The Types of Bookkeeping Systems in India that Small Businesses Use
Bookkeepers and accountants depend on a set of systems to complete their daily tasks effectively. With a stable bookkeeping system, they can manually or automatically calculate financial books and adhere to the set regulations. A number of companies are now outsourcing bookkeeping services, especially in India. 3E Accounting India is one such firm that offers specialized services in bookkeeping, among others. Let’s look at some of the bookkeeping systems in India that organizations are employing in their businesses.
Single-Entry Bookkeeping System
Small businesses frequently use a single-entry bookkeeping system as it has not much or minimal transactions. Most system users refer to it as a simple, practical, and informal manner of recording. Commonly, companies maintain a record of cash disbursement, sales, cash receipts, and purchases in bookkeeping systems in India. The remaining accounting records, such as capital and inventory, will be in the form of a memorandum or notes on records.
As the traditional way of bookkeeping, this system does not follow a fixed set of accounting rules. What happens is that you only make one entry for each transaction, either in the form of revenue or expense. The system works best when you enter items as you incur them.
As a way of keeping track of accounts on a budget, this bookkeeping system is excellent for small businesses and startups. The system uses cash disbursements journals, cash sales journals, and recorded bank statements in monitoring transactions.
Double-Entry Bookkeeping System
More extensive and complex businesses usually use a double-entry system of bookkeeping. Double-entry bookkeeping is a type of bookkeeping systems in India, that 3E Accounting India often uses. The system allows the user first to post single transaction as either income or expense items. Then, it creates a second sub-entry that tracks the transaction to the correct account. The system enables you to follow five transactions at once: equities, assets, expenses, revenues, and liabilities.
The double entry system operates under the ‘two-fold effect’—meaning that for every value received (debit), there must be a value given up (credit). In this manner, it keeps the accounting equation in balance. Its capability of determining what affects a given business transaction is priceless for keeping track of current financial records. This ensures that one can evaluate future predictions and correctly monitor assets and liabilities. Many businesses opt for this system among the type of bookkeeping systems in India. This is because it gives you a clear picture of the financial state of your business. A business can easily compare one period to another and detect errors, growth patterns, loss patterns, among others.
Through web-based applications, businesses can maintain their financial books effectively. Online bookkeeping forms another type of bookkeeping systems in India for both small and large businesses. Companies that are outsourcing this service can scan and store their business documents and data in a web-based application. Then, their offshore provider’s bookkeeper can remotely access the documents and update the books. The advantage of online bookkeeping is that it’s secure as you upload documents to a safe location. SQL Ledger and QuickBooks are examples of online bookkeeping software businesses use.
An organization may choose to use the different types of bookkeeping systems in India depending on their business size. Each of the systems has its advantages and disadvantages that one must first understand before using one. However, 3E Accounting India is always available if one requires further advice regarding which system will best work for you. Our professionalism, ethics, and experience make us among the best bookkeeping firms in India to outsource. All you need is to contact us and book an appointment with the best.