Single entry bookkeeping is sometimes referred to as the easiest method of applying bookkeeping to financial transactions and in fact, it is the first system that is adopted by most small businesses and freelancers and the independent-operating entrepreneurs. Single entry bookkeeping has been in use by you unknowingly in the event that you have been tracking payments in a notebook, an Excel sheet or even a simple cashbook. It is not that complicated, does not need you to have the knowledge of accounting, and will keep you on the track of the fundamentals of your finances without bombarding you with rules and formats. 

However, despite its simplicity, it is of paramount importance to know how it works, where it works, and where it is inadequate in the long-term business development. This guide dissects all that you should know in a manner that is relatable and practical so that you can determine whether you would be better suited to single entry accounting.

What is Single Entry Bookkeeping?

The easiest way of keeping financial records is single entry bookkeeping. The single entry bookkeeping records only one side of a transaction, i.e. either income or expense, as opposed to the double-entry system that records both sides of a transaction. Consider it as your own checkbook or simple cash diary in your business. As you receive money, you post it. You record the cost when the cash is out. It’s that straightforward.

The system is particularly useful in case of freelancers, independent service providers, consultants, online sellers, home-based business, small shops and in solo entrepreneurs that have limited transactions without elaborate financial systems. In case your business does not imply large volume operations, inventory management, loans or asset tracking or several accounts, the single entry accounting is not only adequate but remarkably convenient.

The system is simple to maintain using Excel, Google Sheet, or a simple cashbook as it does not require any debits, credits, ledgers, journals, or balance sheets. It is the ideal low cost low effort financial management solution to many newer or smaller level businesses.

The Single Entry Bookkeeping System: How to do single entry bookkeeping

The single entry system of bookkeeping operates by keeping a cash book, which is a simple record within which you record the income and expenses on a daily basis. All the records include a basic set of information, including the date, description, amount received or paid, and running balance. Most small businesses use:

• Excel sheets

• Google Sheets

• Simple accounting software, such as Wave or Zoho.

• Cashbook apps

• for maintaining this record.

This system is effective as it is not complicated, fast to refresh, and there is no need to have financial background knowledge. But the more transactions you have the more it might begin to get harder to keep track of everything. It can be easily understood in the following format:

• Money leaves you in a bigger place.

• Money out decreases it

• You never forget your disposable income.

• Most small businesses use:

• Excel sheets

• Google Sheets

• Simple accounting software, such as Wave or Zoho.

• Cashbook apps

• for maintaining this record.

This system is effective as it is too easy, fast to update, and it does not require financial skills. Nevertheless, the larger are your transactions, the more it can begin to be hard to keep track of it all.

The Advantages of Single Entry Bookkeeping 

Here are the benefits of single entry bookkeeping system:

Extremely simple to learn and use

Single entry bookkeeping does not need accounting knowledge, debit-credit concepts, and technical training. Immediate recording of transaction allows the business owners to start right away, which is most suitable in start-up businesses and freelancers who simply need to see the cash flow in and out.

Low set up cost and low tools 

This system does not require any expensive accounting programs to keep. It only takes a diary, Excel sheet, or a plain bookkeeping application – it saves time in setting up and saves money in operations expenses of small businesses.

Fast and easy cash tracking

Single entry bookkeeping allows you to keep track of daily revenues and expenses without having to work your way through various accounts and detailed journals, in case you have simple financial operation.

Less or no training is required

The records can be kept by anyone in the business even though one has no experience in finance. It is ideal when dealing with small teams, individual business owners, and home-run businesses.

The time-efficient system

It is quicker, as you record one side of each transaction only. It enables business owners to have uniform records without wasting hours in the bookkeeping activities.

Ideal for businesses with simple operations

The greatest beneficiaries are the freelancers, consultants, small shops in the retail sector and online sellers with minimal transactions. The system provides them with clarity about the basic finances without overwhelming them.

Flexible and easy to update

Due to the simplicity of the structure, it is easy to make some adjustments or correct them, which is more complicated with the complex system of accounting.

The Drawbacks of Single Entry Bookkeeping 

Gives low financial accuracy

The assets, liabilities, and equity are absent since the two sides of a transaction are not documented. This decreases financial information reliability.

Unsuitable to grow or complicated business.

When a business grows, hires workers, gives loans, or works with inventory, the single entry approach is no longer adequate and does not allow pursuing the sophisticated financial requirements.

Unable to prepare all financial statements

Reports such as balance sheets, cash flow statements or detailed profit and loss statements will be in need of data that is double entry. Single entry bookkeeping merely is not in a position to store enough information that can produce them.

Increased chances of unnoticed mistakes or fraud

Records have no mechanism of balancing (such as the balancing of double entry). An entry that is missing or inaccurate can go unnoticed and this can compromise financial accuracy.

Complexes audits and compliance

Since the information is not in-depth, organized, it cannot be viewed as perfect in terms of tax, investor, and lender analyses all of which require complete financial transparency.

Does not support credit transactions 

It becomes hard to track credit sales, unpaid bills, receivables payables or loan repayments. This renders it inappropriate to businesses that are not involved in dealing with straightforward cash payments.

Higher risk of undetected errors or fraud

Only the income and expenses are registered and with superficiality one cannot determine the actual profit margins, financial health or long term performance.

Makes audits and compliance difficult

In cases where a business finally transitions into the double entry bookkeeping, it may need professional assistance and reorganization to make the incomplete data available complete accounting system.

The Disadvantages of Single Entry Bookkeeping 

Here are the drawbacks of single entry bookkeeping system:

Offers moderate financial precision

Because the transaction has been recorded only on one side, the other relevant information on assets, liabilities, and equity are absent. This decreases the accuracy of financial data.

Not for growing or complex businesses

When a business grows, begins recruiting employees, taking loans, or working with inventory, a single entry method will be not enough and will not be able to help with the development of more complex financial requirements.

Unable to prepare full financial reports.

Such reports as balance sheets, cash flow statements, or detailed profit and loss statements are also double entry data. Single entry bookkeeping does not even hold the amount of information to create them.

Higher risk of undetected errors or fraud

Records are not cross checked in any way (as with double entry which should be balanced). An absent or inaccurate record can go undetected, which can influence the financial integrity.

Compliance and audits made difficult

This is due to the fact that the data is not rich and structured and therefore cannot be used in tax examination, investor analysis and lender demands which require complete financial disclosure.

Unable to support credit or accrual transactions.

Following the credit sales, the unpaid bills, the accounts receivables, the accounts payable, or loan payments becomes hard. This renders it inappropriate among companies that operate outside the sphere of cash transactions.

Harder to calculate true profitability

Having income and expenses reported shallowly, it becomes difficult to assess real profit margins, financial performance and long-term performance.

Late transition becomes time-consuming.

By the time a business decides to convert to double entry bookkeeping, the unfinished information might need the services of professional assistance and reorganization.

Why Select Aone Outsourcing Solutions as a Single Entry Bookkeeping?

With single entry bookkeeping selected by small businesses, the question of accuracy and consistency is of greater importance than ever. It is here Aone Outsourcing solutions come in as a good partner.

Bookkeeping Professionals

We have a professional team that makes sure that your income and expenses are appropriately registered, tabulated and kept without any errors.

Accurate, Reliable and Timely Records

We assist companies in preventing errors and have a clear vision of their money flow throughout the year.

Cheap Outsourcing among Small Businesses

Our bookkeeping outsourcing processes are targeted at:

• Startups
• Freelancers
• Small and medium-sized businesses
• all at cost-effective rates.

Scalable Solutions

As your business expands we ensure that you move out of single entry bookkeeping to double entry, full accounting and high level of reporting without interruption.

Software Expertise

We work with:

• QuickBooks
• Xero
• Zoho
• Wave
• Excel
• Tally

You have to make sure you receive the system that suits your business the best.

Wrapping Up…

Single entry bookkeeping is a great option when starting a small or simple business and do not want to keep the financial records complicated. It maintains cleanliness, time-saving, and allows you to stick to the most important things, running, and developing your business. However, when you desire peace of mind and accuracy, and also scalability, then outsourcing of your bookkeeping can render your financial management easy.

Aone Outsourcing Solutions is on hand to assist you with the single entry bookkeeping processes that are affordable, professional, and reliable. Be it a freelancer or a small business owner, we will keep your financial records in order and free of any errors.

Are you willing to make bookkeeping simple? Call Aone Outsourcing Solutions.

Frequently Asked Questions

Q1: What is Single Entry Bookkeeping?

It is a simple accounting system in which all the transactions are recorded in one place that can be income or an expense without debit credit records being used.

Q2: What is the diffrence between single and double entry bookkeeping?

Single entry records one side of the transactions whereas the double entry records both the debit and credit side of these transactions which is more accurate and provides full financial statements.

Q3: Who is to use the single entry method of bookkeeping?

Independent workers, business individuals, domestic businesses and small service providers with straightforward financial transactions.

Q4: Can I change single entry to the double entry?

Yes. Most business ventures begin as single entry and are upgraded with rising businesses. The Aone outsourcing solutions facilitate transitions.

Q5: Why am I outsourcing single entry bookkeeping?

You obtain the correct records, save on time, minimize your mistakes, and make sure your budget is controlled by a professional, without paying full-time employees.