General ledger: Everything you need to know

What is a general ledger?

A general ledger is the master record of every financial transaction in a business. Think of it as the foundation of accounting. It includes all your income, expenses, assets, liabilities, and equity – grouped into accounts so you can keep track of how money moves in and out of your business.

For small business owners, the general ledger acts as the single source of truth. It tells you where your money is coming from, where it’s going, and how it impacts your bottom line. Without it, accurate bookkeeping and tax reporting would be almost impossible.

General ledger vs other accounting records

It’s easy to confuse the general ledger with other records, so let me clear that up:

• General ledger vs trial balance: The trial balance is just a report that summarises the balances of all your accounts in the general ledger. It’s like a snapshot to check that your books balance.
• General ledger vs journal: A journal is where individual transactions are recorded at first. The general ledger organises those entries by account to show the full financial picture.

If you’re choosing accounting software, look for one that makes these relationships clear – it will save you hours of manual work.

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How the general ledger works

The general ledger is organised into accounts that are usually numbered and categorised. For example, 1000–1999 might be assets, 2000–2999 liabilities, and so on. Each transaction is allocated to the correct account.

So, if you buy office supplies for £200, that expense reduces your cash account and increases your office supplies account. Over time, these accounts show you patterns in spending, revenue, and tax obligations.

You might also ask whether a general ledger can go negative. Yes, some accounts (like liabilities or overdrafts) naturally show negative balances. The key is that the ledger always balances across debit and credit entries.

General ledger reconciliation

Reconciliation is the process of comparing your general ledger to other records, such as bank statements, to ensure they match. This step is crucial for spotting errors, missing entries, or even fraud.

For example, if your bank shows a $1,000 expense that isn’t in your ledger, reconciliation will flag the issue. By keeping your ledger reconciled, you ensure your accounts are accurate for reporting and tax lodgements.

In traditional accounting, reconciliation can be time-consuming. That’s where automated accounting tools like Thriday make a real difference. The system automatically matches transactions and highlights discrepancies, saving valuable time.

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How to prepare and use a general ledger

If you’re just starting, here’s the typical process:

1. All your transactions are recorded or captured automatically in Thriday.
2. The transactions are then categorised automatically to a chart of accounts.
3. Your ledger is automatically reconciled as new transactions occur.
4. You can then generate reports or edit any transactions you want.

Students often learn this process step by step, but for a small business owner, the thought of doing it manually can be overwhelming. That’s why most people turn to accounting software like Thriday that does it automatically for you.

General ledger in accounting software

Different systems manage ledgers in different ways. QuickBooks, for example, has a built-in general ledger view, and SAP is commonly used by larger corporations with complex requirements.

The problem is that many tools feel designed for accountants rather than business owners. That’s why I’m excited about Thriday’s new general ledger feature. It allows you to see all your transactions in one place, edit them against your chart of accounts, and keep your records accurate. For a small business, that means real clarity without drowning in accounting jargon.

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General ledger in practice

When I first started working with ledgers, I found it intimidating. But once I understood the structure, I realised how powerful it was. The general ledger isn’t just for accountants – it’s a tool to give business owners financial peace of mind.

I’ve also noticed how automation has changed the game. Instead of manually entering and reconciling data, I can rely on Thriday to keep the books accurate in real time. That’s why I recommend small businesses embrace automated accounting wherever possible.

Do you need a general ledger?

If you want clarity over your finances, the general ledger is non-negotiable. It underpins every report, every tax return, and every decision you make about your small business.

The good news is you don’t need to manage it manually. With Thriday’s new general ledger feature, you can review and edit all your transactions, reconcile automatically, and stay on top of your bookkeeping without lifting a finger.

Running a business is tough enough. Let Thriday simplify your accounting and tax so you can focus on growth.