The process of recording all types of day-to-day transactions that occur in a business is called bookkeeping. It is a part of accounting that demands a high level of accuracy. Small businesses can achieve it using bookkeeping software.
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The first step in a business cycle is purchasing the products from a distributor. The items and their details such as quantity, batch number, MRP, purchase price can be recorded using bookkeeping software.
For every product sold and service done, the buyer has to be provided an invoice listing the items/ service details, customer details, and seller details. The final invoice can be designed as per the user's wish.
Sales and purchase of goods happen in parallel. A constant check on available inventory will help the business to plan on next purchase. Real-time knowledge on physical stock quantity gives an upper hand in planning for the next day's sales too.
Every invoice created will involve tax calculations. Manually calculating and filing them is a nightmare even for a small business. Bookkeeping software calculates taxes and adds them to the invoice amount.
Every business runs on a belief called "credit". A retailer would purchase from a supplier on credit, promising to payback in a period. Both the parties have to keep a digital record of these credits to access them immediately when needed. Bookkeeping software helps in recording these entries.
The term "organization" itself means a group of people involved in a business. From suppliers to customers, from employees to management, every detail about these entities has to be recorded in bookkeeping software.
"Data is the new oil" is one of the most recited phrases of this century. Business have to plan their next actions based on what has happened, is happening and might happen. A successful prediction is possible only by analyzing data in the form of reports.
Trust is a costly word as it requires steady thinking and lots of effort. Pay your bills on time to the supplier to win their trust. Reminder tools in the bookkeeping software not only alerts on supplier credit payments but also on customer credit receivables. Trust goes both ways.
Anything that's in a paper might get lost or destroyed easily and anything that's digital can be copied easily until the data is being managed by a bookkeeping software. Frequent data back-ups and password encrypted security keep your business data safe and secured. Online bookkeeping solutions come with cloud back-ups.
Not just businesses, but Governments are also mandating audit trails in the software. A Business bookkeeping software automatically records your actions from creating a new entity to editing a payment voucher. Tracks to an extent where information on the maker, time of action can be fetched.
Bookkeeping, an ever evolving process that every business of any scale has to perform. Recording every transaction such as sales, purchase, receipts, payments, credit notes, debit notes, contra, journal entries and the taxes involved is bookkeeping. Bookkeeping is the first step in accounting, performed by bookkeepers with the help of any bookkeeping software. Insights are derived not just by blindly recording data, but by recording them systematically and seamlessly with the help of business bookkeeping software.
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Decisions cannot be made blindfolded and taxes cannot be filed unsorted.
Every transaction made isn't just debit and credit. They are converted into actionable insights when recorded systematically using bookkeeping software.
If you feel sorting out items based on batches and MRP in a rack is tiring, imagine sorting out the taxes involved in these items based on supplier's/ buyer's region, item/ service type manually. Head's spinning already. A Bookkeeping software would have sorted them out already.
All of this can be done and monitored from anywhere at anytime using online bookkeeping software.
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Bookkeeping can be classified into two different systems known as single entry bookkeeping and double entry bookkeeping. Despite recording the same transactions, each system has its own set of advantages and disadvantages, based on which one may choose their required system for bookkeeping.
The Single entry bookkeeping system is simple and commonly used by small businesses for recording transactions affecting only one account. This book usually maintains the records of cash transactions, sales, purchases, receivables, payables, daily and/or weekly summary of cash receipts/payments.
Double-Entry Bookkeeping System is the standard and detailed method of record keeping normally used by most businesses, bookkeepers, and accountants. This system of recording affects two or more accounts as it involves both the debit and credit aspects for every transaction. This is based on the fundamental rule of double entry system that "Every debit has a corresponding and equal credit". Double entry bookkeeping ensures accurate and complete recording of business transactions as it records what is received/paid and who is the corresponding giver/receiver at the same time for every transaction.
Business bookkeeping software is the recording phase which records all the business transactions whereas accounting software is the summarizing phase which consolidates the data from bookkeeping and provides impactful accounting data for business.
Records and maintains all financial transactions in the original book of entry
Bookkeeping is the primary step that collects and provides data for accounting
The purpose of bookkeeping is to summarize the results of all financial transactions for a defined period.
Interprets, analyses, and summarizes the financial transactions of a business
Accounting starts where bookkeeping ends and completes a full accounting cycle
The purpose of accounting is to interpret and analyze financial data for certain accounting period for making informed decisions.
Manual bookkeeping is prone to errors and demands extra effort to recheck repeatedly. Using bookkeeping software, every transaction that happens in the business can be recorded with nil errors. Bookkeeping, being the first step in accounting, helps to keep the book of accounts accurate.
Tax slabs vary with respect to item/ service type, region of customer or supplier and exemptions. Bookkeeping software will automatically find the right tax slab and calculate the tax amount. Doesn't just stop there, they make tax filling as easy as 123...
To prepare the budget and to plan the next actions, organizations hunt for insights. These insights are not available in plain sight but can be derived from reports. Bookkeeping software summarizes the business activities and present in the form of reports.
GIGO - Garbage In Garbage Out is the term used generically to say that the quality of output is determined by the quality of input, thus entrusting the responsibility to the bookkeepers on ensuring the accuracy of the transactions fed into the bookkeeping software. At the same time, the quality of bookkeeping software is determined by the quality of the reports in terms of factors like its depth, volume, efforts, user-friendliness, dynamics, analytics, and how they aid in simplification of the decision-making process at various levels of management.
mrakaf bookkeeping software (AccountsEasy) comes with a variety of Bookkeeping reports ranging from Daybook, Cash Book, Bank Book, Transaction Registers, Ledgers, Trial Balance, Outstanding reports and the Financial Statements like Balance Sheet, Trading account, Profit & Loss Account, Cash Flow Statement, Fund Flow Statement with all of them considering the above-mentioned factors for quality reporting in a bookkeeping software.
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mrakaf posses all the features of a bookkeeping software and stands out in the market for "n" number of reasons. Fast billing, seamless inventory management, accurate tax calculations and reports are a few of the many highlights. All of this requests only least skills and minimal staff. Join 30,000+ customers like you who trust mrakaf as the reliable solution for their business growth.
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Try mrakaf online bookkeeping softwareThere are two types of bookkeeping systems.
Single entry bookkeeping system
Double entry bookkeeping system
A basic style of bookkeeping where only one account comes into picture. For example, when a payment is made, only the receivers ledger balance will be affected and not the bank/ cash ledger
Unlike single, in double entry system of bookkeeping both the debit and credit ledgers are affected. This style demands an equal and opposite credit entry for every transaction of an account
Every country has its own financial year structure. In the United States of America, the financial year starts on 1st October and ends on 30th September. However across the world, FY starts from 1st April and ends on 31st March. The bookkeeping period follows the financial year of each country. Hence, it varies from country to country. Based on the country, the bookkeeping software is configured with the corresponding bookkeeping period.
The business bookkeeping software is available in the modes of On-premise bookkeeping software, Online bookkeeping software, and bookkeeping app. Business owners can decide on the best working model for their business bookkeeping based on their requirements and limitations.
The primary principle of bookkeeping software is to ensure the recording of each financial transaction of a business and manage those information on day to day basis with regular update to yield accounting software. In order to note down each business transaction in bookkeeping software there are several bookkeeping principles to provide the right information that is required for accounting.
Revenue principle
Expense principle
Matching principle
Cost principle
Objectivity principle