Are you a small businessman who still uses paper and books to maintain business accounts and records? Do you keep track of all your invoices, receivables and dues? Do you find the process of taxation incredibly painful because everything is so disorganised?
If the answer to any of these questions is “yes”, this article is for you. Among the millions of small businessmen in India, only a fraction of them maintains proper records, out of which a smaller fraction of use technology to assist them. Here are some tips for you on the need for proper maintenance of records, and why using books to do so has become obsolete.
Why Should You Maintain Accounts?
Simply put, maintaining accounts keeps your business organised because you can track every transaction you made. This keeps you in control of your expenses, income, receivables, dues, and taxes. On the other hand, not having proper records can have disastrous consequences.
With no proof of dues, your customers might not pay you on time or never pay at all. If you cannot justify your income tax liability, the tax authorities will penalise you for reporting the wrong numbers. Banks will refuse to offer loans if they have no proof of how your business is performing.
How to Maintain Accounts Digitally
If you are convinced of the need for maintaining records, many of you might be wondering why doing so on paper is a bad thing. Technology is indeed an alien concept for a lot of small businessmen, but digitisation is influencing every industry and sector for the last couple of years. Once you adapt to technology, you will realise that it makes a large chunk of your work smoother, faster, and more accurate.
- Online Billing Software
An invoice is proof of a sale that the seller keeps, which contains details like date of sale, amount, product name, and details of the buyer. It is essentially a more detailed form of a receipt that a salesman hands a customer. Invoices are necessary to keep track of your trades and for taxation purposes.
If you deal with a large number of customers daily and keep create all your invoices on paper, keeping them organised neatly to file tax returns is almost impossible. What if you lose or misplace some of them? That’s why online billing software applications do the job for you.
Saving your invoices online help you search them easily and keep them organised in a single place. Moreover, GST regulations mandate that the invoices should be in a certain format, which GST billing software automatically generates for you. A GST invoice typically has a header, customer details, tax details, billing summary, and a signature.
- Accounting Software
Account or bookkeeping software is used to keep track of expenses, income, dues and all financial transactions. An Excel spreadsheet is the simplest way to maintain records digitally, whereas sophisticated software tools also offer features like GST calculators, automatic reminders for dues, automatic payment options, and so on.
Payment reminders are a particularly useful feature because many transactions among small businessmen involve paying the amount at a future date and not during the purchase. An accounting app lets you keep tabs on all your past, current, and future payments, which, in turn, helps you calculate your tax liability correctly. The accrual basis of accounting can get messy if you do it on paper.
- GST Software
The GST Act has fueled the digital movement in India because the entire process – registration, payment, and filing returns – has to be done online through the GST portal. The various tax slabs, amendments, exemptions, and rules can be confusing to many of you, which is why there are software applications dedicated to GST processes.
These applications calculate the correct tax rates, help you choose the right form(s) to fill, and upload the invoices seamlessly when filing returns. Most GST software tools can be integrated with existing ERP (Enterprise Resources Planning) and accounting software too, enabling you to consolidate all the relevant data in one place.
By now, you are hopefully convinced to take the digital leap for maintaining your accounting books. The initial transition phase is difficult, but in the long run, many processes are simplified with technology. Check out the various software tools designed for small businessmen today!