What Is Single-Entry Bookkeeping?

Single-entry bookkeeping is a basic accounting method where each transaction is recorded only once in a simple cashbook. It tracks money received and money spent without linking entries to multiple accounts.

Single-entry bookkeeping system is like a “cash diary”, where you record all the financial transactions in a single line. Popularity? – Yes, it is too high! Studies show that nearly 60% of self-employed individuals and micro-businesses use a single-entry system.

Reasons? 

• Zero technical terms
• No need to prepare complex ledgers
• No requirement for any costly accounting software

That’s the comfort single-entry offers! Read this article to learn what single-entry bookkeeping is, how it works, where it helps, and where it falls short. You’ll also see when it’s the right choice for a D2C business and how to decide if you should upgrade later.

What is the Definition of Single-Entry Bookkeeping?

Single-entry bookkeeping is the simplest way to track money in a small business. It’s like a “financial notebook” of cash inflows and outflows. For each transaction, you make one entry and write it in a cash book. 

Now, every time you earn money (income) or spend money (expense), you record four things:

1. Date of the transaction
2. Short description (example: “client payment” or “office supplies”)
3. Amount (in either the income column or the expense column)
4. Running balance (how much cash you have after this transaction)
   

Be aware that single-entry bookkeeping covers basic items like: 

• Money you earn (taxable income)
• Business expenses
• Cash movements
  

Each transaction sits on one line. At the end of the month or year, the last line of your cash book shows how much money you have left. Some growing D2C companies even use accounting software or simply use a spreadsheet to record transactions. 

Example of Single-Entry Bookkeeping

In a single-entry bookkeeping system, you do the following for recording each entry:

• You write the date
• Add a short description of what happened
• Record whether the money came in (income) or went out (expense)
• Update the running balance (how much cash is left after this transaction)
• Some bookkeepers even add optional columns, such as:
  • A reference number column to note invoice numbers

and

• A reconciliation column to mark entries that match your bank statement

For more clarity, let’s see a specimen of a single-entry cash book for a D2C company:

By recording such single entries in a cashbook, you can know where money came from, where it went, and what your current cash balance is.

What is the Difference Between Double-Entry and Single-Entry Bookkeeping?

Both the accounting systems create two very different pictures of your business! Single-entry and double-entry may look similar from the outside, but they capture money in very different ways. 

One works like a simple cash diary. The other acts like a full map of your business. Below are three major ways a single-entry bookkeeping system differs from a double-entry system:

1. How Many Entries Each System Needs: One Line vs. Two Lines

Single-entry bookkeeping puts every transaction on one line. 

• If you receive money, you record it as income.
• If you spend money, you record it as an expense. 

Nothing else is tracked, which keeps things simple but gives a limited view of your business. You cannot see how money flows between different parts of your operations, such as:

• Inventory
• Supplier payments
• Customer credit

In contrast, double-entry bookkeeping uses two lines for every transaction: a debit and a credit. These entries go into two different accounts and must always equal each other. For example, 

• Let’s say you buy inventory.
• Now, your inventory account increases while your cash account decreases. 

This dual record reduces the chances of errors because the books must balance.

2. What Each System Tracks: Cash Only vs. Full Financial Picture

Single-entry bookkeeping works on a “cash-basis” approach. It tracks only two things: 

• Money you earn 

and

• Money you spend

“Cash” includes physical cash, checks, card payments, and online transfers. It does not record:

• Assets you own
• The money customers owe you
• Loans you need to repay
• Changes in stock levels

On the other hand, double-entry bookkeeping tracks all five main accounting categories:

• Assets
• Liabilities
• Equity
• Revenue
• Expenses

It allows you to record what you own, what you owe, and how your business is growing. As a result, you can see:

• Customer dues
• Supplier dues
• Loan balances
• Inventory value
• Profit with higher accuracy

Also, in a double-entry system, you prepare balance sheets, profit-and-loss statements, and cash-flow reports. That’s something the single-entry system cannot support.

3. When Transactions Are Recorded: Cash Basis vs. Accrual Basis

In single-entry bookkeeping, you record income only when money actually arrives and expenses only when you pay them. It ignores timing differences. For example, 

• Let’s say you make a sale today but get paid next week.
• Now, you will not record this transaction until you actually receive money.

This approach helps you track cash movement but hides upcoming obligations or income that is earned but not yet received. The bigger issue? It becomes harder to plan for cash shortages or upcoming commitments.

Now, the double-entry bookkeeping method normally uses accrual accounting. Here, 

• Income is recorded the moment you earn it, even if the payment arrives later

and

• Expenses are recorded when they become due, not when you pay them

The advantage? You can see your upcoming cash needs, pending customer payments, and real monthly profit. 

What are the Advantages of Single-Entry Bookkeeping?

What are the Disadvantages of Single-Entry Bookkeeping?

Need Help With Bookkeeping? Outsource Your Accounting Functions to Atidiv in 2025!

So now you know single-entry bookkeeping is a simple way to record money coming in and going out of your business using one entry per transaction. Some major benefits you can achieve are:

• Easy to learn and manage
• Low setup and maintenance cost
• Suitable for service-based or early-stage businesses
• Produces a clear profit and loss view
  

Are you a growing D2C company with limited operations and a small accounting scope? You can start with single-entry bookkeeping. And if you need help managing your books, you can hire Atidiv, an accounting outsourcing company with 16+ years of experience and 70+ clients. 

We provide comprehensive bookkeeping support along with strategic financial advisory. Our services start at only $15 per hour. Schedule a consultation call to learn more.

Single-Entry Bookkeeping FAQs

1. Is single-entry bookkeeping enough for a small business?

Single-entry bookkeeping may work for micro businesses and sole proprietors. That’s because it tracks basic cash inflows and outflows in one simple ledger. If your business has low transaction volume + no complex assets or liabilities, it can give you the clarity you need without heavy systems.

2. What makes single-entry bookkeeping cheaper than double-entry?

Single-entry bookkeeping uses one cash book instead of multiple ledgers. You only record each transaction “once”, which reduces time, tools, and effort. 

Also, you don’t need specialized software or trained accountants, which makes it a cost-friendly option for new or small businesses with limited activity.

3. Can I trust single-entry bookkeeping for financial decisions in 2025?

You can only rely on it for basic income and expense tracking. Remember it provides limited financial insight and does not track assets, liabilities, or equity. So for deeper decisions (like investments or loans), you may need a more detailed system.

4. What documents do I need for single-entry bookkeeping?

You mainly maintain a cash book and keep all original vouchers, such as:

• Bills
• Receipts
• Invoices
• Payment proofs

These documents allow you to record accurate information for each transaction.

5. When should a business move from single-entry to double-entry bookkeeping?

If you are a D2C company, you should upgrade when:

• Your cross $5M+ revenue mark
• Your transaction volume increases
• You start holding inventory
• You offer credit to customers or take loans

Be aware that double-entry helps you track assets, liabilities, payables, and receivables. This system allows you to prepare all the major financial statements, which are highly important when your business and reporting needs grow.