![]() The double-entry method is a bit more complex, and is often used by businesses that want to grow and/or need more detailed reporting. This leaves you with the “balance,” which is the amount of funds your business has on hand. All your business’s transactions, including income and expenses, are recorded as a single entry in a log. Single-entry bookkeeping is the simplest method, and is often used for businesses with few or no employees, minimal plans for growth, and no need for detailed financial reporting. ![]() We’ll explain the differences below! Single-entry bookkeeping Bookkeeping is a worthy investment! □ Watch the first part of our bookkeeping YouTube series below for more information on what bookkeeping is and why it’s important for small businesses, and keep reading for more juicy details on how to get started with bookkeeping!īookkeeping FAQs What are the different methods of bookkeeping?īefore you start bookkeeping, you’ll need to determine the right bookkeeping method for your business: the single-entry method or the double-entry method. Shows credibility with investorsīookkeeping also helps you generate common financial documents that investors and lenders usually want to see before they give you funding. These reports help you make better business decisions and catch mistakes before it’s too late. Generating important financial reports-like balance sheets, income statements, and cash flow statements-can also give you insight into how your business is doing. Bookkeeping can also help you identify and prepare for slower business seasons. Tracks cash flowīy staying on the pulse of your cash flow through bookkeeping, you can easily see if you’ve been a lil’ too lenient with your spending lately and quickly react (and budget!). Įven better, tracking expenses can also help you find tax deductions and lower the amount of tax you have to pay. The Internal Revenue Service (IRS) may want to see documentation of your financial transactions, so keeping on top of your bookkeeping can help you keep the IRS-anxiety at bay. If you’re recording every transaction your business makes on a frequent basis, it’s easier to always be prepared for tax season and avoid any last-minute scrambling. Let’s go into a little more detail about how all of this comes together. Demonstrate credibility with vendors and lenders . ![]() See how cash flows through your business and know exactly how your business is performing.Always be ready for tax time and find ways to receive tax deductions.Why is bookkeeping important for small businesses?īookkeeping is important for small businesses, because it can help you:
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