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FreshBooks Double-Entry Accounting – Industry Standard Format Structure
In this article, I am going to highlight The FreshBooks Double-Entry Accounting tools that have just been added to the Fresh Books accounting system.
What Is The FreshBooks Accounting Software?
– FreshBooks has everything you and/or your accountant need to stay organized year-round and be 100% ready for tax season
– You can create and send super polished invoices in about 30 seconds with FreshBooks
– FreshBooks keeps you organized with smart and simple time tracking for you and your team
– FreshBooks lets you record and organize expenses with a tap of your mobile camera
– FreshBooks gets you paid in a snap by accepting credit card payments directly on invoices
– For faster payment next time, you can save credit card info directly in client profiles
FreshBooks has designed the Double-Entry Accounting tools in the same simple, easy-to-use way as all of their above original features.
Who Is The FreshBooks Double Entry For
The FreshBooks Double-Entry Accounting system would be most beneficial to the following three types of small businesses:-
1. Simple But Sustainable Small Business
Why is that so? For instance, if you’re a small business that is just starting out or maybe you’ve been an entrepreneur for years. Although you are experiencing ups and downs but you’re making a good living and you’re happy with your revenue, clientele and lifestyle. This will work for you.
FreshBooks’ double-entry accounting will help you structure your financial information in an industry-standard format so sharing your information with your accountant at tax time will be even easier. It will also help with the reconciliation of your bank account transactions with your cash account to better manage your cash flow so you will always know how your business is doing.
2. Fast Growing Small Businesses
If you’re a small business and you’ve been using FreshBooks for a while. You have a few employees, an impressive clientele and you may have recently hit a new revenue milestone. However, your financials are becoming too complex to manage on your own. You need a more robust system that both you and your accountant can use to get the right data that will help you make smart decisions for the future.
With FreshBooks’ double-entry accounting system, you’ll have everything you need in one refined solution. Your accountant will appreciate the access to your financials and the industry-standard format. You’ll love the complete view of where your money is being spent, where you can find savings, how your business is performing and the ability to forecast the health of your business with confidence.
3. Small Businesses Primed For Growth
If you’re a small business and you’re on the rise too, you’ve been content with accounting features like invoicing and expenses, but lately you’ve been dabbling in advanced reporting tools that help you see the bigger picture. You might be hiring contractors or even employees, purchasing assets like new equipment and you may have taken out a small business loan to help seed your growth.
Double-entry accounting in FreshBooks will give you a deeper line of sight to your financials to help you understand where your business truly stands historically, currently and in the future. The industry-standard bookkeeping system will help on both counts. And tax time will be smoother than ever.
Is It For Everyone?
The double-entry accounting system is not for freelancers and micro businesses or those businesses just starting out.
Freelancers and some micro businesses can make single-entry accounting work but as a small business that is doing well, if you opt to use single-entry accounting, you’ll receive a very limited view of your business. But why even hobble along with single-entry accounting when you could use double-entry accounting to excel? Honestly, the single-entry accounting gives you as much insight into your business as your checkbooks ledger that’s all!
Major Benefits of Using The Double Entry System
Double-entry accounting is a way of recording bookkeeping transactions, where each transaction affects two accounts. This method of accounting helps ensure accuracy, as the debits must always equal the credits.
The Ability to Generate Reports Anytime
Double-entry allows you to generate a statement of cash flows, balance sheets, and more detailed income statements. The beauty of the system is in its ability to generate these reports any time you want.
Make Financial Reporting Easier
It’s a confusing system at first because you’re not familiar with it. Once you get used to it, you’ll appreciate a heap of helping benefits that come with the tools. The primary reason to use double-entry accounting is to make your financial reporting easier. Single entry accounting can help you create an income statement – earnings, costs, profit – but falls flat on other major reports.
Where to Find Double Entry Accounting Software
Almost every modern accounting software solution on the market these days offers double entry accounting. Most of the accounting software does double-entry accounting behind the scenes so you don’t have to worry about the basic accounting equation or recording debits and credits at all.
You’ll get accurate financial statements automatically. That is the reason why FreshBooks has added the double entry accounting system to their sophisticated original features to compete with other major accounting software on the market.
All you have to do is enter transactions and categorize those transactions into the right accounts, and the software takes care of the rest!
Why You Should Use Double Entry Accounting
Double-entry accounting is the only way to get an accurate view of your company’s finances. Single-entry accounting records income and expenses alone, whereas double-entry accounting takes assets and liabilities into account, giving you a more complete balance sheet.
A list of income and expenses only go so far in helping you understand your business — especially because a company’s finances involve more than just income and expenses. Assets like property, equipment, and machinery may not bring in “income” like cash, but these assets are integral to the owner’s equity and to understand the business’s overall net worth. That’s why double-entry accounting is the only way to go.
Other Benefits of Double-Entry Accounting are:
• Helps catch errors
• Makes for strong accounting records
• Is used by accountants (which makes things easier on your accountant and your wallet)
• Makes it easier to prepare proper financial statements
Major Features of What The FreshBooks Double Entry Accounting Software Records:
• Cost of Goods Sold (COGS):
• Other Income
• General Ledger
• Trial Balance
• Chart of Accounts: A list of all accounts that help you categorize the transactions of your business.
• Accountant Access: A personalized login for accountants for easy collaboration and data sharing.
• Bank Reconciliation: A place to create additional entries, expenses or payments that occur outside of FreshBooks,
• Balance Sheet: A full aggregate record of your business’s finances.
Hopefully, you now have a grasp on how the FreshBooks double-entry accounting tools and other features on this system will work for your business and understand why it is integral to proper bookkeeping. When it comes to keeping financial records, you can never be too careful. Double-entry accounting is the only way to go if you want to keep strong records and understand the overall financial performance of your business.
No matter what size your business is, there’s always a way to get more insight into your success and failures by keeping a keen eye on your finances. The first step to that is to embrace the power and value of double-entry bookkeeping.