If you have experience on double entry/ software accounting, you will learned that a business transaction occurs and is recorded within the software debiting and crediting related accounts selected from your Chart of Accounts. There are six major types of accounts:
- Assets
- Liabilities
- Capital/Equity
- Revenues/Income
- Cost of Goods Sold
- Expenses
These same accounts will be used in manual bookkeeping system. The advantage of single entry bookkeeping for micro business owners is that the recording of transactions is accomplished by simply entering revenues and expenses on a single form and requires no formal accounting education. Business owners still required to keep those general records pertinent to your business (such as petty cash, accounts, receivable and payable, fixed assets, travel and entertainment, inventory etc), but in a very simple, logical way that can still provide for perfect retrieval of needed tax and business analysis information.
With this method, the flow of accounting data will be as follow:
Business Transaction <==> Business Document <==> Entry Recorded in Revenue & Expense Journal
As such, you are now ready to set up your bookkeeping system and can begin with setting up Revenue & Expense Journal. Business owners can outsource some of the accounting processes such as AP, AR to Singapore accounting services provider in order to maximize time and resources.