Bookkeeping & MIS
Book Keeping / Accounting
Book keeping is a systematic process of recording, analyzing and interpreting the financial transactions. It is the responsibility of every business – whether large or small to furnish their accounting records to various regulatory authority like Income Tax, GST and Ministry of corporate affairs. Usually, start-ups ignore this process and after few years, they have to face problems. To avoid problems like raid and fines, it is always good to maintain your financial records and furnish details to the government agencies.
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Planning budget:
An effective accounting system in place helps startups and established companies in:
Planning budget:
Budgeting helps organizations in effectively controlling the income and expenditure of the company while monitoring the managerial policies and goals of the business. It provides a disciplined approach to developing strategies; directing capital and other resources into profitable channels.
Evaluating the performance of the business
Accounting system acts as a yardstick in measuring the performance of the business with respect to key metrics like net profit, sales growth, asset turnover, EBITDA, debt to equity ratio etc.
Managing cash flow
It helps in assessing working capital requirement for the period and timely identification of bottleneck to flow of business transactions.
Regular tracking of the money that comes into the business helps in predicting the trends, paying to staff and suppliers, covering debts, etc.
Mandatory by law
In India, every body corporate like private limited company, public limited company and LLP shall be required to get their books of accounts audited and shall file the audited financial statement with various government authorities like MCA, SEBI, Income Tax and GST.
Managing cash flow
It helps in assessing working capital requirement for the period and timely identification of bottleneck to flow of business transactions.
Regular tracking of the money that comes into the business helps in predicting the trends, paying to staff and suppliers, covering debts, etc.
Methods of book keeping
Accounting may be done in single entry or in double entry mode and business house which expects to have better control over the number do elect double entry basis of accounting ie for every debit there is corresponding credit.
There are two prominent method of book keeping under double entry mode which are as follows
a) Accrual basis
Revenue is accounted for when it is earned. Typically, revenue is recorded before any money changes hands. Unlike the cash method, the accrual method records revenue when a product or service is delivered to a customer with the expectation that money will be paid in the future. Expenses of goods and services are recorded despite no cash being paid out yet for those expenses.
b) Cash basis
Revenue is reported on the income statement only when cash is received. Expenses are only recorded when cash is paid out. The cash method is mostly used by small businesses and for personal finances.
Medium of book keeping
Accounts can be maintained from low level in handwritten books to integrated ERP system wherein routine entries are automated and seamless system which inculcate robust internal control eliminating human intervention and rolling in system control to achieve error free book keeping which helps in statutory compliance and to consider optimum decision by management.
Some of famous ERP system are listed below
What is ERP and how it works?
The main purpose of an ERP system is to increase organizational efficiency of an organization by managing and improving how company resources are utilized. Improving and/or reducing the number of resources necessary without sacrificing quality and performance are keys to effectively improving business growth and profitability.
ERP systems typically cover all aspects of business operations and commonly provide
ERP software has the ability to collect and compare metrics across departments and provide a number of different reports based on roles or specific user preferences. The data collected makes finding and reporting on data faster and gives a complete view of business performance with complete insights on how resources are being spent.
ERP synchronizes reporting and automation by reducing the need to maintain separate databases and spreadsheets that would have to be manually merged to generate reports. This combined data collection and reporting offers valuable insight, such as where to cut costs and streamline processes, providing the information to make real-time business decisions.
Which Accounting software to choose?
There is no one default accounting software for every business, depending upon the scale and complexity of business operation one needs to contemplate about ERP system
We can broadly classify any business structure in India into following three buckets and ERP software aligned towards the need of such business is portraited below
| Scale of Operation | Manufacturing Sector | Trading Sector | Service sector |
|---|---|---|---|
|
Global level |
SAP / Oracle / Microsoft dynamics |
Zoho inventory / warehouse |
Microsoft dynamics |
|
National level |
SQL Ledger |
Tally |
Zoho / Quick books |
|
State level |
Tally |
Tally |
Quick books |