Month: December 2022

Importance Of Accounting Software For Small Businesses

Posted on by @nkpal25

Sending emails, paying suppliers, issuing invoices, creating workflows, and creating financial reports are just a few of the many hats of running a small business. Along with completing the work that consumers or clients have paid for, these are requirements.

None of the additional responsibilities that small business owners have is as crucial as accounting. While poor accounting methods can lead to business collapse or difficulty with the IRS, good accounting practices keep your company in top financial form and assist you in making smarter decisions.

Key Benefits & Advantages Of Using Accounting Software

Invoicing and billing

Billing and invoicing are important business processes that are the main way that money enters the company. Paper-based invoice management is hectic, time-taking, and likely to be mistaken. When you have recurring orders, creating tangible invoices for each time your client buys from you is not viable. Without automated tools, it is also difficult to track invoices and remind consumers of pending payments.

Online payments

You may integrate your accounting software with various online payment processors to provide your clients with a quick and safe way to make payments. Additionally, they offer a range of payment choices to their clients, such as credit and debit cards, online bank transfers, and more.

Expense Tracking

It’s crucial to maintain track of your costs if you want to manage your cash flow. Therefore, there is no longer a need to keep paper receipts in storage or to be concerned about misplacing them. Thanks to accounting software, it is simpler to bill clients for the costs you incur on their behalf.

Bank reconciliation

Bank reconciliation is a fundamental accounting task that accounting software performs for businesses. You can instantly download bank feed statements into your accounts by directly linking your bank account to your accounting software. Your accounting software’s criteria and bank rules can be configured to classify and match imported bank transactions automatically. You only need to confirm and validate your matched transactions to reconcile your accounts.

Timesheet and project management

A robust accounting app has to have a timesheet section that enables you to bill clients according to the amount of time you spend on a project. Timesheets assist you in managing your tasks, including budgeting, time tracking, and customer billing. Accounting software can assist you in keeping from overcharging or undercharging your clients by tracking the time spent on tasks.

Tax compliance

A good accounting programme is designed to adhere to your country’s tax regulations and make tax administration easier. Accounting software can help you apply the correct tax to your transactions more precisely by speeding up tax computations when working with various tax rates. To keep you organised and prepared for tax season, it may also assist you in comprehending your taxes by providing tax summary reports.

Report generation

As a business owner, you must regularly assess your company’s progress and take the appropriate actions to maintain the health of your company. You can study growth patterns and comprehend financial trends in your company with the aid of accounting reports. However, creating reports in spreadsheets is a lot of work because you have to combine data manually and enter formulas for each report.

Final Thoughts

The SME Accounting software from Ankpal is simple to use. It has sophisticated analytics and reporting tools ideal for streamlining your company’s operations. Ankpal is a straightforward yet effective accounting programme for small enterprises. With features like GST Reconciliation, GSTIN Validation, eWay bill, and e-Invoice production, it has taken care to manage GST from billing to return filing.

What Is Double-Entry Bookkeeping? A Simple Guide for Small Businesses

Posted on by @nkpal25

Double-entry bookkeeping is a system of accounting in which every financial transaction is recorded in two places. In other words, every time you make a sale, it’s also recorded as an expense.

This system helps businesses keep track of their income and expenses with the help of SME cloud accounting software, and it also provides a record of how much money is owed to and by the business.

As a small business owner, you need to understand double-entry bookkeeping. This guide will teach you the basics and how to get started.

Who Uses The Double Entry System?

 

Double-entry bookkeeping is the standard system of accounting that is used by businesses and organizations all over the world. But why is it so popular? Well, because it’s a system that helps businesses keep track of their expenses and income in a very accurate way. A debit and a credit are both recorded for every transaction. This way, business owners can track where their money is coming from and where it’s going.

You must learn about double-entry bookkeeping if you’re a small business owner. It’s a system that will help you keep your finances in order and ensure your business runs smoothly.

What are The Rules of Double-Entry Bookkeeping? 

 

By following the rules of double-entry bookkeeping, you can be sure that your accounts are accurate. These rules include the following:

  1. You must use at least two accounting books to record every business transaction or accounting entry.
  2. For each transaction, there must be an equal number of reported debits and credits.
  3. An organization’s total assets must always equal its total liabilities plus equity. They must balance on both sides of this equation.

Double Entry Bookkeeping Examples 

 

Double-entry bookkeeping records two entries for every transaction, one debit and one credit. This helps ensure that your books are balanced and takes into account both parts of a transaction. To illustrate this concept further, let’s look at a few examples of double-entry bookkeeping:

  1. When you get paid for goods or services rendered, you will record a debit in Accounts Receivable and a credit in Cash.
  2. When you pay a vendor for goods or services received, you will record a debit in Cash and credit in Accounts Payable.
  3. When loan payments are made to a lender, you will record the debit in Cash and the credit in Loans Payable.

Double-entry bookkeeping ensures that your records stay accurate and up to date by making two opposite entries into two different accounts. It also eliminates any potential discrepancies between your records and those of other parties involved in the transaction.

Why Is Double Entry Bookkeeping Important?

 

Double-entry bookkeeping is essential in managing your business finances because it helps ensure that your accounts are accurate and up-to-date. By recording each transaction twice, you can keep tabs on your financial health and promptly address discrepancies.

Plus, double-entry bookkeeping lets you track how money flows through the business by creating actual financial statements. This helps to identify cash flow problems or cost overruns and any other possible issues within a company’s budget. So you don’t have to worry about hidden expenses or revenue sources—you can see exactly where the money is coming from and where it is being allocated.

How Is Single Entry Bookkeeping Different?

 

At its core, single-entry bookkeeping is the opposite of double-entry; transactions are only recorded once instead of twice. It’s the more basic, straightforward bookkeeping method and records income and expenses in one ledger.

The upside to this type of system is that it’s fast and simple to use (you only record transactions once, as opposed to twice), so it’s ideal for small businesses with little to no accounting experience. The downside is that errors may go undetected since there are no checks and balances in place—which could lead to misinterpretations or sudden consequences down the line.

How Do You Start Double Entry Bookkeeping?

 

The first step to setting up a double-entry bookkeeping system is to create an appropriate chart of accounts through SME cloud accounting software. This allows you to classify your transactions into logical categories: revenue, expenses, and liabilities.

The next step is to enter your financial transactions into the appropriate account in your SME accounting software and reconcile them with bank records. Once all of your transactions are reconciled, you should then be able to generate reports like income statements and balance sheets. This will give you a better picture of your business financially.

Finally, ensure that you review your reports regularly to provide all the numbers add up correctly and that all the transactions have been entered correctly.

Conclusion

Double-entry bookkeeping can be an excellent way for small businesses to understand their finances better quickly and easily. While it may seem daunting, it can be relatively simple once you get the hang of it. If you’re a small business owner, it’s worth considering adopting this system.