Double Entry Bookkeeping (2025 Guide for Small Business Owners)
Double entry bookkeeping is the foundation of accurate accounting. Whether you’re a freelancer or a growing small business, this method helps you keep clean records, detect errors, and understand your financial position.
In this guide, we’ll break down what double entry bookkeeping is, how it works, and why it’s still essential in 2025 — even with software like QuickBooks Online.
What Is Double Entry Bookkeeping?
It’s a method of recording financial transactions where every entry has two sides: a debit and a credit. This keeps your books balanced and helps you catch mistakes early.
Here’s the core formula:
Assets = Liabilities + Equity
How It Works
- Debits: Typically increase assets or expenses
- Credits: Typically increase liabilities, income, or equity
Every transaction affects at least two accounts. For example:
- You buy office supplies with your business debit card: Debit (Supplies), Credit (Bank)
- You invoice a client: Debit (Accounts Receivable), Credit (Revenue)
Why It Matters
- Keeps books balanced — if they’re not, something’s wrong
- Helps prepare accurate financial statements
- Makes tax filing easier
- Gives you insight into business health
Real-World Example:
We recently worked with a small eCommerce business. They had been using single-entry tracking (like a checkbook), but couldn’t figure out why profits looked off. After switching to double entry, we found several uncategorized payments. Problem solved.
Quick Tip:
Even if you’re using QuickBooks Online, knowing the basics of double entry will help you understand what’s really happening in your books.
Get Help With Your Books
At LangBookkeeping LLC, we specialize in remote bookkeeping services for small businesses across the U.S. Whether you’re just starting or need catch-up help, we’ve got you covered.
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FAQ: Double Entry Bookkeeping
Is double entry bookkeeping required by law?
It depends on your business structure and location. But even when not required, it’s strongly recommended for accuracy and audit-readiness.
Can I do double entry bookkeeping in Excel?
Yes, but it’s tedious and error-prone. Software like QuickBooks Online makes it much easier while still using double entry under the hood.
What’s the difference between single and double entry bookkeeping?
Single entry tracks income and expenses only. Double entry tracks all assets, liabilities, income, and equity — giving a full picture of your business.
Do I need a bookkeeper to manage double entry?
If you’re unsure how to apply debits and credits, or you’re spending too much time trying to figure it out, a bookkeeper can save you time and costly mistakes.