Best Bookkeeping Software for Small Medium Sized Business

Tally Solutions | Nov-27-2019

• What is a bookkeeping software?
• Difference between bookkeeping and accounting
• Features of a bookkeeping software
• Importance of Bookkeeping
• Who needs a bookkeeping software?
• Bookkeeping Process
• How does bookkeeping software work?

What is a bookkeeping software?

Bookkeeping or Books of original entry is a science and art of recording all the business transactions that result in a transfer of money or money’s worth’ in the accounts books. Bookkeeping is a task concerned with recording and classifying financial data related to business operations in order of its occurrence. Bookkeeping and accounting are inseparable and there is a thin line to differentiate bookkeeping and accounting.

Difference between bookkeeping and accounting

Accounting is a broad subject. It calls for a greater understanding of records obtained from bookkeeping and an ability to analyze and interpret the information provided by bookkeeping records.

Bookkeeping is the recording phase while accounting is concerned with the summarizing phase of an accounting system. Bookkeeping provides necessary data for accounting and accounting starts where bookkeeping ends.

The distinction between Bookkeeping and accounting can be tabulated as under:

Features of bookkeeping software

• Customize invoicing – allows sending invoices as soon as jobs are done and getting paid for works your company does
• Automate banking – allows getting real-time updates on the cash flow and monitoring financial transactions by connecting to the bank accounts
• Payment reminding – allows setting up the automatic reminders to customers with overdue invoices
• Remote access - allows access to crucial business reports on a web browser, anywhere, anytime
• Inventory tracking – allows managing the flow of products and goods in and out of the company and getting the real-time stock valuations
• Instantly reporting – allows getting customized reports anytime they are needed
• Payroll – allows tracking employees working hours and automatically payroll filing and tax calculation
• Paying bills – allows scheduling bill payments, receiving and storing bills electronically, and knowing where the business is spending money
• Tax rates – allows automatically calculating the sales and other tax rates the business needs
• Purchase order – allows simplifying the purchase order process and maintaining the control 
• Contacts list – allows getting extracted lists of contacts based on the needs and reducing the data entry

Importance of bookkeeping

• Bookkeeping helps to keep track of receipts, payments and record of every expenditure made from the business
• It helps to summarize the income and expenditure records on a periodic basis
• These records are used to create financial reports which tells us specific information about the business as how much profits the business has made or how much the business is worth at a specific point of time

Who needs a bookkeeping software?

A bookkeeping software would be a great deal of help for small businesses who have a daily routine of keeping their books of accounts up-to-date. An intuitive bookkeeping software simplifies data entry, organises your vital information, provides reports, and allows accountants more access to important financial information about many aspects of the business. 

Bookkeeping process

Bookkeeping is a mechanical task which involves the following steps:

• Collection of basic financial information
• Identification of events and transactions with financial character i.e., economic transactions
• Measurement of economic transactions in terms of money
• Recording financial effects of economic transactions in order of its occurrence
• Classifying effects of economic transactions
• Preparing an organized statement known as trial balance

How does bookkeeping software work?

• Billing for goods sold or services provided to clients
• Recording receipts from customers
• Verifying and recording invoices from suppliers
• Recording payment made to suppliers
• Processing employees pay, ESI, PF etc
• Monitoring individual accounts receivable
• Recording depreciation and other adjusting entries
• Providing financial reports

FAQs on bookkeeping software

• What is bookkeeping?

Bookkeeping is a process of recording and organizing all the business transactions that have occurred in the course of the business.  Bookkeeping is an integral part of accounting and largely focuses on recording day-to-day financial transaction of the business.

• What are the types of bookkeeping?

The single-entry and double-entry bookkeeping systems are the two methods commonly used. While each has its own advantage and disadvantage, the business has to choose the one which is most suitable for their business.

• What are the bookkeeping principles?

To ensure the all the transactions are recorded and organized systematically, bookkeeping principles are applied. The following are the bookkeeping principles

• • Revenue principle
  • Expense principle
  • Matching principle
  • Cost principle
  • Objectivity principle

• What are the elements of bookkeeping software?

Bookkeeping procedures are governed by the end product, the financial statements. And ‘financial statements’ includes profit and loss account and balance sheet including schedules and notes forming part of accounts. The three primary elements of bookkeeping software are; journal, ledgers and financial statements.