Still Here: Double-Entry Bookkeeping in Online Accounting

And even though most online accounting solutions are built on simple-entry bookkeeping, suggesting it’s the end of the double-entry system, the latter still has a bright future.

The basics of double-entry accounting

How double-entry bookkeeping goes with online accounting

We cannot emphasize enough how easy double-entry bookkeeping is today for SMBs, especially since the dawn of online accounting services. These clever solutions are not only capable of rationalizing your whole bookkeeping so that you can say goodbye to those piles of files and dreaded Excel spreadsheets, but they also radically eliminate chances of making a mistake due to real-time data recording. This is basically the system behind single-entry bookkeeping. The problem is that it is still very likely you will make mistakes (this is an unavoidable human factor) and you are still not trusted by creditors and other business partners until your books have been verified.

This is where the advanced double-entry bookkeeping enters into the picture. Since businesses can record in real-time what they owe and own, and what they have earned and spent over a given period of time (ergo the transaction is recorded the moment it is processed), owners and/or auditors can spot mistakes when it comes to the verification. In fact, your online books are open for accountants and bookkeepers upon invitation by the business owner; therefore they can immediately interfere should some data get recorded in an incorrect manner. Furthermore, advanced accounting solutions like Xero are capable of constantly balancing out the classic double-entry bookkeeping equation, taking into consideration various factors for assets, liabilities, expenses, equity and revenue.

Whether you trust your accounting program or ask for the help of an auditor (or even combine the powers of both), when it comes to lending capital, bankers can see a full set of historically accurate, audited numbers, thus they can evaluate whether you’re eligible to receive capital.

Bookkeeping without borders

Furthermore, by cooperating with a foreign auditor, businesses conducting activities in other regions of the world can get verified in other countries and be eligible for loans therein as well.