What Are the Three Methods of Bookkeeping?
Bookkeeping isn’t one-size-fits-all. Depending on your business size, complexity, and reporting needs, you may use different methods. The three primary bookkeeping methods are:
- Single-entry bookkeeping
- Double-entry bookkeeping
- Computerized bookkeeping
Let’s explore how each works and when you should use them.
1. Single-Entry Bookkeeping
- Each transaction is recorded only once – as income or expense.
- Works best for very small businesses or sole proprietors with simple finances.
- Easy to manage but limited – doesn’t provide a full financial picture.
2. Double-Entry Bookkeeping
- Each transaction is entered twice: once as a debit, once as a credit.
- Ensures accuracy by balancing the accounting equation (Assets = Liabilities + Equity).
- Essential for growing businesses, corporations, and any business seeking outside funding.
3. Computerized Bookkeeping
- Uses software like QuickBooks, Xero, or FreshBooks.
- Automates categorization, reconciliation, and reporting.
- Provides real-time access to financials and integrates with banks, CRMs, and payment processors.
Why the Method Matters
- Single-entry: good for microbusinesses
- Double-entry: required for most businesses to remain accurate and compliant
- Computerized: the modern standard – scalable, reliable, and CPA-friendly
Conclusion
The three methods of bookkeeping – single-entry, double-entry, and computerized – reflect the evolution of how businesses manage finances. Today, most businesses rely on computerized double-entry bookkeeping for accuracy and compliance.
Stay ahead with RemoteBooksOnline – start your first month free today.
Explore our full range of bookkeeping services designed for small businesses looking for accuracy, simplicity, and CPA-reviewed financials.
Tax professionals and CPAs rely on our QuickBooks bookkeeping services to streamline financials and scale their practices efficiently.
Need to fix errors or outdated data in QuickBooks? Start with our expert QuickBooks cleanup services.
Stay organized and tax-ready year-round with our flat-rate monthly bookkeeping services.
