Entry Bookkeeping is an accounting system where every transaction has two equal and opposite elements – a debit to one account and a credit to another.
For example, if a restaurant buys a new oven for £1,000, they debit their equipment expense account for £1,000 and credit their cash account for £1,000. This is because their equipment assets are now worth £1,000 more, and they have £1,000 less in cash.
What is single-entry bookkeeping?
In single-entry bookkeeping, you only record your income and expenses. For instance, you buy a new oven for £1,000, and it is added to your expenses – there is no crediting involved.
Disadvantages of single-entry bookkeeping
The disadvantage of this is that, of course, this only gives a one-sided picture of transactions within a business.
How can double entry bookkeeping help?
Double entry bookkeeping allows you to have a more complete financial picture as you have two accounts to compare, making it a wholly more attractive proposition to investors, banks and buyers.
Advantages of double entry bookkeeping
Another advantage double entry bookkeeping has is the ability to spot errors. In double entry, debits and credits must always balance each other out – if they don’t, you know there is an error somewhere. This makes it easy to ensure incorrect figures are not transferred into other documents or financial statements, enhancing the overall profitability of your business.
Avoid balancing errors
Balancing errors are a given in business – no matter how big or small your company. It is therefore incredibly important for any business to have someone responsible for their double entry accounting. Hiring your own double entry bookkeeper will eradicate the stress bestowed onto you as a business owner, as you will have full peace of mind that your accounts are balanced at all times.
Potential investment advantages
Not only this but it will make you far more lucrative as a business proposition to any potential partners or deals that you might pursue in the future, having clean accounts that have been properly managed and maintained.
Choose Sandwell Accountancy Services
Here at Sandwell Accountancy Services, we have a selection of hugely experienced professional accountants who are best suited to dealing with double entry accounts in the West Midlands. As certified, trusted local accountants, we provide our clients with a key contact to deal with all your queries and questions. We offer our clients a truly personal touch along with accurate, expert advice and a dedicated contact person who will always respond in a timely manner to your queries.
We’re a premier accounting firm
With a lifespan of almost 50 years, we have built a reputation as one of the region’s premier accounting firms due to this reliable, professional service, but what’s more – we believe quality shouldn’t cost the earth. Our affordable rates make us an ideal solution for you and your business.
What are you waiting for? Get in touch with the team now on 01384 568 197 to discuss your requirements, or email firstname.lastname@example.org.
We are ready and willing to help.