Setting up Accounting System for New Business

Now that you are considering starting a new business on your own, including having a sole business idea, designing a career that has the flexibility to grow with you, working toward financial independence and investing in yourself.

Now the real challenge begins as you quit your regular day job & become a business owner yourself, not knowing how that industry works. The most important part of starting your business is managing finance. You can’t proceed too far without establishing a simple & efficient accounting system that won’t get too complicated for you. The early stages are the time one needs to establish the structure that will support your company financially and help you define your financial strategy as you too grow.

It is very important that you manage your accounting properly for the growth of your business. However, it is not necessary to spend a fortune doing it. Rather you can invest it in your own business.

These are the basic that you must follow before you start your new business,

  • Open a Business Bank Account

Opening a bank account that is separate from your personal account is very much necessary for accepting payments & paying your creditors. If you will have employees, a separate payroll account should be set up as well. This should be the account where you make payments and receive payments as well.

  • Separate Personal & Business expenses

Avoid using the business account for personal use by establishing corporate checking & saving accounts. Maintain a separate income statement and balance sheet. Use checks from your business banking account or separate business credit or debit cards to pay for all of your business transaction.

  • Keep records of receipts & invoices

Keeping a record of all your transaction can help you in the long run of your business. This will also come in handy when you have to pay to taxes. You can either keep their physical copies or store them on the cloud so that you can have their access from anywhere.

  • Make a list of Items

Create a list of items and materials the company owns. This list will become your assets in the accounting system. For example, cash, office equipment, buildings, vehicles, and office supplies. Include the value of the assets when you make your list.

  • Create a process for Payment Collection

Always have a process for payment collection so that you know from where and when you will be getting your money. Even keep records for new customers. Establish credits guideline and create a collection timeline so your clients know what is expected. Keep a simple process for payment collection, even for accepting payments through PayPal, or any other online payment.

Choose the right method of recording the transactions

Now that you have set up your business account, the question is how you maintain it effortlessly without investing much of your time. Now you have to choose how you would like to record your transactions. You can record the transaction on your own, hire an accountant or use accounting software.

  • Though recording your own transaction would be the cheapest solution for you but it will take a large chunk of time out of your daily work. Recording transaction and making calculation will take too much of your time. And you may make errors while bookkeeping.
  • If you hire an accountant, you need not to worry about managing your books yourself. The accountant will take care of financial complexity. But, always keep in mind that hiring an accountant can get expensive for your business.
  • The best alternative is using an Accounting Software. You can record your business transaction yourself without needing an accountant. The software will automate your accounting process giving you streamlined book and accurate calculations.

Setup your Charts of Accounts.

After choosing the method for recording transaction, it’s time to set up your chart of accounts. A chart of accounts is simply a list of accounts that you will be using in your business such as revenue, cash, accounts receivable, accounts payable, payroll, supplies, rent, utilities, etc.

Choose the right Accounting Software for your Business.

Now that you are clear which way you want to proceed with, choosing the right accounting software depending on the requirement of your business.

Make a list of crucial features that you absolutely need in your business’s accounting software. Here are some of the features which must be part of a good accounting package,

  • Create and customize invoices
  • Track expenses according to categories
  • Manage inventory
  • POS mode billing
  • Barcoding
  • Income & expense management
  • E-way bill
  • Bank integration & reconciliation
  • GST Reports
  • Bank Reconciliation
  • Multi-user login
  • Manage a list of customers & vendors
  • View account payables & receivables
  • View Balance Sheet, Profit & Loss statement and Trial Balance reports

As you will face multiple setbacks in offline accounting software, so it is better to use online accounting software.

Understanding the Requirement for your Business.

  1. If the software is bloated with every possible feature you can imagine, it will become difficult to use for you & your team. So, go for software which has a simple user interface and is not overstuffed with unnecessary features. The clean interface makes it easy to focus on the important tasks and can reduce the learning curve.
  2. As you are starting a new business so your requirements are of small businesses, so choose a software that can help your small business grow. But, it is also better to select an accounting software which can scale with your business needs.
  3. The major concern of all business is the safety of their data.  If your accounting software provider is hosting the application on their own servers, ask them about the security measures they are taking to safeguard your data.
  4. No matter how good or user friendly the software is, you will need support at some point. And if you have nobody to talk to when you are stuck, your entire investment will go in vain. So before buying always inquire what kind of support you will be provided when you are in doubt.

Budget & Prices

Most of the software provides free trial for a short period of time and then the service becomes paid. So the best suggestion is, do a little research & make a list of some accounting software which you consider is good. Signup with all of them and spend a little time experimenting with all of them. Find the software that you are most comfortable with.

Always have a clear discussion with the company about the actual cost of product & any future costs before upgrading from the free trial. This will be helpful for your business to avoid any hidden cost burden. Make a comparison of the pricing of different accounting software. Invest in the accounting software that you think will take your business to next level.

Conclusion

Always keep in mind, that it will be very difficult for you migrating to different software once you have started and invested so much of your time and money on accounting software. Finding the right software is not easy, take your time but try and make a quick decision.  It’s always better to spend more time before the purchase to save frustration a later stage.

Looking for the best accounting software for your business, start here. Checkout our free trial.

Why Cloud Accounting is better than traditional accounting?

Cloud accounting is widely accepted by small businesses. Cloud Accounting is termed as online accounting and manual accounting called as traditional accounting. Why we need cloud accounting? The best answer would be to save time, money and to reduce accounting errors. Also, cloud accounting is the best way to do accounting as you can save & edit all your data at any time and anywhere as data will be saved on server. These are some features which attract small businesses to use accounting software.

Continue reading “Why Cloud Accounting is better than traditional accounting?”

Step-by-step guide on GST Registration

GST marked as the biggest tax reforms in India since 1947. It’s a unified tax implemented by current BJP Government with an aim to erase all state or central government indirect taxes. GST subsumes 11 Indirect taxes that were levied on the sale of goods and services by central or state Government. GST made indirect taxation process simpler for small and medium scale enterprises. It will also boost economic growth in a long run. New small businesses will be benefited from this new tax law as they have to pay less tax under composition scheme (SMEs with Rs.20 – Rs.50Lakh turnover).

As we are saying that GST made taxation easier. So, let’s have a look at its registration process. In this article we will cover all details regarding GST registration with below-mentioned points:

Continue reading “Step-by-step guide on GST Registration”

Revised GST – Why it’s a best Diwali gift for traders?

Since its implementation on 1st July, 2017 GST has been always in the news due to its high tax rates & bit complicated tax slabs also Govt faces lots of criticism for it.

Recently RBI forecast GDP growth rate at 7.3% (2017-18), which is lower than last year’s GDP growth rate. To main economic stability and for a higher GDP growth Government decided to revise tax rates.

On 6th October Finance Minister Arun Jaitley announced new tax rates after a long & fruitful discussion with GST council members.
The GST council slashed rates on 27 items and 12 services.

Here are the details of revised tax rates on goods:

Continue reading “Revised GST – Why it’s a best Diwali gift for traders?”

GST Council trims tax rates to ease the filing process

GST Rate revised

Since its implementation on 1st July, 2017 GST has been always in the news due to its high tax rates & bit complicated tax slabs also Govt faces lots of criticism for it.

Recently RBI forecast GDP growth rate at 7.3% (2017-18), which is lower than last year’s GDP growth rate. To main economic stability and for a higher GDP growth Government decided to revise tax rates.

On Friday Finance Minister Arun Jaitley announced new tax rates after a long & fruitful discussion with GST council members.

Continue reading “GST Council trims tax rates to ease the filing process”

What’s accounting? Accounting terminologies

Accounting is the backbone of every business. Its very necessary for start-ups’ to have a clear and detail knowledge on all accounting terms to manage business finances easily also to have a better talk with investors. In this series we have compiled a list of basic accounting terms and its details to provide our users a better and in-depth knowledge on accounting.

Get all the posts in accounting terminologies series here

Accounting: Accounting is a way of keeping record of all financial transactions followed by summarization and analysis in the form of a book. Accounting also called as book keeping. It shows the financial health of a business which in turn will help the business owner to take better decisions for growth of the business.

Accounting provides detail information on available stock, budget, cash flow status, profit & loss status etc.

Recently companies are using cloud accounting softwares for easy and error free accounting. Also this is the best way to save time and money on accounting.

Accounting cycle:

Accounting Example:

 

This is just an example how entry items in a account using an online accounting software.

The most common reason for business failure

The most common reason for business failure is people don’t invest in stuffs they should. And that’s called not taking risk.

Can this tool make me more efficient and I can get more out of what I’m investing and can get success done quicker. 

They just continuously look into their wallet and tells oh scrap I shouldn’t invest in it. Else I’ll not have money for tomorrow. And that’s why they just keep having the money on their wallet and they never could increase it.

And it’s not just about monetary investment, but more often it is the case.

And don’t laugh, you might be in that state too. I know, I was there too.

And thank God we didn’t built SlickAccount software on that rule. We always hated to show something that deters people from investing. And that’s the common thing accounting softwares do. We instead focus on incomes and cash in hand. It’s OK to invest. But can you get this much in this amount of time?

This thing is so subtle. But you can see it everywhere around SlickAccount. And it’s a biggest secrete in making SlickAccount work for a lot of small businesses.

So invest on stuffs that can make it easy for you to reach your goal fast and buy you time. But don’t spend on stuffs that’s independent of this relationship. You can do that later.