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Cloud accounting

Setting up Your Accounts-Part 1

by Sanjeev Archak Sanjeev Archak No Comments

When you are starting your business handling accounting and compliance can be daunting. There are a few  common mistakes that early stage businesses commit; of course with the right advice you can avoid these pitfalls. Part 1 of this blog looks at setting up your accounting system.

Open a Bank Account

It is best to open a current account for your business. This current account must be used to deposit all your sales income & paying all the business expenses. Of course there is a wide choice of banks to choose from, here are some factors to be kept in mind while choosing a bank account:

Bank charges: look at how much the bank charges for NEFT/RTGS, ATM Withdrawals, foreign currency receipts and payments, forex rates etc.

Minimum balance requirements: check the minimum balance requirements in the account. Also ease of operating the net banking must  be checked.

Mobile banking: choose a bank which offers mobile banking. This will save you a lot of time.

Separate Your Finances

There needs to be separation between yourself and the business. The individual and the business are not necessarily the same. How this works will depend on your legal structure:

For Sole Traders/Owners: if you’re a self-employed sole trader then your business and personal money are one and the same, legally speaking. But to manage your accounts, it’s still essential to have two separate bank accounts and to keep detailed financial records.

For Companies: a company is a legal person separate from its shareholders & directors. Companies are required to have bank accounts in company’s name.

Accounting for business and personal money separately allows you to have the best possible overview of how the business is faring – and is vital for tax purposes.

Keeping Tax Records

One can never escape taxes, as a business you will have to pay tax. It is a legal requirement, under GST & Income Tax Law, to have books of accounts. How much tax you have to pay depends on your legal structure. So as a business you must:

Know your tax liabilities: which depends on the legal structure of your business. Tax rates are different for companies & individuals.

Digitise your records: Income Tax Law requires you to maintain records for a minimum of seven years. Similar requirements are there in the Companies Act as well. So it is prudent to digitize your records.

Pay Taxes on Time: by paying taxes on time you will avoid payment of penalty. Let our experts at Integra Books help you with taxes.

Choose Cloud Accounting Software

Put your accounting on the cloud. A good cloud accounting software has the following features:

Ease of Use

Automation

Integration with other Apps

Zoho Books is a cloud accounting software which ticks these requirements. Zoho Books integrates with a whole range of Zoho Apps and will put your entire business on the cloud.

You can read a related blog here. Stay tuned for Part 2.

What happens if you don’t do your accounting?

by Sanjeev Archak Sanjeev Archak No Comments

You are a business owner and you are juggling sales, marketing, hiring, managing payroll and employees. The chances are that you will be letting boring things like accounting stack up into a mess. Maybe you are waiting for the tax season to arrive. What happens if you don’t do your accounting?

There is a good change that you are likely to end up in a big mess and there might be a hefty price tag.

You will never have clear view of your business finances

If you put a full stop to accounting, your books will no longer show a clear picture of your company’s financial viability. Without accurate records, it can be difficult (or nearly impossible) to track cash flow projections and statements.

Without accurately measuring cash flow, you can obscure issues like overdue invoices, held inventory, or recurring variable expenses like shipping costs or salaries. A clear break up fixed and variable costs allows you to find out your break-even point.

Your cash flow shows when money is coming in and what bills need to be paid. If your business is failing to track cash flow and you’re struggling financially, having a paper trail can reveal the problem. But, without accounting there is no trail—just a stack of papers on a desk somewhere.

Financing options become limited

Let’s face it; no bank will lend you without proper financial statements. Without evidence of your financial history, securing loans, bringing on investors or partners, or selling your business will be an uphill grind.

Your invoicing cycle goes haywire

You could keep a mental note of who owes you what, but we’re all human—we all make mistakes. Are you sure you didn’t forget about the invoice for the client who always pays late? If you did, they’re not going to voluntarily remind you that they owe you money. The slower you are at organizing outstanding invoices, the longer your business will go without those funds.

Payroll problems start to rise

If a system of checks and balances isn’t in place, issues with payroll can happen. Without proper bookkeeping, you might be under-compensating (or overpaying) employees without knowing. Generating Form 16 for tax filing will be a huge problem. Moreover, this can cause tax problems for the employees as well.

Managing expenses becomes tricky

Having a shoebox of receipts might sound easy enough, but this is not going to save you money. Without proper bookkeeping, your business could suffer from slow leaks.

Accounting backlog drains your time and money

Tracking down a year’s worth of records on your own takes you away from running the day-to-day operations of your business—and catch up accounting can make a stressful time of the year even worse.

If there isn’t a system in place for monitoring your books, your accountant is going to need ample time to sort through the mess, and it will cost you money

You will get in tax trouble

Filing tax returns without books of accounts is near impossible. All tax filers declare that they are providing correct information in their returns. Therefore, providing incorrect or false details will lead to penalties.

So we have answered  the question of “What happens if you don’t do your accounting?”. Get in touch today and save yourself a load of trouble.

Cloud Accounting Software

by Sanjeev Archak Sanjeev Archak No Comments

Internet has changed the word in indescribable ways. With the advent of cloud computing all products and services are now hosted on the cloud. Cloud computing enables access to data from any device or any place.Rapid penetration of internet has made access to data easy and quick. Most businesses are now on the cloud so why should accounting be an exception? A recent report estimated the accounting software market to reach US$ 20,408 Mn by  2026.There has been steady shift to cloud based accounting software from desk top software.As businesses become more mobile, they will move away from on premise accounting software.

 

In this post we shall read  how cloud accounting can transform your business. Here are some reasons to move your accounting to cloud:

1.Automation

Desktop accounting is a manual process. This requires sales invoices,expense entries, bank and cash entries to be entered manually. In a cloud based software one can:

  1. Set recurring invoices for sales
  2. Set recurring bills for expenses
  3. Integrate expense management software with books of accounts
  4. Sync bank accounts,credit cards,payment gateways for automated matching
  5. Create workflows to streamline processes

These features are absent in a desktop environment.

2. All teams on one Software

Cloud based application empowers services organizations to manage

  1. People
  2. Projects
  3. Financials
  4. Customer
  5. Vendors

in one integrated application. Desktop bases software is designed to do only accounting. This means that the finance function becomes a silo, distinct from the rest of the business.

3.Accessibility

All you need is internet connection. Internet penetration is increasing in India and data costs are cheapest in the world. Your accounting software can be accessed from a PC,tablet,mobile phone or any other device. This allows teams to work remotely.

Desktop based software is installed on a machine and remote access is not possible unless one brings the machine along. This rules out remote working.

4. Customization

Cloud based accounting software are very flexible. An user can customize:

  1. Sales invoices based on customer requests
  2. Emails to be sent to vendors/customers
  3. Financial reports
  4. Integrate with third party apps

Desktop bases systems rarely integrate with other applications.Hence customization options are limited.

5.Data Backup

All data rests on the cloud. Data is backed up off site and secured by high tech systems.  If your computer crashes,is broken, you can access your data from another device.

Desktop software requires manual back ups. If your dedicated accounting computer breaks down then data,if not backed up, is lost. This can cause huge damage and downtime.

6.Security

A recurring question when it comes to cloud is “How secure is my data”?. Relax. All the cloud based accounting software’s use state-of-the-art encryption to secure data. You do not need an IT department to host and administer these applications. User access can be regulated and can be changed on demand.

Desktop software requires that local machines be protected from viruses and unauthorized access. Login credentials have to be kept confidential.

7.Updates

In cloud based software you are always using the most current version.The software is automatically updated for changes in tax laws or any other upgrades. Installing updates in a desk top software is forced when there is a migration. Bug fixes or other upgrades require a new version to be purchased.

So there you have it, seven reasons why you should move your accounting to the cloud.  Integra Books uses Zoho Books, cloud based accounting software to provide accounting services. Integra Books can help you migrate from into Zoho Books. Get in touch with us today to put your accounting on the cloud and empower your business.