Bookkeeping is the process of recording and organizing all financial transactions of a business on a daily basis. It involves keeping accurate records of what comes in and what goes out — whether it’s sales, purchases, receipts, or payments.
A bookkeeper typically performs the following tasks:
- Recording sales and income
- Tracking expenses and payments
- Managing invoices and receipts
- Reconciling bank statements
- Preparing ledgers and trial balances
Methods of Bookkeeping
There are two main methods of bookkeeping:
1️⃣ Single-Entry System
- One entry for each transaction.
- Mainly used by small businesses or individuals.
- Doesn’t track assets or liabilities in detail.
Example: You record only that ₹1,000 was received – not which account it came from.
2️⃣ Double-Entry System
- Every transaction affects two accounts (debit and credit).
- Standard method used by most businesses.
- Helps in tracking assets, liabilities, income, and expenses accurately.
Example: You record ₹1,000 received from a customer:
Debit: Cash A/c ₹1,000
Credit: Sales A/c ₹1,000
Bookkeeping vs. Accounting – What’s the Difference?
| Bookkeeping | Accounting |
|---|---|
| Focuses on recording transactions | Focuses on interpreting transactions |
| Maintains daily financial records | Prepares reports like Profit & Loss, Balance Sheet |
| Performed by bookkeepers | Performed by accountants |
| Basic data entry work | Analytical and decision-making work |
Bookkeeping Tools & Software
Modern bookkeeping is often done using software to save time and reduce errors. Popular tools include:
- Tally
- QuickBooks
- Zoho Books
- Busy Accounting
- Wave (for freelancers)
These tools help automate data entry, generate reports, manage invoices, and even file taxes.
Bookkeeping is the backbone of any successful business. It keeps your financial house in order, helps you stay compliant, and supports future growth. Even if you’re using software or hiring a bookkeeper, having a basic understanding of bookkeeping gives you better control over your business.