What is Accounting Software?

Accounting software automates all financial and accounting processes of a business. The software helps record, analyze and interpret financial information transactions. You can automate manual data entry tasks and prepare transactions quickly using accounting management software. 

Top accounting software in India for small businesses and big enterprises helps manage account journal, general ledger, payroll, and trial balance, among many others. Accounting systems can also be used for preparing financial reports and filing GST returns without depending on any third-party application. 

An accounting system further helps with invoice generation and sharing, and online payment. You can also track expenses, check the inventory levels and generate bills and reconcile bank accounts with accounting solutions. 

What are Online Accounting Software Functionalities?

Online accounting software functions just like any other SaaS (Software as a Service) solution. Every critical accounting financial information is stored in the data center, and all you need is an internet connection to access the information. It also ensures higher data security and backup, with restricted, role-based access to any financial information. 

Web-based accounting software supports single ledger or common ledger accounting from anywhere and at any time. Instant data sharing through this software eliminates the chance of repetitive data entry. This system ensures that every user gets access to the latest list of products, invoices, and customers to manage the general ledger, categorize transactions, generate payroll, and track payments efficiently. 

What is the Difference Between Desktop and Cloud-Based Accounting Software?

Desktop or offline accounting software comes with a package installer in a physical storage device such as DVDs, external hard drives, and pen-drive. In addition, data related to the software is stored in the local computer. 

Cloud-based accounting software allows you to access the data online with a single sign-in. Whatever work you do on the software, is stored remotely on third servers. This enables users to access the free accounting application from any location with an internet connection, and on any device, including smartphones and tablets. 

Today, most of the accounting and bookkeeping software is available in cloud versions for SMEs and big enterprises. Online accounting software companies also run software updates and fix bugs remotely, without any hassle. Moreover, a cloud accounting system does not require an in-house hardware installation and is a budget-friendly option for SMBs. Look at the quick comparison of offline vs online accounting software.

Types of Accounting Software

Below are the types of accounting software available:

• Spreadsheets: Google Sheet, OneDrive, and Microsoft Excel are often used by startups to list their income, expenses, sales, and other financial data. For managing advanced functions, businesses often opt for a complete solution. 

• Online: Online accounting software is web-based or cloud software, which saves all your financial data on third-party servers. This type of business accounting software provides 24x7 access to business data with just a system and an internet connection. 

• Offline: An on-premise accounting software, which stores financial data on your in-house server. Its features can be accessed even when you are offline. These solutions are mostly available for free download or can be purchased with a one-time payment. 

• Small Business: This type of software includes the basic accounting and bookkeeping functions for modern-day businesses. You can easily manage payroll, billing, invoicing, and reporting needs with small business accounting software. 

• Enterprise: This application includes a package of advanced accounting management features like sales and purchasing, reconciliation, customer relationship management, business intelligence, and more. 

• Commercially Available Software: This type of software caters to the needs of different industries and provides standard reports and features. However, its features can be moderately configured as per the specific needs of any industry. 

• Billing and Invoicing Software: Accounting software with billing and invoicing functionalities streamlines activities like invoice creating and sharing, automated payment reminders, payments and billing through multiple modes, etc. 

• Payroll Software: It is used to automate processes related to employee salary processing, deductions, loans, advances, claims reimbursement, overtime, etc. This software also generates automated payslips and helps with tax calculations. 

• ERP Software: This is a broader software category with accounting as one of the major functions. Along with accounts management, ERP systems also help with procurement, material planning, and inventory management. 

Accounting Software Modules and Features

• Chart of Accounts: The Chart of Accounts is available with the best accounting software packages. It is a complete list of ledger accounts that provides an overview of your business transactions. The chart is arranged using metrics like expenses, income, liabilities, assets, and capital. 

• Balance Sheet Reports: Balance sheet and profit/loss reports can be created easily with an accounting application. The reports are helpful in highlighting the profitability ratio, the expense incurred, and income generated. 

• Cash Flow Statements: An accounting system analyses the transaction records for producing cash flow statements. You can do this to maintain the bookkeeping record on a quarterly or monthly basis. 

• GST and Returns Filing: This particular module helps you file GST returns seamlessly by pushing transactions directly into the GST portal. Make your business GST compliant by preparing and filing GSTR-1, GSTR-2, GSTR-3, and GSTR-4 return online effortlessly. 

• Debt Collection: Through the debt collection module, you can keep track of whether the overdue bills have been collected or not. You can also quickly identify and resolve issues that may be affecting the debt collection process. 

• Credit Management: Credit management is required to handle payables and receivables. You can also use this module for defining credit limits and periods for every customer. 

• Banking: Reconciliation of bank statements with an accounting system is easy and so is managing the bank accounts. The module also makes cheque printing easy for making payments. 

• Budgeting and Forecasting: By the end of a financial year, accounting programs help assess your business performance and set a budget for the next year. Based on your budget, you can establish sales targets and assign the capital for different expenses. 

• Payroll: Payroll accounting software lets you process employee payroll, expenses, and reimbursements. This module also helps in the preparation and printing of cheques while taking care of all legal and tax obligations. 

• Inventory: The main purpose of an inventory management module is to keep track of your stock levels. You can sort out issues related to procurement, availability, and movement of your goods. Also, you can keep a close eye on your inventory to avoid overstocking or understocking. 

• Project Accounting: This is a customized module found in top accounting software and is used primarily by project management and deployment teams. Accounting programs help in making project estimates based on the overheads and costs pertaining to labor, material, and equipment. 

• Fixed Asset Management: This module helps in the management of a company’s financial data related to fixed assets in a more accurate manner. It helps in taking care of audit history, cost records, depreciation calculation, resource allocation, etc. 

• Billing and Invoicing: Accounting ERP software helps automate several routine tasks. It generates invoices quickly and shares them with the clients for timely payments. 

• Tax Management: App and desktop-based accounting software help in carrying out tax calculations automatically, along with tax reporting and integration of multiple tax rates. You can easily collect tax information from all financial documents into one single repository to generate reports necessary for tax filing. 

• Receivable and Payable: This module assists in managing customer invoices and processing customer payments. This module is chiefly used to create bills or invoices for customers. You can also keep a tab on individual deposits to bank accounts so that deposit information can be uploaded and applied to customer accounts automatically. 

• General Ledger: Without the general ledger, you won’t be able to create vital financial documents, such as trial balance, balance sheet, and profit and loss statement. This module is used to record financial transactions. It helps create a trail of information needed for audit purposes. 

• Billing: Billing is an important function of any top accounting system. Billing and accounting software help get timely payment through payment links on invoices. 

Advantages of Accounting Software

• Accounting Made Easy: The major benefit is that it enables even the non-accountants to understand and analyze their financial data. You don’t require any special training to execute your accounting operations. And you get to manage accounting functions in compliance with the legal standards of your state/country. 

• Mobile App to Manage Accounting Functions on the Go: The best Mobile apps available on Android and iOS devices help you manage financial data and transactions on the go. 

• Increased Productivity: By migrating your financial data to an accounting ERP software, you can automate and streamline your mundane tasks, such as collection, organizing, and analysis of your most sensitive data.

• Tax compliance: The accounting system helps adhere to tax regulations. The tax rules can be pre-set and are taken care of by the vendors whenever an update happens. It also acts as a source of information pertaining to audit and tax, making your job easier.

• Accurate Forecasting: To analyze your financial numbers, you need the best accounting solution. It’ll assist you in understanding the situations where you need to cut expenses or where you should make investments. This will help give a clear view of your present financial scenario, helping you devise innovative strategies to funnel resources in the right direction.

• Financial Data Security: An organization’s financial data is considered critical and must be prevented from falling into wrong hands. This is where an accounting solution comes in handy, helping you keep your data secure either through maintaining a backup or having multiple security levels for accessing sensitive data.

• Cost Savings: By automating administrative tasks and core calculations, you won’t have to devote valuable resources or outsource finance management to a financial expert.

• Secure Billing: Billing and payment become secure with this software. The best billing and accounting software supports multiple payments with industry-grade standards.

How to Choose Accounting Software for Small Business?

An ideal accounting software solution with features well-suited for your business has the potential to reduce time, effort, and scope of errors significantly. However, it’s important to keep the following points in mind before choosing any accounting application for your business.

• Cloud-Based Vs On-Premise

  Cloud-based applications bring a gamut of benefits for modern businesses; whether small, medium, or large.

  They can be accessed remotely and come with their own servers. This means that the cost of getting separate servers can be saved. Moreover, financial accounting software can automatically be upgraded on the server end by the service provider, saving you the time, cost, and resources that would have been spent on upkeep and maintenance.

  One of the most prominent features of cloud-based accounting applications is that they can be accessed on any device- laptops, tablets, and smartphones. Moreover, the classified and crucial data will be stored securely on the cloud, in case of any mishap.

• Budget

  The cost of specialized accounting software solutions varies depending upon the tools and features that they provide. Therefore, it is important to carefully select the one that fits your budget while also fulfilling your organizational requirements.

• Add-on Features

  The latest features in accounting software solutions will help in automating diverse financial management processes. For instance, a software solution may provide remote access and options for online payments through third-party software integration. You can ask for selective or full accounting features as per your specific process requirements. Budget is quite an important factor when you are to compare top accounting software for small businesses in India. Cloud-based accounting systems prove to be a more profitable option in this scenario.

• Accountant’s Opinion

  Last but perhaps the most crucial of all, it is highly recommended to take your accountant’s advice before choosing software. In the end, it will be the job of your accountants to work with the accounting system software.

  Hence, they would have a better perspective on which software is best for the business. In addition, they would also need a first-hand understanding of the software through product demos.

How Do Accounting Tools Work?

Accounting tools offer modules, which are crucial for finance management, budgetary allocations, and expense analysis. Know how they work?:

• Generating financial reports: Financial accounting software generates reports like balance sheets, cash flows, and income statements for analyzing the profits earned.

• Analyzing cost allocations: It helps businesses undertake cost allocation analysis. This is essential for assigning costs to specific goods and services.

• Managing the budget: It allows businesses to set financial goals on a yearly/semi-annual basis and assign the budget for specific tasks.

• Performing fund flow analysis: Financial accounting tools help perform fund flow analysis to determine if the funds have been utilized properly.

How Does Accounting Software Help Save Time and Money?

Number crunching is the first step when it comes to making sense of your financial data. This is where an accounting solution comes into the picture. Business accounting software gives financial numbers a meaning, so you can decide whether you need to cut down on expenses or start pumping up investments.

By using an accounting software solution, you’d have a clearer overview of your present financial state. This, in turn, would help you devise strategies to grow your business to new heights by allocating resources smartly.

Top accounting solutions automatically generate financial reports, which include payables, receivables, expenditures, profit and loss, and more. With such reports, accountants and business owners can minimise the time required in fetching data manually and focus on other core tasks.

Accounting software facilitates firm credit control with a clear picture of who owes money to your business. Accountants and small business owners can take action to clear overdue accounts and seek out payments. Thus, the software ensures that your cash flow is not affected because of inaccurate credit information.

In addition, you can use the latest accounting software to send recurring invoices, alerts, and notifications, which will save your time. These reminders with unpaid invoices also include clicking to pay button, which results in faster electronic payment. Further, you can effortlessly execute account reconciliation by matching transactions.

If you have to submit quotes or estimates, just go for an accounting system that can convert those documents to invoices in a few clicks. It also helps reorder products when your inventory levels drop below a set threshold by generating purchase orders automatically. Basically, you can automate a great many tasks with accounting applications.

Top Accounting Software Examples Based on the Company Size

Top accounting software Online vendors in India cater to the financial management needs of different businesses. While some cater to the SMBs with a package of essential features, others provide additional modules to manage the complex aspects of financial management.

Accounting software for small businesses often comes with custom modules and capabilities. However, this software for large enterprises provides standard modules and features that cater to the diverse financial management tasks across silos.

Accounting Software For Financial Business

Number crunching is the first step when it comes to making sense of your financial data. This is where an accounting solution comes into the picture. Business accounting software gives numbers meaning, so you can decide whether you need to cut down on expenses or start pumping up investments. By using this, you’d have a clearer overview of your present financial state. This, in turn, would help you devise strategies to steer your business to new heights by allocating resources prudently.

Do you have to submit quotes or estimates? Go for accounting systems that can convert those documents to invoices in a few clicks. Reorder products when your inventory levels drop below a set threshold by generating purchase orders automatically. Basically, you can automate a great many tasks with effective accounting software. 

Who Can Benefit from Accounting Software

Any business which needs to keep track of income and expenses can benefit from accounting software. It helps in records and tracks every financial transaction and provides an accurate picture of your business health.

Here are a few industries that can benefit mainly from accounting software:

• Accounting Software for Manufacturing: Manufacturing businesses need to keep an accurate record of the movement of raw materials, production of finished goods, overheads, labor charges, etc. These metrics are important for determining the cost of manufactured goods.
  It helps to manufacture businesses with accurate costing, current stock levels, by-products, scraps, incoming orders, and outgoing deliveries. Manufacturing companies can also use accounting software to integrate their product catalog and price lists into their system.
   
• Accounting Software for Jewellery Business: Jewellers need to keep an accurate record of sales and inventory because it is a high-value industry. Jewelry business owners must track the cash flow in and out while determining the markup on goods sold. They also need accounting software to manage GST compliances, TCS, labor charges, and maintaining customer details (PAN) as required by the government.
  It allows jewellery business owners with their bookkeeping, inventory tracking, government compliances, and actual profit loss calculations.
   
• Accounting Software for Share Trading: It helps stock traders manage their purchases, sales, and brokerage. Keeping track of sales and purchases in real-time is vital in stock trading to determine capital gains and advance taxes. With accounting software, share trading companies can comply with tax laws, improve their cash flow and budgeting.
   
• Accounting Software for Accounting Firms: Accounting firms are the most benefited ones from this software. It helps firms manage the books of account for multiple clients simultaneously. It makes sure that the financial statements like balance sheet, P/L account, and clients' cash flow are accurate and comply with the rules. Accounting software makes the bulk entry of sales and purchases easy, which helps accounting service providers compile their clients' books quickly.
   
• Accounting Software for Non-Profits: Accounting software helps non-profit organizations keep track of payments, receipts, and donations, giving them a clear picture of organizational goals and progress. It also helps non-profit organizations keep track of their money spent on specific activities.
  
  More importantly, computerized accounting software helps them create budgets, adjust the pricing of products and services, determine how much they need to spend on overhead expenses, and so on.
   
• Accounting Software for CFOs & Managers: It provides financial reports for managers and CFOs to make strategic decisions. Valuable reports, it-then analysis, comparative charts, and Intuitive graphical user interface gives them an in-depth view of their company's performance.
   
• Accounting Software for Accountants: Accountants are the ultimate consumers of accounting software. It saves them time by automating routine bookkeeping tasks, reducing errors through data entry automation, and providing real-time information, so they always have access to the most up-to-date information.
  
  Also, this software helps accountants become more efficient and productive because it streamlines most of their daily workflow, allowing them to focus on important accounting aspects, which results in a better representation of the company's financial status through financial statements.
   
• Accounting software for Auditors: It helps auditors audit books of accounts and traces discrepancies in a few minutes. Auditors can generate quick reports, apply multiple filters, recalculations, break down the ledgers, and master data with the auditing module this. The software also provides a variety of reports that can be exported into different formats.
   
• Accounting Software for SMBs: Small business owners need to focus on their operations rather than worrying about the bookkeeping tasks. It helps owners minimise errors of omission, generate GST invoices, and keep up-to-date with suppliers' ledgers. It simplifies the bookkeeping and accounting tasks which increases productivity.
   
• Accounting Software for Chartered Accountants: It ensures reliability and can cover all the needs, no matter how many clients they have or how many audits they conduct every year. Without the accounting software, auditing tasks become cumbersome and inefficient. With that software, CA's can be more productive and focus on what they do best: - providing advice to their clients.

Different Deployment Options for Accounting Software

Accounting software can majorly be categorized into three types depending on the deployment types.

Cloud-Based Deployment

Cloud-based accounting software is the preferred option for small businesses. These are hosted in the cloud and do not require any installation or on-site maintenance. The requirement can easily be scaled by upgrading the subscription.

• Pros: Affordable initial cost and easily scalable.
• Cons: Entirely dependent on the internet and third-party service provider.
• Best for: Small Businesses, Start-ups.
• Popular Cloud-Based Accounting Software: Vyapar, myBillBook, QuickBooks, etc

On-Premises Deployment

In this type of deployment, accounting software is installed on a private network. It is generally preferred in cases where the security and privacy of data are a significant concern.

• Pros: High-level data security.
• Cons: Expensive and limited to the workplace.
• Best for Business entities with centralized operations and Government organizations.
• Popular On-Premises Accounting Software: Intuit QuickBooks Enterprise Solutions, Oracle Hyperion, etc.

Hybrid Deployment

This is one of the most common and widely deployed options for medium and large businesses. The software can either be used offline or through the web. A private cloud is created for the entire business data in a hybrid deployment, and users can access it from a centralized interface or a web portal.

• Pros: Reduced cost and remote accessibility
• Cons: Technical and data security concerns
• Best for: Enterprises with decentralized billing.
• Popular Hybrid Accounting Software: Oracle NetSuite, Tally Prime, etc

Accounting Software Online Trends in 2022

Understanding the accounting software trends helps you procure software that won't get obsolete in the near future and provides your business a competitive edge. Here are the five latest trends that you should know. 

• Powerful Integration: The latest solutions are coming up with the power of integration. Much state-of-the-art accounting software can be integrated with other business management systems, ensuring that transaction recordings are accurate, fast, and reliable. It can also take inputs from payroll systems to record employees' salary expenses automatically. 

• Blockchain Accounting: Blockchain technology is the next big thing about accounting. According to Deloitte, blockchain accounting will be making its way to every large accounting system in the coming years. Blockchain can stop data redundancy, manage accurate ledgers, and determine ownership of the asset. In the coming years, every accounting software will make a shift towards blockchain technology. 

• Smartphone Accounting: Digital payments, GST invoicing, and maintaining books of accounts are growing rapidly since the rise of smartphones in India in 2016. This is the future of accounting in India because it allows every mobile user to maintain the account books at no cost. Smartphone billing enables every shopkeeper, barber, or self-employed to generate invoices and keep a record of payments without an accountant. 

• Data Analytics: Analytics is probably the most crucial phase of business management. While consolidated report generation has existed in accounting software for decades, data analytics takes it to a whole new level. Graphical representations, forecasts, if-then-else scenario analysis, industry-based comparison, and so on are the features that business owners are searching for.