Category: Accounting

Organizing your business activities is an extremely crucial step when you start your organization. A sound planning and setting up certain guidelines to manage various business activities has always proved to be beneficial for businesses, irrespective of the size or revenue. The amount of time and energy you spend in devising a plan to run your business, says a lot about your company’s future position. In fact, the more you plan and strategize, the better it is for your business’ survival in the market.

There are many upsides to keeping your business accounting organized right from the start. With a methodical and an organized approach to business accounting in place, several crucial decisions on cash flow can be made on-the-go, and further plans to grow and develop can also be devised. 

These five tips can help even the smallest businesses achieve a well-kept set of books and financial clarity in the long run.

Separate your personal and business accounts

One of the best ways to manage your business’ finances in the most organized way possible is by separating personal expenses with your business expenses. This will not only provide clarity over tax-deductible expenses the business incurs, but also ensure that your overdraft, checking account and credit cards are separate and no business transactions or tax-related charges are affected.

Avoid cash transactions, wherever possible

Cash transactions are hard to track and manage. Expenses paid in cash can be tedious to track and reconciling cash outgoings with receipts can be tricky and time-consuming. Thus, it is always advised that all business transactions should take place in the form of either digital payments, online banking services or cheques, so that these expenses can be tracked, seamlessly.

Maintain a solid tracking of accounts receivables and payables

Maintaining continuous tracking for receivables and payables will help you track payments more seamlessly. Accounts receivables refer to the amount that a company is entitled to receive from its customers for goods or services sold on credit. Management of receivables refers to planning and controlling of debt owed to the customer on account of credit sales.  In simple words, successful closure of your order to sales is determined only when you convert your sales into cash. Till your sales are converted into cash, you need to manage ‘how much you need to receive? from whom? And when? Having a proper tracking system lets you control and manage when your clients have paid and how late outstanding accounts are, so you can keep the cash flow smooth during the month by chasing up payments.

While accounts payable are short-term liabilities that need to be honoured within a specific date, any delayed payment will attract additional charges in the form of interest and later payment charges. Also, delayed payment may create discomfort between both the parties and gradually impact the credibility of the business which in turn leads to disruption of the supplies. Thus, maintaining accounts payable will help ensure you aren’t duplicating or being late on your supplier payments.

Invest in an accounting software that will digitize your company data

Manual filing has flown out of the window is no longer appreciated, especially for MSMEs. The only reason why businessmen choose to start their own company is to grow and expand over the years. Thus, staying compliant with the latest technology comes in handy when your forecast is growth. All the crucial reports and files are best if stored digitally. Optimizing your accounting processes and automating them can reduce your costs and improve your business efficiency greatly. An intuitive business management software helps you automate the most complex processes in a business, to ease you from manually entering information. This also reduces the room for errors which would eventually impact your business performance in the long run.

Every business aims at expanding its processes and make a mark in the industry in the long run. However, not adopting the evolving needs of your business may hamper its growth and success. One of the best methods to run your business smoothly is by choosing a business management software that adapts to your current and future needs.

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As a consumer in UAE, you are aware that VAT has been implemented in the country. You have also paid VAT on many purchases since then. However, there have been certain cases which have come to the fore now where suppliers have charged and collected VAT from consumers, though they are not authorized to do the same. As consumers, it is understandable that our knowledge of the intricacies of the VAT Law will be limited. However, you do not need to worry. With this simple checklist, you can ensure that you are receiving a genuine Tax Invoice for your purchase.

This can be a basic checklist for you to ensure that you are paying VAT to genuine suppliers. This, along with the provision for any person to verify the validity of a TRN, gives great power in the hands of consumers to ensure that they are not cheated.

Hence, these 4 things need to be checked by consumers when they receive invoices for their purchase. Note that a TRN (Tax Registration Number) is the identification number given to every registered business under UAE VAT. A business cannot charge VAT without being registered and holding a TRN. Additionally, in case you suspect that the TRN mentioned by the supplier is not true, you can verify its validity. We have explained the process for this in our article ‘How to verify whether a TRN is valid’. With these measures, you can ensure that you pay tax only to the businesses eligible to collect VAT.

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If you have a business, you need an accounting software to record your income and expenses. Ideally this is the first piece of software you should purchase when you start the business. However, most business owners get one only when they need to pay taxes or apply for loans.

So, how to choose a right accounting software for your business? This can get confusing as there are plenty of products available in the market today. I’m trying to make your job easy by listing down some important filtering criteria’s that you should consider before you invest in an accounting system.

There is also a short step by step process in the end to help you in decision making process.

8 Important factors for selecting a perfect accounting software

1) Online or Offline

First question to ask yourself is – Whether I want an online software, or a desktop based offline software? How does it matter? Well, most businesses nowadays are adopting cloud-based software’s as they offer lot of advantages over traditional offline software’s. However, some businesses like retail stores require speed and not always connected to the internet. For them, offline POS (Point of Sale) systems are the best bet.

Advantages of Cloud Accounting Software:

• -Nothing to install. Just signup and start entering your transactions
  You don’t have to worry about upgrades as all changes are pushed automatically. Online software’s are always up to date.
  
• – Can be accessed from any internet enabled device at any point of time
  
• – Cloud accounting software providers take care of backup and maintenance   which is a cost saving for you.
  
• – Data across all your offices is always synchronized.
  
• – It can integrate with other cloud-based applications.

When you should buy an offline or desktop-based software:

• You have a retail store and need to create few hundred invoices over the counter. You do not have internet connectivity at your business location.
  Its strongly recommended that you go for an online accounting software as you will have your financial data on your tips even when you are not in the office.
• Read more about how your financial data is more secure in cloud.

2) Data Security

Skip this point if you have opted to go for an offline accounting package. If you are thinking forward and considering an online accounting application, then data security is the most important aspect to check.

Essential things to check:

• Ask the company how they store the application data. In most cases, this information will be available on their website.  Some of the trusted cloud hosting service providers are Amazon and Rackspace. 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.
• Check if these services are using HTTPS connection. It’s very simple to check this just open the application and see if the URL in address bar starts with https://. Normally, this is highlighted in green color. You can even click on that to view the security certificate. HTTPS protocol ensures that the data transferred from your computer to software company’s servers is encrypted and cannot be viewed by hackers.

3) Features

Make a list of essential features that you absolutely need in an accounting software. Here is some feature which part of a good accounting package must be.

• Create invoices and customize the look and feel 
• Track expenses according to categories
• Manage inventory, inward-outward stock movements and wastage 
• Perform bank reconciliation by importing bank transactions
• Create purchase orders (PO) and record inventory purchases
• Create and manage taxes
• Record Journal Voucher entries
• Manage list of customers & vendors
• View account payables & receivables
• View Balance Sheet, Profit & Loss statement and Trial Balance reports
• Add additional team members
• Good to have Features:
• Support for multi-currency transactions
• Option to manage employees and process payroll
• Categories transactions according to projects
• Access control for every team member

4) User Interface & Complexity

Most of the business owners do not have any accounting background. Even if you have a dedicated accountant who would be using the application, as an owner you should be able to login and browse the things. Also, it should be easy enough for your employees to learn the software. Investment in training is a cost and should be avoided.

If the software is stuffed with every possible feature you can imagine, it will become difficult to use for your team. So, go for a software which has a simple user interface and is not bloated with unnecessary features. Clean interface makes it easy to focus on the important tasks and can reduce the learning curve.

5) Scalability

Lot of businesses make a mistake by buying an application which suits to their needs at the time of purchase. Later, when their business starts to grow, the accounting software fail to cope up with the progress and eventually business owners have to migrate to another software. Migrating data from an existing system to a completely new software can be painful.

So, select an accounting software which can scale with your business needs. Some softwares offer only one version of the product and some have progressive versions depending the business type or size. Go for the software that offers an entry level version as well as a feature rich version which you might not need now but will definitely need in future.

6) Exit options

Imagine if the company you are buying from shuts down its operations or you discover lot of bugs few months after the purchase. To save yourself from such situations, ensure that the accounting software provides data export facility.

You should be able to export ledger or other transactions at least in the form of excel as most other software’s will accept excel file for the import.

If fact, as a good practice, you should always backup your data at regular intervals.

7) Hidden Costs

Some software providers might charge for the support or upgrades. Sometimes, a basic software is provided at a lower cost and then you are forced to buy ‘add-ons’ or pay for ‘maintenance fee’. So, check if there are any hidden costs associated with the software you are planning to buy.

Best way to know this, is to check pricing page of the software provider’s website. If they are selling additional services, those will be mentioned there.

8) Post-sale Support

This is the most important but most ignored thing while selecting an accounting software. No matter how good or easy 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.

Lack of support is also one of the reasons why some accounting software’s are cheap. Obviously, support cost is not included in the offering. You should avoid such products at any cost.

Here is a simple tip to check the support – just post a message or call support number and see how they respond. Based on the response time and quality of response, you will come to know about their support infrastructure.

5 Step Process for Selecting A Perfect Accounting Software:

• Talk to the employees who will be using the application

Find out what exactly they need to get their job done. Once you understand your accounting needs, make a list of it and keep it handy.

• Know your budget

Find out how much you can pay at this time. This will filter out almost half of your options.

• Search & shortlist

Google is your best friend and should be the first point to start your research. Check out software comparison sites and testimonials of the existing users. Shortlist your software names in a simple spreadsheet.

• Schedule a demo

Visit the software provider’s website and request for a demo. You can ask questions related to your niche during the demo. Watch application walkthrough videos, if available.

• Take a trial

Always take a trial before purchasing any accounting application. Enter dummy transactions related to your business and check the accuracy of reports. If everything looks good, you are all set!

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Courtesy : https://www.profitbooks.net/tips-and-in-depth-process-to-choose-best-accounting-software/