Recording of the financial data of a business in an orderly manner which will help for future reference is termed as bookkeeping. Many businesses prefer outsourcing their bookkeeping to professionals rather than doing it on their own.
Types of bookkeeping
Single Entry Bookkeeping
Businesses with minimal and uncomplicated financial transactions adopt this method of bookkeeping. This is a basic system of bookkeeping which a company uses to keep track of daily receipts or generate daily, a weekly report of cash flow. This system is not used for businesses that have accounts receivable, accounts payable or many capital transactions.
However, this system cannot be used by a bigger business with a huge sum of financial transactions as it lacks arithmetic accuracy and is not acceptable for tax purposes.
Double Entry Bookkeeping
This type of bookkeeping is required by businesses that have complex financial transactions. This system provides checks and balances by recording a corresponding credit entry for each debit entry. These entries are not based on cash. Double-entry bookkeeping is made when a debt is incurred or revenue is earned.
However, double-entry bookkeeping is not preferred by small businesses as it requires costly maintenance and the system is also a little complicated when compared to a single entry bookkeeping system.
Many businesses use bookkeeping software to track their financial records. There is quite a few user-friendly software that are available in the market for accurate bookkeeping purpose. Aavana is a proud owner of one such software named Aodry. Aodry is a user-friendly ERP software that helps you keep your financial statement.
Virtual bookkeeping has major advantages as it eliminates the expense of employing an in house bookkeeper or the CPA fees. In this method, a bookkeeper accepts sales invoices, expense receipts and payroll ledgers electronically. Unlike an in house bookkeeper, your virtual bookkeeper will be available all 365 days of the year. Hiring a virtual bookkeeper also increases revenue and reduces cost.