Will you use single-entry or double-entry bookkeeping?

(This is an excerpt from https://www.hiscox.com/blog/business-bookkeeping-101-what-every-small-business-owner-needs-know, written by Kathleen Moore, and shared with appreciation.)

There are two standard methods for recording your financial transactions. The one you use will depend on how detailed a picture you want to generate. 

For many small or start-up businesses, the single-entry method is preferred, as it records all transactions in a single leger, much like a checkbook. Revenue and expenses are treated as deposits and withdrawals. 

As its name suggests, double-entry bookkeeping involves two records for every transaction – a debit and a credit. It is the preferred method of professional bookkeepers and accountants, as it can accommodate a higher level of analysis. It allows you to track not only where money comes from but where it goes.

Every transaction consists of a debit and a credit in the same amount. It works like this: If your jelly and jam company purchases a new fruit-washing unit for $2500, it would show up first as a $2500 debit to your cash account. (Bookkeepers refer to outgoing funds as ‘debits’). It would also show up as a $2500 credit to your equipment (assets) account. If you took out a loan to purchase the equipment, your liability account would get the debit of $2500, rather than your cash account.