Best Bookkeeping Software for Small Medium Sized Business

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Tally Solutions, Nov-27-2019

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 operation 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:

S.No

Bookkeeping

Accounting

1.

Yield of bookkeeping is an input for accounting.

The yield of accounting permits informed judgments and decisions by the user of accounting information.

2.

Purpose of bookkeeping is to keep a systematic record of transactions and events of financial character in order of its occurrence.

Purpose of accounting is to find results of the operating activity of business and to report the financial strength of a business.

3.

Bookkeeping is a foundation of accounting. It is done by bookkeepers, who do not require any special skill or knowledge

Accounting is considered as a language of business. Accountants, on the other hand, require special accounting knowledge and skills.

4.

The objective of bookkeeping is to summarize the cumulative effect of all economic transactions of business for a given period. This is done by maintaining permanent record of each business transaction with its evidence and financial effects on accounting variable.

The objective of accounting is not only bookkeeping but also analysing and interpreting reported financial information for informed decisions.

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
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