Through bookkeeping services, many businesses have been able to save valuable time and money as far as managing their daily business finances.
Trusting a bookkeeper can be a little stressful since they have access to a lot of financial data. However, most bookkeeping services take pride in their work, their professionalism, and practice confidentiality to ensure that clients’ information are safe and secure.
The typical bookkeeping services can be summed in three main areas: single entry system, double entry system, and the online system. Let’s discuss their differences.
Single Entry System
The single entry method of bookkeeping keeps financial information by relying on a more single-sided method of entry. It records basic information such as taxes paid, accounts payable, and cash and accounts receivable.
A bookkeeper would generally put together the data from this method using an income statement and statement of affairs.
The advantage of this system is it is simple and more affordable than other types of bookkeeping services. Another advantage is the daily and monthly summaries of cash receipts for better management of finances. In addition, the entry of business transactions can be recorded in a notebook, a journal, a ledger, or a combination of both.
A disadvantage of the single entry system is mistakes are easier to make. Since it may not be as accurate, it may end up being inefficient. Also, it is easier to let things slide through the cracks, including theft.
Double Entry System
Bookkeeping services such as the double entry system record more than one side of a business transaction to ensure accuracy when noting transactions. It takes into consideration what was lost and what was gained in a transaction. The two sides accounted for in this type of system are debit and credit.
A debit record accounts for the increase in an asset or an expense, or a decrease in liability, equity, or income.
In contrast, a credit record accounts for the decrease in assets and expense, as well as the increase in liability, equity, or income.
The advantage of the double entry system is it is more accurate than the single entry system because it is more like an equation and must be balanced. Any increase in expense will be offset by a decrease in assets, or increase in liability or equity, and also vice versa.
Online Bookkeeping System
Online bookkeeping services are increasingly becoming more popular because it allows you to access your financial information from anywhere and at any time as long as you are connected to the internet. This system requires software-based programs like Xero, MYOB & QuickBooks, etc.
The advantage of your data stored online or in the “cloud” is clearly the convenience of being able to access it anywhere and any time as long you’re connected to the internet. This allows you to have up to date information to make better informed and accurate business decisions.
In addition, this allows you to access other cloud applications and software that link in with Xero, MYOB, Intuit, etc. that can further help you run your business more efficiently. For example, apps and software that will help you manage your inventory, receivables, invoice automation, point of sale, e-commerce and CRM to name a few.
You also do not need to manually update the software as they happen automatically. The software supplier will take care of this for you.
The ability to access and share your information to specific individuals will also allow you to increase collaboration and work closely with key team members such as your accountant.
Furthermore, the online bookkeeping system is cheaper and less time consuming overall than any other type of bookkeeping system.
A disadvantage could be the lack of physical contact with the bookkeeper handling your finances since everything is online. Do your due diligence when looking for a bookkeeper who uses an online bookkeeping system to avoid risks such as unsecure accounting software and systems.
If you need reliable and expert bookkeeping services, contact a Chan & Naylor bookkeeper here. We only use the most secure accounting software for your bookkeeping needs.
Aside from our bookkeeping services, have a look at our other accounting and advisory services that we do to help you achieve greater success.
Chan & Naylor Group has national offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can assist you with your tax accounting needs as well as help you with any business or personal tax enquiry that you may have. Contact us today.