Small Business Ideas In India – Keeping books of account is important in any business, whether it is small or large. Unfortunately, most of the sall and ediu business entrepreneurs often neglect this process, which has a direct adverse effect on the business.
Bookkeeping is a burden in the growing phase of a business, but it is essential to aging the day-to-day functions of a business that keeps the business running successfully.
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Anish Soni, a sarti trader, started a textile business three years back and has done well so far. However, for record keeping, he contained a register in which he records transactions such as amount to be recovered from customers, amount due to suppliers, among others. He now wants to expand his business and take advantage of a bank facility, that is a cash credit, but to his horror the bank refused his request.
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Since he is also unable to forecast his income and expenses and no accounting records are available with him, the bank refused to extend cash credit. To make matters worse, he received a notice from the income tax to justify his income tax liability. Due to lack of proper account books, he could not justify his income tax liability and was punished with a huge penalty. At the point of severe cash crunch, he is on the verge of closing his business.
This is a hypothetical situation, but it increases the need to have proper accounting books. Keeping books of account is important in any business, whether it is small or large. Unfortunately, most of the sall and ediu business entrepreneurs often neglect this process, which has a direct adverse effect on the business.
In fact, soe SEs have failed in financial management due to weak or no accounting records. They do not have their account books because they think that keeping account books for their selling business is worthless. Conversely, a financial manager is very crucial to the success of a sales business.
Without it, there is a fear of hitting a cash flow crisis, wasting one and other financial information that could lead to the closure of a business. In this competitive box, an accurate book of account is a necessity for every selling business. Khandelwal R Sethi & Copany, Partner, Ravi Khandelwal says “Getting started and having solid accounting records is essential for the growth of a retail business.”
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Keeping books of account is the process of recording and keeping track of financial transactions and information related to a business, on a daily basis. It ensures that records of the individual transactions are correct, comprehensive and updated with accuracy.
To prepare a financial statement: balance sheet, profit and loss account, cash flow statement are the main elements to report to your investors/financiers/bankers about crucial information about the financial state of the companies, and to prepare these financial statements you need books of account .
To fulfill tax obligations: If you want to do business, you have to pay taxes like income tax, sales tax, excise duty, service tax, central sales tax etc and know the exact amount of tax liability and settle the business/legal. lawsuits, you should have adequate and accurate account books.
Legal requirement: According to Section 44AA of the Income Tax Act, any person whose income from business or profession exceeds Rs. 1.20 lakh or the Total sales/turnover/gross receipt exceeds Rs. 10 lakhs is mandatorily required to have books of accounts for income tax purpose. Further Section 128 of the Companies Act 2013 also requires every company to have its books of account.
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Better financial manager: Nowadays a better financial manager provides a better picture of the health of a company. In order to forecast financial requirements, obtain necessary capital and analyze investment decisions, you should have adequate records of business transactions.
Pricing: Pricing is the biggest problem for the selling merchant – at what price should he sell his product or service? Price of all the products has been set on a cost plus margin basis and to ascertain the cost of a product you should have proper records of cost elements of the product. “A business that does not have books of account is like a blindfolded driver who can easily cause an accident,” says Gxpress Solution India Pvt Ltd, Prooter Director, Praveen Vashistha.
For the simplicity, accuracy and security of account books, sall business entrepreneurs can contain their account books in an electronic ode. Even Companies Act 2013, under section 128, also allows maintenance of electronic books of account. There is any software available in the box for the maintenance of books of account at an affordable rate. While keeping books of accounts, every transaction must be recorded according to applicable accounting standards and principles, as these principles/standards ensure the accuracy and all the requirements of the industries and law. Therefore, the following aspects must be considered while preparing books of account.
Double Entry Accounting System: This works as an error identification system. According to the double entry system of accounting, each transaction has two parts; therefore it affects two ledger accounts when recording a transaction. It involves a debit entry in one account and a credit entry in another account. If the sum of debits does not equal the corresponding sum of credits, then this means that an error has occurred. It also ensures accuracy of recording transactions.
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Accrual Basis Accounting: House basis of accounting is considered as a standard accounting practice worldwide, because it provides ore accurate ease of the profitability of a company, because it takes into account all incomes and expenses regardless of cash collections and expenses. For example, an expense incurred in a period for which no invoice has been received at the end of that period, is considered an accrued expense, and continues to be recognized.
Recording of every transaction: Every business transaction whether it is purchase or sale, expenses or income, payment or receipt must be recorded daily in the books or accounting system, because recording of every transaction means that we prepare proper and complete books of account.
Documentation: There must be a document for each transaction that describes the business transaction such as sales invoice, supplier invoice, supplier payer, bank payers and journals. These documents provide the audit evidence for each transaction and are an important part of containing accurate records in the event of an audit.
Bookkeeping is a burden in the growing phase of a business, but it is essential to aging the day-to-day functions of a business that keeps the business running successfully.
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(Disclaimer: The opinions expressed in this column are those of the writer. The facts and opinions expressed here do not reflect the opinions of www.econoicties.co.)
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Contrary to popular belief, there are actually many ways to start a business that let you focus less on the logistics and upfront costs and more on getting your ideas off the ground. Let’s get past the first major mental hurdle of “I want to start a business but have no ideas.”
These 26 small business ideas are a great entry point for beginners, startups, or anyone with a busy schedule, and allow you to set aside a business without having to drop everything else.
To help you find the inspiration to get started, we’ve compiled a list of over 100 in-demand business ideas, divided into categories such as fitness, clothing and gaming.
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Whatever your business type, you’ll need a good domain name (use our free domain name generator) associated with a great brand name and representative logo.
Buy stock, store it, pick it, pack it, ship it. Managing inventory is a big commitment when you run a business.
Dropshipping is an easy, cheap, business idea to start and the first of our good business ideas. Dropshipping is a fulfillment model where a third-party supplier stores and ships inventory to customers on your behalf. It is one of the best businesses to start because it is low overhead, hands-free and scalable.
Micro, Small And Medium Enterprises
You don’t need to handle any products yourself—you just need to make the sales and pass orders to your supplier. In fact, it is one of the fastest and cheapest businesses to start.
You can store products from one or more suppliers in your own online store under a theme that focuses on a specific niche, such as gear for yoga.
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