FreshBooks is a great tool for carrying out certain business functions such as creating professional looking invoices, managing and organising expenses and tracking time, just to name a few. These types of features work well for small businesses and for the most part, fulfil their requirements from an accounting standpoint.

But, as a business grows, so does the need for more functionality, data and easy access to relevant information.

Now, let’s take a step back and take a look at the accounting equation:

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Assets = Liabilities + Equity

This is an equation that you want to ensure is balanced as far as your business accounting is concerned. Now cue, double entry accounting.

Double entry accounting

The accounting equation is the foundation of double entry accounting which ensures that the balance sheet remains balanced. Every business transaction will involve two or more accounts in order to comply with the accounting equation. So, for every debit entry, there will be an equal credit entry. You can also look at it as a way of making sure that everything adds up.

It can take a minute or two to get your head around if not an accounting professional but it’s good to know the basics if you are in business.

FreshBooks double entry accounting

Image courtesy of FreshBooks

Since its inception, FreshBooks has been a really good cloud accounting option for small business owners. But, it did have its limitations especially for rapidly growing businesses needing more functionality and data. That said, FreshBooks has just added more functionality to its software and now offers double-entry accounting and bank reconciliation. This is a big win for growing businesses that need this added functionality.

The new features make FreshBooks a more robust cloud accounting solution and it comes with the following industry standard functions:

• Accountant access: create a profile for your accounting professional and give them access to only the relevant tools
• Chart of accounts: A list of all accounts in a business’ accounting system used to record transactions
• Balance sheet: a snapshot of financial position at a given time
• Bank reconciliation: a checklist for matching lines imported from financial institutions to those in FreshBooks
• General ledger: a record of all transactions from all accounts
• Cost of goods sold (COGS): the direct costs for delivering a service of producing a product
• Other income: other income the business is bringing
• Trial balance: a list of closing balances on general ledger accounts

For more in-depth explanations on the functions listed above, visit: FreshBooks’ Double-Entry Accounting Glossary

Is FreshBooks double entry accounting right for your business?

FreshBooks is pretty straight up about who they feel would benefit from double entry accounting. If you are a one-person business with few expenses and are getting on just fine using (what were) their regular tools such as invoicing, time tracking and reporting functions, you don’t need to worry about double entry accounting.

The businesses that they see benefiting the most are fast-growing small businesses, those primed for growth and simple sustainable ones. The main theme for the benefit of double entry accounting across the three types of businesses points towards data! FreshBooks gives business owners (and accountants – who will be especially happy at tax time!) easy access to information. Having easy access to the right data gives users a complete view of where the business has been, where it currently stands and where it could be going. Having this kind of insight can go a long way in helping to make decisions that shape the future of the business.

More often than not, a small business owner is a jack of all trades and usually short of time. The last thing that they want is to over complicate life with all sorts of tools that are a necessary evil. FreshBooks endeavours to take the pain away from bookkeeping with an easy to use full feature cloud accounting software.

Sign up for a FREE 30 trial today and see if it is right for your business.