How to Make Your General Ledger Efficient in 2025

Avoid creating too many accounts initially. A restaurant will use detailed food cost accounts, while a consulting firm might use more project-based revenue tracking. When setting up or refining your chart of accounts, start with your industry’s standard categories and customize based on your needs. Most charts of accounts follow a logical numbering sequence. The chart of accounts tells you which specific account to debit or credit. This framework forms the basis of your general ledger because it determines exactly where each transaction gets recorded.

Reuse your data and allow employees to transform data into insights on financial, operational, and strategic outcomes. They handle multiple currencies seamlessly, integrate with all of our accounting systems, and thanks to their customizable card and policy controls, we’re compliant worldwide.”” The main types of accounts in a general ledger include asset accounts, liability accounts, equity accounts, revenue accounts, and expense accounts.

The sub-ledgers you use will depend on what type of business you run. Here’s what you need to know about this stalwart of business bookkeeping. I could have made decisions for my business that would not have best accounting software for small business of 2024 turned out well, should they have not been made based on the numbers.” Hear straight from our customers why thousands of small business owners trust Bench with their finances Learn more about Bench, our mission, and the dedicated team behind your financial success.

First, businesses should identify the accounts affected by each journal entry, such as Cash, Accounts Receivable, or Sales Revenue. This template ensures consistent and accurate recording of financial data within an organization’s accounting system. Cloud technology is revolutionizing GL management, enabling businesses to store and access financial data remotely. This format of a general ledger ensures accurate recording and tracking of financial transactions for each account in the ledger.

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The general ledger https://tax-tips.org/best-accounting-software-for-small-business-of/ matters because financial statements matter. As a supplement to the general ledger, your chart of accounts lists the account names and purposes of all your sub-ledgers. The general ledger (also called a general journal or GL) summarizes all the financial information you have about your business. We partner with businesses that help other small businesses scale—see who’s on the list Tools and calculators to help you stay on top of your small business taxes and evaluate your financials

The transaction details contained in the general ledger are compiled and summarized at various levels to produce a trial balance, income statement, balance sheet, statement of cash flows, and other financial reports. Double-entry transactions, called journal entries, are posted in two columns, with debit entries on the left and credit entries on the right, and the total of all debit and credit entries must balance. When a business uses enterprise resource planning (ERP) software, a financial-features module produces subledgers and the general ledger, with entries drawn from a database that is shared with other processes managed through the ERP. Get user reviews, pricing, demos, and independent expert advice on the best accounting software for most businesses like Xero, QuickBooks Online, FreshBooks, and CustomBooks. Financial management systems help businesses track income and expenses and plan for growth. Income statements explain your current company performance by monitoring debits and credits, bank account balances, and, most importantly, how much income has been made during a set period.

Especially those businesses that are already using other Zoho products such as Zoho Sheet and Zoho Projects. Zoho Books is part of that, with companies like Asta Bumi Cipta and Swifty Print Ltd using it for accounting. It’s a fully capable double-entry system with invoicing, expense tracking, and inventory management features, making it comparable to QuickBooks or Xero in functionality. It handles foreign transactions, revaluations, and currency conversions smoothly—something many tools still struggle with.

These accounts allow businesses to categorise transactions clearly, making it easier to generate financial statements like the income statement and balance sheet. Under the double entry system of accounting and bookkeeping, every business transaction will affect two (or more) general ledger accounts. A general ledger (GL) is the central recordkeeping system in accounting that tracks all of a company’s financial transactions. The general ledger is the central recordkeeping system in accounting, where you record all your company’s financial transactions. This data from the trial balance is then used to create the company’s financial statements, such as its balance sheet, income statement, statement of cash flows, and other financial reports. A general ledger is used by businesses that employ the double-entry bookkeeping method, which means that each financial transaction affects at least two sub-ledger accounts, and each entry has at least one debit and one credit transaction.

In this blog, we’ll take you through everything you need to know about general ledgers—from their definition and core functions to their role in double-entry accounting. If your business is busy, and you find it hard to keep your books organized with this template, it may be time to consider double-entry bookkeeping. Your software of choice will probably have an option to “View general ledger,” which will show you all the journal entries you’ve entered (for a given time frame). If you’re more of an accounting software person, the general ledger isn’t something you use but an automated report you can pull.

Revenue

• Our regulatory solutions help government agencies and departments of any size simplify every aspect of regulatory compliance — from workflow and process to licensing and enforcement — with software to handle the unique needs of your organization.
• Start with basic categories such as assets, liabilities, equity, revenue, and expenses.
• An income variance report breaks down income and expenses during the current period and a selected period, showing the difference and the variance percentage.
• This data from the trial balance is then used to create the company’s financial statements, such as its balance sheet, income statement, statement of cash flows, and other financial reports.
• Get user reviews, pricing, demos, and independent expert advice on the best accounting software for most businesses like Xero, QuickBooks Online, FreshBooks, and CustomBooks.

It supports multi-currency, multi-entity, and consolidation and offers a solid range of financial reports right out of the box. Business Central is Microsoft’s cloud ERP platform for SMBs, and its general ledger comes with more depth than you’d expect from an entry point into Dynamics. Costs vary based on modules, user count, and company size That’s especially useful for companies balancing internal and external reporting requirements. With over 1,000 integrations in its app marketplace, Xero connects well with CRMs, inventory systems, and other financial tools. The software supports up to 25 users on the Advanced plan and is widely used across industries—from retail and e-commerce to consulting and professional services.

An Income Statement Transaction Example

Pricing ranges from $29/month for core accounting to $99-$349/month for full purchasing, sales, and advanced inventory. While it’s on the pricier side, its flexibility and depth of accounting features can be worth the price for growing operations. SoftLedger is built for larger businesses with multiple entities, and the pricing reflects this. Each ledger includes one main type and custom subtypes, making routing to financial statements easy.

Ramp is a strong fit for mid-sized and growing finance teams that want to automate manual GL tasks, reduce close time, and maintain full visibility into spend. Ramp offers a finance platform that brings your general ledger, expenses, and approvals into one dashboard. Others are built for audit-ready reporting, complex entity structures, or deep ERP integrations. You rely on it to keep your books accurate and balanced. We care about the security of your data and use encryption technology to keep it safe.

In addition, each transaction’s debit amount(s) must be equal to its credit amounts. Leveraging smart solutions like ClickUp can be transformative for optimizing ledger management and enhancing efficiency. Next, these journal entries are transferred to the general ledger. Each financial event—a sale, purchase, or expense—is first logged into a journal with details like date, amount, and involved departments or parties.

What’s the difference between a general ledger and a journal entry system?

Despite countless benefits, many businesses struggle to make their general ledger stand out due to the demanding need for accurate and consistent record-keeping. In 2025, we will see greater integration between the GL and other business functions, such as accounts payable, accounts receivable, and enterprise resource planning (ERP) systems. General ledger systems will evolve to support continuous monitoring and the integration of real-time data, offering a clearer view of financial performance at any given moment. In 2025, the demand for real-time financial data will continue to rise.

The general ledger is a versatile tool that adapts to the needs of various businesses. The general ledger is your business’s financial diary, keeping track of every important move. Let’s make accounting less intimidating and more relatable.

How Does the General Ledger Work in Double-Entry Accounting?

To fully grasp the role of a general ledger, it’s essential to understand its structure—starting with the key categories of accounts that organise and classify every financial transaction. This balance is the foundation of the double-entry system and ensures that no transaction is missed or inaccurately recorded. A general ledger (GL) is a centralised record that organises and stores all financial transactions in one place. This template gives you everything you need to set up a simple, single-entry accounting system for your business.

• The chart of accounts serves as your business’s financial filing system.
• First recorded in 1250–1300; Middle English, from Latin generālis, equivalent to gener- (stem of genus “race, kind”) + -ālis adjective suffix; genus, -al 1
• Catch up bookkeeping services for small businesses, no matter how far behind they are
• Most companies don’t switch general ledger software often.
• Asset accounts reflect the resources that enable growth and operations.

Transaction data is segregated by type into accounts for assets, liabilities, owners’ equity, revenues, and expenses. FreshBooks software started as an invoicing tool and later expanded into a general ledger system with double-entry accounting features. It lets Oracle act as a central GL, pulling transactions from different systems—including non-Oracle ones—and applying uniform accounting rules.

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Posting moves financial data from specialized journals and sub-ledgers into the general ledger, creating a centralized record of all business activity and account balances. Double-entry accounting is a fundamental principle that ensures every financial transaction affects two different accounts in equal and opposite ways. General ledger accounting serves as your business’s financial hub, capturing and organizing every transaction that flows through your company’s operations.