Introducing: Industry Standard Double-Entry Accounting
November 29, 2018
We’re proud to announce a new option for FreshBooks customers: industry standard double-entry accounting to help grow your business.
It’s the same FreshBooks you know and love – only stronger, better and packed full of advanced features that offer even more insight into your business’s performance and growth potential.
Here at FreshBooks, we’re obsessed with providing all of our small business owners with exactly what they need to manage their accounting. We’re constantly working behind the scenes to respond with features you generously tell us you’d like.
Many of our customers love us for the ease and simplicity of whipping up invoices quickly, recording expenses and tracking time. Others, intent on growing their businesses, are hungry for more data, more insights and more precise, industry-standard functions that’ll help them collaborate with their accountant even easier.
We hear you! And we’re introducing a new suite of industry standard double-entry accounting features.
This new system in FreshBooks allows you to share your financials with your accountant in a format they prefer, satisfy your curiosity about your business’s performance in a more complete way and offer you more accounting options for your growing business.
What is Double-Entry Accounting?
It’s an industry-standard method that bookkeepers and accountants use to track and manage a business’s financial records.
“Double-entry” means there are always two entries for each accounting transaction. One is a credit; the other is a debit. For example, if you buy a new laptop for your business, the double-entry system will track the purchase as a debit for the cost and a credit for the new asset you now own.
With this more robust way of looking at your accounting activity, you’ll have a more complete picture of your financial status than what you’re accustomed to having in FreshBooks. You can get more insight into cash flow and profitability and understand how much you’ve got in assets, liability and equity at any given time.
It also helps you ensure that this “accounting equation” (assets = liabilities + equity) is always in balance. Plus, it’s an extra layer of verification that your business accounts are up-to-date and accurate. Always a bonus at tax time.
Sound complicated? It’s really not. FreshBooks has designed the double-entry accounting tools in the same simple, easy-to-use way as all of our original features.
Is Double-Entry Accounting for Everyone?
Nope. If you’re a one-person freelancer who incurs few expenses and you’re happy with the invoicing, time-tracking, project-management and reporting functions of FreshBooks, you can ignore the double-entry accounting tools. They’re there for you if you want to expand and get deeper insights on your business, but you don’t need to use them to manage your accounting in FreshBooks.
FreshBooks Plus and Premium customers automatically have access to double-entry accounting. Here are three types of small businesses that will benefit most from its features:
Fast-Growing Small Businesses
You’ve been using FreshBooks for awhile. You have a few employees, an impressive clientele and you may have recently hit a new revenue milestone (congrats!). However, your financials are becoming too complex to manage on your own. You need a more robust system that both you and your accountant can use to get the right data that will help you make smart decisions for the future.
With FreshBooks’ double-entry accounting system, you’ll have everything you need in one sophisticated solution. Your accountant will appreciate the access to your financials and the industry-standard format. You’ll love the complete view of where your money is being spent, where you can find savings, how your business is performing and the ability to forecast the health of your business with confidence.
Small Businesses Primed for Growth
You’re on the rise too! You’ve been content with accounting features like invoicing and expenses, but lately you’ve been dabbling in advanced reporting tools that help you see the bigger picture. You might be hiring contractors or even employees, purchasing assets like new equipment and you may have taken out a small business loan to help seed your growth.
Double-entry accounting in FreshBooks will give you a keener line of sight to your financials to help you understand where your business truly stands—historically, currently and in the future. You need more data to help you decide your next moves and you want to run your plans by an accountant. The industry-standard bookkeeping system will help on both counts. And tax time will be smoother than ever.
Simple But Sustainable Small Business
Maybe you’re just starting out or perhaps you’ve been an entrepreneur for years. Although there are ups and downs, you’re making a good living and you’re (mostly) content with your revenue, clientele and lifestyle. No big changes on the horizon for you!
FreshBooks’ double-entry accounting will help you structure your financial information in an industry-standard format so sharing your information with your accountant at tax time will be even easier. And it’ll also help you reconcile your bank account transactions with your cash account, so you always know how your business is doing and you can manage your cash flow better.
What Are the New Double-Entry Accounting Features?
FreshBooks’ double-entry accounting functions have seven new features that are part of the industry standard system. You can find more detailed information on each of them here. These are the broad strokes:
- Cost of Goods Sold (COGS): Associate expenses with the costs required to deliver your service to clients.
- Other Income: Record and track the income you receive outside of your invoices in FreshBooks, so all your income is in one place.
- General Ledger: It’s a complete record of all the financial transactions of your company throughout its life.
- Trial Balance: A statement of all the debit and credit balances in your chart of accounts. Any disagreement in the totals will show an error so you know what to investigate.
- Chart of Accounts: A list of all accounts that help you categorize the transactions of your business. It helps you keep all your financial information organized in an accountant-friendly way.
- Accountant Access: A personalized login for accountants for easy collaboration and data sharing so they can access all of the information they need to provide you with clear insights about your business’s performance.
- Balance Sheet: A full aggregate record of your business’s finances, including assets, equity and liability, so you know whether you’re in the red or black. You can see trends over time and compare performance in different time periods to determine the true health of your business.
Integrating industry standard double-entry accounting is just one more way we’re always evolving to serve you better. If your business is primed for growth, you may dive right in. If you’re just starting out, it may not be for you—yet.
Just like us, double-entry accounting is there for you when you need it. We’re with you every step of the way.