Author: @nkpal25

Learn the Difference Between Invoicing and Accounting Software

Posted on by @nkpal25

While some people think they are the same thing, the truth is that they are not. They sometimes serve the same purpose but not in every business. Some businesses that deal with utilities such as water, energy, and telco need separate invoicing and accounting softwares.

Why Invoicing and accounting different?

Invoicing software collects the input about the service, adds the contracted rates, and then generates an invoice. It also makes a detailed report about the receivables.

Accounting software keeps track of inventory, manages finances, monitors revenue, and handles invoicing and forecasting. It keeps track of all the financial data of the business.

Any business needs to learn about the subtle differences. Invoicing software can be used for simple operations. At the same time, accounting software is required for more complex functions.

What do these industries need?

Many utility companies need a dedicated billing platform to run their consumption-based charges. Similarly, some big companies prefer cloud-based accounting software to manage their financial operations.

It depends upon the kind of industry one is involved with and the business requirements.

  • Specialist in integrating billing and accounting systems

What if we tell you you can ask a software vendor to integrate your business’s billing and accounting system? That is possible. Billing outsourcing services can make this happen. They provide tailored invoicing tools and services that remove expensive bottlenecks. They use digitization to easily combine with conventional accounting programs and equipment to conduct as many invoicing tasks as needed individually.

Will invoicing software be enough?

Some people come from the school of thought that invoicing software can do the job. But that’s different with a lot of business. Accounting software comes in handy when you need to track various operations.

Accounting software helps with double-entry bookkeeping and managing inventory of the products.

Accounting software provides detailed reporting options for all the transactions made. The same cannot be said about invoicing software. Accounting software is ideal if you want specific information besides the general profit and loss report.

Investing in quality accounting software is wise because it helps with employee payroll. It makes accounting easier. Check the accounting software pricing before investing.

Reasons to use invoicing software:

We discussed the advantages of accounting software, so now it is time to discuss the perks of invoicing software. Have a look;

Invoicing software comes with fewer features and is, therefore, beginner friendly. It is easier to understand.

If you want your software to compute late penalties and add them to the original bill, invoicing software perfectly matches you. This feature still needs to be found in accounting software.

It can also send snail mail invoices for you. The feature is automatic in most invoicing softwares.

You get what you pay for. Several invoicing softwares in the market will fit your needs and budget perfectly.

Conclusion

When you decide which software to choose among invoicing and accounting, keep in mind the needs of your business. If you think invoicing software will do the job, compare the prices and select one. Similarly, do your research on accounting software pricing before making a decision.

Tips To Select The Right Accounting Software For Your SME

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Accounting software is the need for any business nowadays. All kinds of companies, whether big or small, need excellent SME accounting software to run their operations. Doing so will help you with increased revenue, better handling of GST invoices, and managed finances. There is no need to keep paper records since the process is simple, with almost zero errors. Accounting softwares takes care of everything and helps boost efficiency.

Top accounting software to consider 

Each business has its own set of requirements. Keeping your needs and then making a choice will help you manage finances, financial reporting, inventory management, budgeting, and forecasting.

Have a look at some of the most popular accounting softwares available in the market:

Have a look at some of the most popular accounting softwares available in the market:

SOFTWARE IDEAL FOR BUSINESS PRICING
Vyapar GST Invoices
Receivables and Payables
Order Tracking		 Starting at ₹2159
FreshBooks
  • Excellent for invoicing
  • Provides multi-branch helpdesk channels.
  • Service Level Agreements
 Starts at ₹1240 monthly pricing.
ZohoBooks
  • Excellent for micro businesses
  • Invoices can be custom-made.
  • Tracks expenses
 Start at ₹744 monthly pricing.
Oracle NetSuite
  • Excellent for ERP tools
  • Single platform access.
  • Contains Native Integration module.
 Available at custom pricing.
Ankpal
  • Excellent for
  • E-Invoicing
  • Inventory Management
  • Expense Monitoring
  • Smooth GST Filing.
  • Multi-Branch Management
 Starting at ₹833

Accounting software features

 

Have a look at the features of accounting software:

  1. Invoicing
  2. Payables and receivables
  3. Multibranch management
  4. Accounts Payable
  5. ERP
  6. Inventory Management

How to choose the right one for your business?

 

Tracking your business’s financial performance depends upon the accounting software you choose, so make a choice after researching.

Compliant Software

 

It’s crucial to ensure that your accounting software is compliant to the GST rules and regulations, and helps you generate compliant invoices, and file your taxes accurately on time.

Your business needs

 

When looking for accounting software for your business, ensure it fulfills all your requirements. Small businesses will have different needs than established businesses with hundreds of employees.

Your budget

 

Do not get swayed by the latest trend in the market; instead, do your research. Invest in software that fits your budget. There is plenty of pocket-friendly cloud-based software that is available in the market. You can even ask for a 30-day free trial from the vendors before purchasing any product.

Cloud-based software

 

Cloud-based softwares is always better than desktop-based software since they provide easy access from anywhere and on any device. Invest in cloud-based software if you are looking for highly cost-effective accounting software.

Scalability

 

Scalability is a significant factor when considering which accounting software to buy. Inexpensive softwares may work well initially but would not be helpful when the business grows. Think of the bigger picture before investing.

Pros and cons of accounting software

 

It is time to look at the pros and cons of accounting software;

Pros

 

There are minimal to no chances of errors since all the operations are done automatically.

The software is compatible with the bank account.

There is software for every budget. It is better to invest in accounting software than hire a bookkeeper.

Cons 

 

Accessing accounting software during a technical glitch or system failure is hard. This is why cloud-based accounting software is a safer option for businesses.

Businesses must take extra precautions to safeguard the data stored in accounting software. A tiny cloud breach can prove disastrous.

Conclusion

 

Accounting software can make your job easier by tracking finances, invoicing, scheduling payroll, and managing finances. Analyze your business’s requirements and invest in software considered the best sme accounting software for your organization.

 

 

 

 

 

 

 

 

The Journey Of Accounting: From Manual To Digital

Posted on by @nkpal25

Digital accounting is introducing digitization and automation into the accounting world. It has become a widely used and widespread phenomenon now. This transformation has made monitoring finances a lot easier and more efficient. The chances of errors have also significantly reduced since companies adopted digital accounting. Let’s understand what online accounting software in India can do for your business.

What is digital accounting?

Modernization has become the parameter of development. If your business is not adapting the latest technology in all its departments, it is soon going to be left behind. Digital accounting is a powerful technology that makes keeping ledgers, monitoring finances and analyzing cash flow more efficient than ever.

Save time and energy

There is no need to transfer data from one system to another. All the records are kept safe and compartmentalized through automation and AI. Digital Accounting saves the time and energy of bookkeepers or accountants.

When should I start my move to digital administration?

Now the question arises, when is the ideal time to move to digital administration? Every business has its own set of requirements. A successful business is one that delivers excellent results consistently. Analyze your existing accounting softwares and tools, and when you think they no longer serve their purpose, it is time to move to digital administration. The move does not have to be sudden.

Putting admin on your agenda

 

The first step to moving to digital administration is organizing a meeting. Include your bookkeeper or accountant in all the steps so that they are aware of all incremental changes. Have a brainstorming session with your team and come up with the easiest way to adapt to a more automated accounting system.

Do you already have digital administration in place?

 

There is a reasonable probability that your business already has digital administration up and running, and half of your job is already done. The benefits of digital accounting you already see will multiply manifold when you introduce your accountant to the latest automation and digitized version. The way you and your accountant exchange financial data will improve tremendously. The accountant’s performance will increase thanks to an extra pair of digital hands.

How can you share your digital documents with your accountant?

The primary benefit of digital accounting is the complete dependence on digital files. There is no need to carry hundreds of paper-based data from one place to another.

An online digital accounting software may read paper documents and extract information from them using OCR technology. This implies that your paper records will be digitalized by the software, eliminating the need for manual entry from your bookkeeper.

As a result, your records are digitized and considerably simpler to locate for your accountant. Furthermore, with the correct digital accounting system, giving your bookkeeper or accountant information on your files will only take a click. There is no need to scan or transmit papers to the accountant anymore.

Final thoughts

Digitization and automation in the accounting process support the accounts so that they feel more confident in their job. If you are operating from India, get the best accounting software in India and reap the benefits.

Desktop Vs. Cloud Accounting: Which One Is The Best For Your Business?

Posted on by @nkpal25

Running a business takes a lot of planning and hard work. Monitoring the financial process, looking at the cash flow, and keeping ledgers are essential factors that can make or break any business. Now businesses have two options for accounting software; desktop accounting and Cloud Accounting. Let’s look at both of them and determine which is better.

What is Desktop Accounting?

 

Desktop Accounting software is a traditional form of software that a single person or computer can only use at one time. This desktop programme is often purchased in advance, and upgrades are supplied until the company launches the latest version. Every time a new version is launched, the company that uses the software must pay its full price.

What is Cloud Accounting?

 

Cloud accounting is a modern approach to financial management that utilizes web-based software to securely store and process financial data in the cloud. This allows businesses to access and manage their financial information from anywhere with an internet connection, collaborate with team members in real-time, and automate routine accounting tasks. It provides enhanced security, scalability, and cost-efficiency compared to traditional accounting methods. Get India’s best cloud accounting software to get an edge over your competition.

Key Differences

 

The primary distinctions are frequently centered on cost, adaptability, protection, and dependability. It is always your organization’s responsibility to guarantee that the software operates as intended.

Reason Why Cloud Accounting Software Is Best 

Accessibility 

 

Accessibility is a significant component that companies look for in accounting softwares. Cloud accounting software makes it possible for the user to access it anywhere and from any device as long as there is a decent internet connection. This is not the case with desktop accounting software.

Automatic updates

 

There is no such thing as an automatic update in desktop accounting software. The software is installed manually, along with the subsequent upgrades. In Cloud computing software, the user always has access to the latest version of the software as all the updates are updated automatically.

Less administration

 

With no requirement to constantly update the software, the accountants can focus more on managing the finances instead of administering monotonous tasks. Desktop accounting software has yet to reach this level of advancement.

Integration with other applications

 

The purpose of Desktop accounting software is to manage financial processes and was never designed to integrate other applications. Cloud computing makes integration with other applications more manageable and more accessible.

Automation results in greater accuracy with fewer errors

 

In Desktop accounting, many processes such as data entry, reconciliation and reporting are done manually, which increases the chances of errors.

Reliable backups 

 

The suppliers of Cloud accounting keep backups of all the delicate information data on their secure networks automatically. This cannot be said for Desktop accounting since giving one individual the responsibility of handling all the information is risky.

Multi-entity and international accounting

 

Desktop accounting is software that a single person or computer can only use at one time. But, cloud accounting can handle multi-entity businesses and even international accounting quickly.

Comparative Analysis

 

 

Cloud Accounting Desktop Accounting
Accessibility Accessibility is a significant component that companies look for in accounting softwares. Cloud accounting software makes it possible for the user to access it anywhere and from any device as long as there is a decent internet connection. Accessibility is not that smooth with desktop accounting software.
Updates In Cloud accounting software, the user always has access to the latest version of the software as all the updates are updated automatically. There is no such thing as an automatic update in desktop accounting software. The software is installed manually, along with the subsequent upgrades.
Administration With no requirement to constantly update the software, the accountants can focus more on managing the finances instead of administering monotonous tasks. Desktop accounting software has yet to reach this level of advancement.
Integration with other applications Cloud accounting makes integration with other applications more manageable and more accessible. The purpose of Desktop accounting software is to manage financial processes and was never designed to integrate other applications.
Backups The suppliers of Cloud accounting keep backups of all the delicate information data on their secure networks automatically. This cannot be said for Desktop accounting since giving one individual the responsibility of handling all the information is risky.
Multi Entity and International Accounting Cloud accounting can handle multi-entity businesses and even international accounting quickly. Desktop accounting is software that a single person or computer can only use at one time.

 

Conclusion

 

This brings us to the end of our thoughts on Digital vs Cloud Accounting softwares. While both softwares are made to serve a single purpose, their operation is entirely different. We went through distinct key differences and concluded that cloud accounting is better for managing all financial processes. For businesses based in India, you need the best cloud-based accounting software in India.

 

 

 

 

 

Impact of GST on Small and Medium Enterprises (SMEs)

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The Goods and Services Tax (GST) represents a substantial overhaul of India’s indirect taxation system. It was introduced to create a single, unified market by eliminating the cascading effect of taxes and streamlining the entire taxation process. GST has significantly impacted Small, and Medium Enterprises (SMEs) in India, and this article aims to highlight how it has impacted these businesses.

Impacts of GST on SMEs

 

GST has made starting a new business more accessible for SMEs. With GST, registering and complying with tax laws has been simplified. SMEs can now register for GST online, saving time and effort. Earlier, businesses had to deal with multiple tax regimes, which complicated the process.

GST has made the entire process of taxation simpler for SMEs. Businesses have to deal with multiple tax regimes, resulting in a complex tax structure. The GST portal provides businesses with various tools and resources to help them file their returns and make payments.

Reduced logistics cost: This has also helped reduce logistics costs for SMEs. Earlier, businesses had to pay multiple taxes at different stages of the supply chain, which added to the cost of goods and services. With GST, these taxes have been replaced with a single tax, which has reduced the overall cost of logistics.

This has also eliminated the distinction between goods and services, making it easier for SMEs to comply with tax laws. Earlier, businesses had to deal with different tax rates for goods and services, which complicated the compliance process. The tax rate is the same for products and services – making it even easier for businesses to comply with GST.

It has also increased the threshold limits for new businesses, making it easier for small businesses to comply with tax laws. Businesses with turnover of up to INR 40 lakhs are exempt from GST, which has provided relief to small businesses. Earlier, businesses with a turnover of more than had to pay GST.

The Entire Process Of Taxation Becomes Simpler

 

GST simplifies the tax compliance process for SMEs. They no longer have to deal with multiple taxes and can pay a single tax under the GST regime. The GST portal provides various features like GST return filing, payment of taxes, and registration, which makes it easier for SMEs to comply with GST.

In addition to simplifying the compliance process, the GST portal also provides various features that make it easier for SMEs to comply with GST. These features include GST return filing, payment of taxes, and registration. The GST portal is user-friendly and provides businesses with various tools and resources to help them file their returns and make payments. An SME cloud accounting software makes it seamless for small and medium businesses to file GST, and even generate GST-compliant invoices. Overall, GST has significantly improved the tax compliance process for SMEs in India, making it easier for small businesses to comply with tax laws.

Reduced Cost Of Logistics

 

GST has reduced the cost of logistics for SMEs as it has eliminated the cascading effect of taxes. Under the GST regime, the tax paid on inputs can be claimed as a credit, reducing the production cost for SMEs.

In addition to reducing the cost of production, GST has also helped to reduce the cost of logistics for SMEs. Earlier, businesses had to pay multiple taxes at different stages of the supply chain, which added to the overall cost of goods and services. With GST, these taxes have been replaced with a single tax, which has reduced the overall cost of logistics. This has helped to make the supply chain more efficient and has made it easier for SMEs to compete in the market.

The Difference Between Goods And Services Will Be Eliminated

 

Under the GST regime, the distinction between goods and services has been eliminated. This helps SMEs as they no longer have to pay different taxes on goods and services.

In addition to simplifying the tax structure, eliminating the distinction between goods and services has helped create a single, unified market in India. This has made it easier for businesses, especially SMEs, to expand their operations and reach a more extensive customer base. The elimination of the distinction between goods and services under the GST regime has positively impacted SMEs in India.

Increased Threshold Limits For New Businesses

 

GST has increased the threshold limits for businesses to opt for the composition scheme. Under the composition scheme, businesses must pay a fixed percentage of their turnover as tax. This helps small businesses as they have to pay a lower tax rate.

The threshold for businesses to opt for the composition scheme varies by state and business type. Still, it is generally around $100,000 per year. Businesses that opt for the composition scheme file periodic returns and pay tax at the fixed rate but cannot collect GST from customers or claim the input tax credit. The composition scheme is optional, but once a business opts in, it can only opt-out at the end of the financial year.

Limitation Of GST

 

  1. Complexity: GST has multiple tax slabs and different rules for different sectors, which can be complex for SMEs to understand and comply with.
  2. Compliance burden: The compliance burden under GST has increased for SMEs as they have to file multiple returns and keep detailed records of their business transactions.
  3. Working capital blockage: The GST regime requires businesses to pay tax every month, which can lead to a blockage of working capital for SMEs.

Conclusion

 

GST has had a mixed impact on SMEs. On one hand, it has made starting a new business easier and simplified the tax compliance process. On the other hand, it has increased the compliance burden and can lead to a blockage of working capital for SMEs. Overall, the GST regime has benefited SMEs as it has reduced the cost of logistics and eliminated the distinction between goods and services. So if you’re puzzled about the GST filing procedure, an SME accounting system can help you smoothly file the same, ensuring you don’t miss the deadlines.

 

 

 

 

 

 

 

Key Characteristics of Online Accounting Software

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Accounting software is computer software used to manage accounting activities such as accounts payable, accounts receivable, payroll, and general ledger. It typically includes modules for accounts receivable, accounts payable, payroll, fixed assets, inventory, and general ledger.

Online accounting software helps businesses streamline their operations, save time, and increase accuracy in their financial processes. Accounting software enables users to quickly create and analyze financial reports, analyze trends, and make informed decisions. Accounting software can be used to track income, expenses, and profitability, as well as to generate invoices, manage customer and vendor relationships, and automate financial tasks.

Examples

Here’s a list some of the well-know accounting softwares:

1. QuickBooks

2. Tally

3. Xero

4. Ankpal

5. MYOB

Types Of Accounting Software

1. QuickBooks: QuickBooks is an accounting software for businesses to manage their finances. It is a cloud-based solution that helps businesses track expenses, create invoices, and manage payroll.

2. Tally is an accounting software designed to help small and medium businesses manage their finances. It is a cloud-based solution that automates the accounting process and helps businesses save time and money.

3. Xero: Xero is an accounting software designed to help businesses manage their accounts and finances. It is a cloud-based solution that helps businesses track expenses and invoices and manage payroll.

4. Ankpal: Ankpal is an all-in-one cloud accounting software that supports businesses in their daily accounting tasks. The software has a user-friendly design that makes the accounting process seamless and efficient for businesses.

5. MYOB: MYOB is an accounting software designed to help small and medium businesses manage their finances. It is a cloud-based solution that automates the accounting process.

The Features of Accounting Software Include

1. Automation: Accounting software automates financial processes, saving time and resources. It can automate invoicing, accounts payable, accounts receivable, purchase orders, payroll, and more.

2. Accurate Data: Accounting software can help ensure accurate data is entered and updated in real-time, giving businesses an up-to-date view of their financials.

3. Reporting: Accounting software allows users to generate reports quickly and easily. It can generate financial statements, income statements, balance sheets, and more.

4. Security: Accounting software provides users with secure access to financial information. It can help protect sensitive data from unauthorized users.

Security of Accounting Software

Accounting software is designed to keep financial information secure and reliable, but there are still risks. Businesses must take steps to ensure the security of their accounting software. Some of the best practices for securing accounting software include:

1. Regularly update the software with the latest security patches.

2. Using a secure connection to access the software, such as a Virtual Private Network (VPN).

3. Implementing solid passwords and multi-factor authentication.

4. Ensuring that all staff members using the accounting software have the appropriate access control permissions, keeping regular backups of data.

Cloud Readiness

When it comes to accounting software, cloud readiness is essential. This type of Accounting software is used to manage financial data and processes, which are highly sensitive and confidential. Therefore, the software must be secure and compliant with data privacy regulations. Additionally, the best cloud accounting software in India, the cloud provides scalability and flexibility that is essential for accounting software.

User-Friendliness

Accounting software varies in user-friendliness, but most are designed to be easy to use and navigate. Some accounting software solutions offer user-friendly dashboards, interactive tutorials, and step-by-step guides to simplify the process. Additionally, many accounting software features an intuitive interface, which makes it easier to find and customize features. Many vendors also offer customer support and training resources to help users navigate the software.

Integration

Integrating accounting software into business operations is becoming increasingly crucial for businesses of all sizes. Integrating accounting software with other applications can also provide a more comprehensive view of a company’s financial position. For example, integration with enterprise resource planning (ERP) systems can provide a more detailed insight into business performance and help identify improvement areas.

Bookkeeping Capabilities

Accounting software is designed to help businesses, including the ability to track income and expenses, create financial statements, and manage payroll. Most accounting software packages can perform the following bookkeeping tasks:

1. Generate invoices and estimates.

2. Track customer accounts receivable and payable.

3. Generate financial reports such as balance sheets, income, and cash flow statements.

4. Track inventory and asset management etc.

Financial Reporting and Projection

Accounting software packages typically include financial reporting and projection functionality. This functionality allows users to create financial reports and projections based on their accounting information.

Reports can include balance sheets, income statements, cash flow statements, and other financial documents. Projections can be used to forecast future performance and can also be used to create budgets. A company’s financial health can be evaluated, and trends can be identified using financial reporting and projections.

Conclusion

Accounting software is essential for businesses to keep their finances organized and running smoothly. They enable businesses to accurately track and report financial transactions, automate tasks, comply with accounting regulations, and collaborate with clients.

These tools are essential for businesses of all sizes and help them to grow and become more productive. With technological advancements, more and more businesses are turning to accounting software to manage their finances. They are an invaluable asset to any business and can help them to save time, money, and resources.

Important E-invoicing Features

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E-invoicing is creating and sending invoices electronically rather than on paper. This can be done through various methods such as email, online invoicing platforms, or electronic data interchange (EDI). E-invoicing has numerous benefits, including cost savings, improved efficiency, and increased security. In this blog, we will discuss some of the essential features of
features of E-invoicing, including the invoice reference number (IRN), digital signature (DSC), quick response code (QR code), and real-time tracking.

Invoice Reference Number (IRN)

 

The invoice reference number (IRN) is a unique number generated for each e-invoice. It is used to identify the invoice and verify its authenticity. The IRN is generated using a hash algorithm. This mathematical function takes input (such as invoice details) and produces a fixed-size output (the IRN).

What is a Hash Algorithm?

 

A hash algorithm is a mathematical function that takes input (such as a piece of text or a file) and produces a fixed-size output called a hash. The input can be of any size, but the output (hash) is always the same size. Hash algorithms are used for various purposes, including verifying the authenticity and integrity of data.

What are Hash Parameters?

 

The hash parameters are the values used as input to the hash algorithm. For the IRN, the hash parameters may include the invoice details, such as the invoice number, date, and amount. These parameters are used to create the hash, which is then verified by the GST portal to ensure the authenticity of the invoice. The hash parameters must be accurate and unchanged, as any changes will result in a different IRN. By using hash parameters, businesses can ensure that their invoices are correctly identified and authenticated, helping to reduce the risk of fraud.

Generating the IRN

 

To generate the IRN, the hash algorithm is applied to the invoice details using the hash parameters. The resulting hash (IRN) is then added to the invoice as a unique identifier.

Digital Signature (DSC)

 

A digital signature (DSC) is an electronic version of a physical signature that is used to authenticate the identity of the sender of an electronic document. In e-invoicing, a DSC can be used to authenticate the identity of the person or company sending the invoice.

What Is The Applicability Of A DSC?

 

 

A DSC is applicable in cases where the sender’s authenticity needs to be verified. In the case of e-invoicing, a DSC can be used to ensure that the invoice is being sent by the person or company it claims to be from.

How to Attach a DSC to an Invoice?

To attach a DSC to an invoice, the sender must obtain a digital certificate from a recognized certificate authority . The digital certificate contains the sender’s public key and is used to verify the DSC. The sender can then use their private key (which is kept a secret) to sign the invoice using the DSC. The signed invoice and the digital certificate can then be sent to the recipient.

Quick Response Code (QR Code)

A QR code is a type of barcode that can be scanned with a smartphone or QR code reader to access information quickly. In e-invoicing, a QR code can be used to access the invoice details quickly. This can be helpful in cases where the recipient needs to verify the invoice details, such as the invoice number and amount.

Real-time Tracking of Invoicing

One of the significant benefits of e-invoicing is the ability to track the status of invoices in real time. This can reduce payment delays and improve cash flow for businesses. E-invoicing allows for real-time tracking of invoicing.

One-Time Reporting of B2B Invoices

In some jurisdictions, e-invoicing systems allow businesses to report their B2B invoices to the government in a standardized format. This can reduce the administrative burden of preparing and filing invoices individually and improve tax reporting accuracy and timeliness.

Reduction in Frauds

E-invoicing helps reduce fraud risk by ensuring that each invoice is unique and authenticated. The IRN and hash algorithm makes it difficult for fraudsters to create fake invoices or alter legitimate ones, as any changes result in a different IRN. This helps to ensure the integrity of the invoicing process and protect businesses from fraudulent activity.

Conclusion

E-invoicing offers a range of essential features that make it an attractive option for businesses. These features include:

  1. Invoice Reference Number (IRN): The IRN is a unique number assigned to each invoice, which helps to identify it and prevent fraud. The IRN is generated using a hash algorithm, which converts the invoice data into a unique code.
  2. Hash Algorithm: The hash algorithm is a mathematical function that takes in data and generates a fixed-size output, known as a hash. The hash is unique to the data it was generated from; even a tiny change in the data will result in a completely different hash. This makes hash algorithms an effective way to identify and authenticate data, such as invoices.
  3. Streamlined Process: E-invoicing streamlines the invoicing process by eliminating the need for paper invoices. This can save businesses time and resources, as they no longer need to create and send invoices manually.
  4. Improved Efficiency: E-invoicing improves efficiency by automating the invoicing process. Invoices can be created and sent electronically, reducing the risk of errors and delays.
  5. Reduced Risk of Fraud: E-invoicing helps reduce fraud risk by ensuring that each invoice is unique and authenticated. The IRN and hash algorithm makes it difficult for fraudsters to create fake invoices or alter legitimate ones, as any changes result in a different IRN.

Overall,
 e-invoicing accounting software offers a range of essential features that can help businesses save time and resources while reducing the risk of fraud. By implementing e-invoicing, businesses can improve their invoicing process and focus on growing their business.

 

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.

 

 

 

What are the Different Types of Depreciation Methods?

Posted on by @nkpal25

Depreciation is a term that business owners hear all the time, but what does it mean? Depreciation is the process of allocating the cost of an asset over its useful life. This allows you to write off a portion of the asset’s cost each year, saving you money on your taxes.

There are a few different types of depreciation methods, and each has its benefits and drawbacks. In this blog, we’ll understand each type of depreciation and know how you can leverage accounting software for small business to calculate the depreciation on your assets.

What is Depreciation?

Depreciation is a word used in accounting to describe the periodic reduction of a fixed asset’s recorded cost until the asset’s value is zero or insignificant.

When you purchase an asset for your business—whether it’s a piece of machinery or real estate—you’ll want to account for the fact that it will lose value over time. This is what depreciation is all about.

Methods of Depreciation

There are two main methods of depreciation: straight line and double declining balance.

Straight-line depreciation is the simplest method, where you divide the asset’s cost by its useful life. For example, if you purchase a machine for ₹1,00,000 and its estimated useful life is five years, you would calculate depreciation as ₹20,000 per year. This is just an example, and you would need to consult with an accountant or take the help of a small business accounting software.

Double declining balance depreciation is more accelerated, where you double the depreciation in the early years and then decline it gradually as the asset gets closer to the end of its life.

 

Straight Line Depreciation

Straight-line depreciation is the simplest of the two, and it’s also the most common. Under this method, the value of an asset is reduced by an equal amount each year. So, if you buy a computer for ₹1,000, your annual deduction would be ₹100.

There are a few advantages to using straight-line depreciation. First, it’s easy to calculate. Secondly, it provides a consistent deduction each year, which can be helpful for budgeting purposes.

However, there are also a few drawbacks. One is that it doesn’t reflect the true value of an asset. This means you could be overpaying taxes in the early years and missing out on deductions later.

Declining Balance Depreciation

Under this method, the depreciation rate is based on the balance of the asset’s original cost that’s still outstanding. So, for example, if your asset is worth ₹1,000 and you’ve already written off ₹600 of that cost, your depreciation rate for the next year will be based on the remaining ₹400 balance.

The key advantage of this method is that it allows you to write off a larger portion of the asset’s cost in the early years when it’s likely to have the most impact on your business. Another advantage is that it’s relatively easy to calculate. You multiply the depreciation rate by the original cost of the asset.

One downside of this method is that it doesn’t consider the asset’s current market value. So, you could write off more than the asset is worth.

Another potential downside is that because the depreciation rate is based on the balance of the original cost, it can fluctuate from year to year.

Conclusion

When it comes to depreciation methods, there are two main types: straight-line depreciation and declining balance depreciation. Each method has its benefits and drawbacks, so it’s important to understand the pros and cons of each before choosing one for your business.

Harness the power of robust accounting software for small businessthat can help you calculate depreciation automatically and accurately.