Top 10 basic Accounting Terms for small businesses

Knowing some the basics of accounting terms will help you understand basic accounting. It will not only enable you to communicate with your accountants in a better way but also help you gain deep insights into your financial reports. 

Here is a compiled list of the most common accounting terms which every business owner must know. 

1. Accounting Receivable (AR)

Accounts Receivable consists of all of the revenue or sales by a company that has provided but has not yet collected payment on it. AR has recorded in the balance sheets an asset that would likely to be converted to cash in a short period of time. 

2. Accounting Payable (AP)

Accounts Payable consists of all the expenses incurred by business but it is not paid yet. AP is being recorded as a liability in the Balance Sheet as it is also considered as a kind of debt owed by the company.

3. Cash Flow 

Cash Flow is a very important term for every business that describes the inflow and outflow of cash in a business. Net Cash Flow can be calculated by taking the beginning Cash Balance and then subtracting the Ending Cash Balance from it.  A positive number of this indicates that more cash has flowed into the business than out, while a negative number indicates the opposite side of it.

4. Inventory 

Inventory classifies the assets that a company has purchased to sell to its customers but it remains unsold. As these items are being sold to customers, the inventory account would be started decreasing.

5. Debits and Credits 

Debits and Credits are entries used in the company’s bookkeeping process to record changes. A debit entry in the accounts is considered as an increase in assets or expense accounts and decreases revenue or equity accounts and liability. Credits are considered as an increase in liability and an increase in assets.

6. Financial reports 

Financial reports are the periodic financial communications that are used to know about the financial position and performance of any entity. These financial reports include three primary financial statements which are the balance sheet, statement of cash flows and income statement along with footnotes and other important information relevant to the proprietors of the business. Public companies must file several types of financial reports and forms with the Securities and Exchange Commission (SEC), which are open to the public. 

7. Financial statement

The financial statement refers to basically three primary accounting reports of an industry: the balance sheet, statement of cash flows, and income statement. Internal financial statements and other accounting reports usually contain more detail, which is used at the time of taking important decisions. 

8. Assets and Liabilities 

Assets and liabilities are very important aspects of business where assets give you future financial benefits and liabilities give you a glimpse of future obligations. The proportion of assets should always be higher than the liabilities. The difference between assets and liabilities refers to the equity of the company. This classification of assets and liabilities helps us in properly arranging assets and liabilities in the balance sheet.

9. Trial balance 

The trial balance includes both debits and credits entries for one particular account and it is recorded in the general ledger. The sheet should have balance, with debits equaling credits.

10. Balance sheet 

The balance sheet is the summary of statements of the business including assets, liabilities, and proprietor's equity at a certain time. In other words, the balance sheet also illustrates your business's net worth.

The balance sheet consists of all the details from previous years also so that you can get insights into a back-to-back comparison of two consecutive years. This data helps to track the business’s performance and identify ways to build up your finances and help you to see where you need to improve. 

These are the most basic accounting terms which every businessman or entrepreneur should know. Accounting is broad that means there’s so much to know, but at least you can start with the basic terms to make better-informed decisions.

New income tax slabs and rates for the Union Budget 20-21

The finance minister has introduced the new tax regime in the budget 2020 and new tax slabs have been declared for the income taxpayers. The new tax rates have updated intending to simplify the tax process and to extend the significant relief to the taxpayers. As per the new tax slabs, income tax rates are significantly reduced for the individual taxpayer who wants to forgo all the exemptions and deductions.

Let’s take a look at the current tax slabs along with rates here:

Income Tax Rates for the FY 2020-21 & AY 2021-22

Taxable Income Range	Existing Tax Rate	New Tax Rate
0 to 2.5 lakh	Exempted from tax	Exempted from tax
2.5 to 5 lakh	5%	5%
5 to 7.5 lakh	20%	10%
7.5  to 10 lakh	20%	15%
10 to 12.5 lakh	30%	20%
12.5 to 15 lakh	30%	25%
Above 15 lakh	30%	30%

Note:  If senior citizens and super senior citizens opt new tax regime then the benefit of the higher exemption limit would not be available.

Surcharge:

• 10% of Income tax where total income exceeds Rs.50 lakh
• 15% of Income tax where total income exceeds Rs.1 crore
• 25% of Income tax where total income exceeds Rs.2 crore
• 37% of Income tax where total income exceeds Rs.5 crore

Note: Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).  

Education cess: 4% of income tax plus surcharge

Note: A resident individual is entitled to rebate under section 87A if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less. rebate under section 87A is available in both scheme I.e. existing scheme as well as the new scheme.

Important points to consider for the new tax rates

However, it has been clarified by the government that the new tax regime is optional to adopt, and the conventional income tax slabs with higher tax rates will continue to exist. The taxpayers must fulfill the mentioned conditions in order to avail of the benefit of the new tax regime.

According to the speech delivered by our finance minister, a taxpayer with an income of Rs. 15 lakh has to pay a tax of 2,73,000, if he doesn’t avail of any deduction under the old regime. Now as per the new regime, he has to pay only 1,95,000 as per income tax, which is near about 78,000 lesser.

On the other hand, taxpayers who continue with the existing tax regime would continue to pay tax according to their income the same as for the previous year 2019-20.

In keeping with the new tax regime, it is highlighted that it will not cover popular exemptions and deductions such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), standard deduction, interest paid on the home loan, under Chapter VI A other than 80CCD(2) and 80JJAA, and so forth.

If senior citizens and super senior citizens opt new tax regime then the benefit of the higher exemption limit would not be available.

As per the new tax regime, the procedures of pre-fill the income tax returns would be introduced so that the taxpayers don’t need the assistance of professionals to pay income tax.

Frequently Asked Questions

1. How to calculate tax liability?

The calculation of tax liability is done on the income arrived after availing all the deductions and other tax-exemptions which are available to the individual.

2. How is total income calculated?

For calculating the total income, you have to add the income received from various sources like salary, interest received from the fixed deposit, pension, recurring deposit, and, savings account, etc. 

3. How to know the tax payment details?

Once the tax has been deposited by you or any other person who is deducting tax and depositing on your behalf with the government then the total amount of tax deposited against your PAN would be reflecting in Form 26AS. Now for your convenience, you can download the statement of payment details from your account on the income tax e-filing website.

4. How to pay taxes?

A taxpayer has two options whether he can pay tax offline or online. For paying tax by the offline method, an individual has to visit the bank branch and pay the due taxable amount along with duly filled challan. Along with that, taxes can be paid online also by using the Debit card/Net banking facility of any of the authorized banks.

Overall if we see then we would find that amendments made in the Union Budget 2020 are beneficial for all the taxpayers.

If you are looking for any further insights into the Budget 2020 or income tax return then you may directly reach out to us.

Trust the signs! Your Business might be Ready for Cloud Accounting

While managing your business accounts, there are a lot of tedious pieces of work that might take the fun out of your work, keeping you constantly worried. Manual data entry, upfront business costs, chasing your clients for information, data security, compliance, to name a few.

A big thanks to the technology that all your problems have one solution and that is cloud accounting software. Cloud is like pretty much of life these days as it works as a backup recovery tool, makes accounting easy. It enables you to access your business data anywhere, anytime.

Here are some of the signs you may feel when your business is ready to take a leap from old accounting methods to the cloud.

Business is Growing

And as your business is growing you don't have time and resources to use the same old book-keeping system. Especially if you are dealing with a lot of things such as inventory system, bulk invoices, tax compliance. In the age of technology, you need modern support such as cloud-based accounting software. So, you can ease your burden. 

Data Security becomes a Priority

One of the biggest concerns of a business is keeping data safe and for that, they are considering a move to the cloud. Sometimes business suffers a lot when the device is corrupt or the data is misused. Keeping this in mind, experts suggest using a cloud tool can be the most secure way to keep business records safe.

Cloud always take a backup at regular intervals and keep data secure. Even if you lose the data, you may retrieve it again from the cloud server.

For Anywhere Anytime Access

If your business requires a lot of travelling, you can manage your work with just a device and an internet connection. Cloud-based software allows users to access data even without carrying their own devices. It enables to log in to your account on your mobile phones too.

When you Want to save Money                                                                                                                                                                                                                                                

While on the one hand cloud software shows you every account separately, it reduces the upfront business costs, helping you save money. You would be making better-informed decisions while using cloud accounting that would be fruitful for your business. There are no heavy maintenance charges, IT cost or any other capital cost when you use online accounting. You just pay as you go and there is no unforeseen cost to update, upgrade or maintain your software.

Checking for Real-time Updates

Can you get real-time updates for your work with your current accounting software or business books? If you are finding your current accounting processes tedious, you must go for online accounting software.

It simply helps you to track sales, inventory and your expenses too, you just need to up-to-date all the financial data and you can get real-time insights into how your business is doing.

Multiple-user Dashboard

It is quite difficult to work together on the same account when you have multiple partners in your business. Cloud accounting software comes with multiple-user dashboard which allows you to create multiple users log-in accounts to work accordingly.

Ultimately, switching to cloud-hosted accounting software is a big step, but this is the step that will take your business to the next level. 

Taking the Leap Toward Cloud Accounting

• Are you confident about company data, is it safely backed up to your accounting software or old bookkeeping system?
• If there is a sudden hardware failure, would you be ready to put your company and data at risk?
• How quickly you would be able to retrieve your data?
• Did you ever test your backup? Are you sure it works?

If these points are stressing you out, it means you need to make your operations more efficient. Cloud accounting can surely provide your business with several significant advantages.

In case of any doubts, take assistance from HostBooks as it is one of the best cloud accounting software to meet your business needs.

It’s time to spread your wings with cloud accounting and strengthen your business.

HostBooks is now a GSTN-approved GST Suvidha Provider (GSP)

It is a proud movement for us to share that we have been selected as a GST Suvidha Provider by the GST Network (GSTN). Now we are a GSTN-approved GSP and would be able to serve taxpayers and businesses even better with our innovative and convenient accounting and compliance software solutions. We provide you with the best cloud-based accounting and compliance software to comply with the provisions of GST law, making the process of registration, filing returns easy and hassle-free.

Who is a GST Suvidha Provider (GSP)?

GSP basically stands for GST Suvidha Provider. A GSP works as a service provider and helps the taxpayer to comply with the provisions of the GST law through its web platform. Now there would be two sets of interactions, the first one would be between the application user and the GSP and the second one would be between the GSP and the GST system. In addition, it is envisioned that the application service provider (ASP) and GSP could be the same entity.

What are the benefits of being a GST Suvidha Provider?

• HostBooks would serve its customer as both government-approved GSP and ASP which means that no third party dependency would be required.
• We ensure our users a seamless experience as our API versions and upgrades are in sync with GSTN.
• Our software works effortlessly and identifies the issues related to ASP or GSP and provides the best resolutions.
• We provide the best solutions to help you stay GST compliant such as GST billing, return filing.
• An advanced level of data protection having cleared GSTN mandated certifications.

Why choose HostBooks GST Compliance Software?

Under GST, it could be difficult to comply with all the regulatory requirements without automation and synchronization of data between the taxpayers' system and the GSTN. In this scenario, HostBooks as a GST Suvidha Provider offers cloud-based accounting & compliance software that will connect with the GST system via secure APIs.

• Automated and cloud-based software with customized GST billing.
• GSTIN validation along with multi GSTIN management.
• Seamless return filing of GSTR-1, GSTR-3B, GSTR-4, and GSTR-9.
• Reconciliation of GSTR-1, GSTR-2A, and GSTR-3B.
• Error-free maintenance of records with errors being highlighted in real-time.

HostBooks is empowering small businesses and accounting professionals to overcome major accounting challenges by putting accounting expertise and technology to work.

Which is the Best GST Software in India?

In its two years of operation, Goods and Services Tax (GST) has gone through its fair share of setbacks and revenue disappointments. Considered as the country's biggest tax reform, GST replaced many indirect taxes such as sales tax, VAT, and service tax, thus reducing the cascading effect for the end consumers. In spite of all the efforts made by the government to ease the transition process to the new indirect tax regime, many taxpayers were finding it difficult to make decisions in terms of billing and filing challenges.

In order to reduce the compliance burden and stay compliant with GST laws and regulations, businesses are looking for the best GST billing and return filing software. With all the excellent features from being cloud-based to a seamless GST billing and return filing experience, HostBooks Compliance Software helps you achieve all your GST endeavours.

Why choose the best GST Software for your business?

The introduction of GST has allowed the country to move one step closer to its dream of achieving "Digital India". To make tax compliance hassle-free, businesses are encouraged to perform various compliance-related activities on time. Hence, the use of GST compliance software can allow a business to simplify and achieve all GST endeavours. Some of the reasons why businesses need GST software are listed below.

• To record all the purchases and generate customized GST invoices depending on the need of your business. This allows you to avail eligible input tax credit (ITC) without any issue.
• You will be able to easily reconcile any invoice mismatches and file your GST returns without much of errors.
• In order to claim the tax credit, your buyers might ask you to upload sales invoices to GSTN. This also protects them from any disputes at a later stage. Hence, the best GST software in India will enable you to manage such tasks with ease.

Top 5 GST return filing software for businesses in India

1. HostBooks GST Compliance Software

By simplifying your GST billing and return filing experience, HostBooks GST Software aims at reducing your compliance time significantly. Being cloud-based with anytime anywhere access, it will always be your side and ease your compliance burden.

HostBooks integrated software solution further simplifies the process of filing GSTR-1, GSTR-3B, GSTR-4, and GSTR-9 with easy reconciliation of invoice mismatches, automatic validation of all your data, and inbuilt HSN/SAC codes.

2. Zoho Books

With mainly catering to international markets before, Zoho has recently introduced its range of software for businesses in the Indian market. It offers cloud-based accounting software that supports simple invoicing and billing, high control over your data, and multi-currency and multi-user support.

3. QuickBooks

It is also an accounting software initially developed by keeping the international market in mind. However, QuickBooks has now started to help the home-grown businesses manage their finances as per Indian accounting standards. Being web-based, it provides businesses with quick invoicing, expense and inventory management, and preparation of financial reports.

4. Clear Tax

Initially, starting with income tax return (ITR) filing software, Clear Tax now also provides GST return filing software. It can be beneficial for businesses that need to extract lots of data from their existing accounting software or any other ERP systems. This makes it a central platform to prepare your accounts and file your returns.

5. MARG GST Software

Considered a comprehensive GST-ready software, it helps to manage compliance for large enterprises. Some of the key features of this GST filing software include ease-of-use, flexibility, customization, and timely upgradations.

Why choose HostBooks GST Software for your compliance needs?

Without GST Software to streamline billing and filing processes, it can be challenging for businesses to be GST-compliant. The best GST software not only helps you to comply with laws and regulations, but it can also save your time and money. The following are some of the amazing features which make HostBooks Compliance Software an excellent choice for your business.

Seamless GST Return Filing: An NSDL-listed software that provides you with a seamless GST billing and returns filing experience, enabling you to overcome all your GST challenges.

Cloud-based Software: With the latest cloud technology, it supports anytime anywhere access to help you file your GST returns – GSTR-1, 3B, 4 & 9 from any corner of the world.

GSTR-2A Import & Reconciliation: Easy to understand format with an effortless import of GSTR-2A along with the ITC ledger, upload of Sales/Purchase invoices and reconciliation of GSTR-2A Purchase/Amendment, Credit/Debit Note.

GSTR-3B Validation: Validate the data entered in various tables in GSTR-3B with ease and file your returns successfully.

Automated: Auto calculation of ITC & tax liability not only save your valuable time but also boosts your efficiency by reducing manual efforts and ensuring accuracy.

Auto-matching: Auto-matching of invoices/returns helps you with invoice reconciliations in a cost-effective manner and makes overall tasks stress-free.

Tally Integration: Whether you are using Tally or any other software, HostBooks return filing software allows you to migrate all your data in its original form without any loss of data.

Data Security & Backup: Your business data is safe and secure with HTTPS, constant data backups, and easy restoration.

Free 10GB Cloud Storage: Never worry about storage space again with 10GB cloud storage absolutely free. Store and manage your important documents on the go.

24/6 Expert Help: Get instant help from GST experts for all your queries. We are just a call away - 24hrs and six days a week.

Conclusion

Manual calculations are often prone to errors and can even lead to a significant loss in revenue. Hence, to efficiently manage your business compliance and reduce your compliance burden, you should go ahead with HostBooks Compliance Software. It can ease your overall tasks in every way possible and allow you to focus more on your core business process.

What is GSTR-2A and How to Download it with HostBooks GST Software

GST has completely transformed the indirect tax regime. Being a technology-driven, destination-based and transparent system it has been playing a pivotal role in decreasing the cases of corruption and tax evasion.

In order to make the whole GST concept more transparent and convenient, the Govt. has introduced various kinds of GST Return forms. However, the businesses are now on a constant lookout for the most reliable software that would make GST a piece of cake for them.

The market today is flooded with many GST software. And, going for the best software that meets your needs is the need of the hour.

HostBooks GST is one such software that makes your GST journey easy. In addition to filing GST returns effortlessly, it also helps you download GSTR-2A seamlessly.

Thus, here in this blog, we shall know what GSTR-2A is and how it can be downloaded easily with HostBooks GST software.

What is GSTR-2A?

GSTR-2A is basically a system-generated purchase related (Inward supply) tax return that gets generated automatically by the GST Portal in favor of a receiver taxpayer. Purchaser's GSTR-2A is the exact reflection (copy) of the seller's GSTR-1. 

It includes the complete details of all goods and/or services whichever have been purchased in a particular month from the seller’s GSTR-1

And now let us come to the next part i.e. –  

How to download GSTR-2A?

To download GSTR-2A easily with HostBooks GST software, we need to follow the below mentioned easy steps.

Step – 1: Firstly, login to your account at https://hostbooks.com

(New users are required to create an account first)

Step – 2: Now enter the registered email address followed by the password, and then Click on “Login”

Now you have the dashboard on the screen where you get a list of all the businesses.

(For adding a new business just fill in all the relevant columns please and click on ‘Save’)

Step – 3: Select business and then click on GST

A pop-up message will appear quickly on the screen

Step – 4: Click on “Continue” to open the GST application in a new tab and then click on “Dashboard”

(Now, the dashboard of the selected business appears on the screen)

Step – 5: Go to the left panel, and click on “Returns” and then click again on “GSTR-2A”

Here, you can view the summary of GSTR-2A

Here you see all the important fields like Customer Name, GSTIN, Taxable Amount, SGST, CGST, IGST, Cess and the Total Amount

These fields are fetched automatically with all the important details just after downloading GSTR-2A

Step – 6: Click on “Download from GSTN”

Fill in your login details like GSTN Portal Username and Password

Step – 7: Enter the Captcha Code and then click on “Login”

After that, a success message will appear shortly on the screen saying that the GSTR-2A has been successfully downloaded.

Step – 8: And finally, click on “Ok”

Step – 9: Click once more on the Refresh button

Now you shall be able to see the complete GSTR-2A details on your screen.

It goes without saying that GSTR-2A is a very important return that helps a lot while filing the Annual GST Return (GSTR-9). For any help with respect to GST, E-way Bill, TDS or Accounting, call us @ 9152343434.

What Makes a GST Software ‘Easy to Use’ for Small Business?

Introduction of Goods and Services Tax in India has subsumed a large number of Indirect Taxes that existed previously. And thus it is known to be the biggest tax reform. But as a matter of fact, it became a need of the hour for the removal of cases like tax evasion, bribery and other forms of corruption in the country.

The emergence of GST paved way for different kinds of GST Software for the filing of various GST returns, in accordance with the prescribed rules and regulations. Hence, there are now a large number of GST software with different features and prices.

With so many returns to be filed along with endless compliances, the small businesses are on a constant lookout for easy-to-use GST software. Other features like Reliability, Affordability, Easy to use, and Data Security make working on GST easy for these businesses.

So here in this blog post, we shall know all about what makes a GST Software ‘Easy to use’ for small business.

1. Anytime Anywhere Access

Suppose you got stuck badly in a Traffic Jam or you are in a metro train or in a remote location and you fall in a dire need to access your account but due to an improper signal issue you will get into the most difficult situation.

So never let such things obstruct your business and choose the cloud-based GST Software only. A Cloud-based advanced software ensures that you can now easily access your account anytime and anywhere. It saves both your time and complications.

Thus, it always beneficial to choose such an advanced software only whose extraordinary features may successfully deal with the GST issues and other relevant terms.

2. Multi-Platform Adaptability

In the present GST Regime, it has become mandatory for businesses to be updated and to furnish every task at the soonest. Like, making a delay or a mistake in filing a GST Return, matching of Invoices, generating an E-way Bill or any such important activity may cause extreme difficulties and/or penalty as well.

Thus, it is highly advisable to get such a GST Software only that possesses multi-platform adaptability. Because, this specialized feature assists you brilliantly executing your requirement online through any device like a laptop, desktop, tab or just with a smartphone.

In fact, choosing such software will bring peace and satisfaction to your mind as everything you need to do at a particular moment will not require a particular place, desk or fixed chair.

3. Security and Professional CA Support

Needless to say that the utmost safety of one’s confidential data is very important. And thus, one should search for such software that ensures advanced security of the data.

Also, a quick professional CA support is important too. Being a less experienced or a new user or just due to some technical misunderstanding you may seek instant support to help you out. Thus always choose a GST software that promises around the clock online professional support.

4. User–Friendly Mechanism

Suppose you purchased software with the most advanced features but your employees feel it be complicated, is it beneficial for you?  Do keep in mind that getting the most adequate operating system is extremely important. And it becomes mandatory in terms of small business. Operating method needs to be very easy so that anyone with a little knowledge can use the software properly. Moreover, the right selection may save a good amount against unnecessary employees’ training.

5. Short-Cut Keys Command

Short-cut Keys Command provides an excellent opportunity to save your precious time by at least 50%. It enhances your speed brilliantly and saves you from moving the cursors on the screen with a mouse. Moreover, it guarantees more accuracy in calculations along with all other tasks too. Chartered Accountants, Accountant and other concerning professionals highly prefer this option. So, before purchasing, it is good to keep in mind that an advanced GST software featured with Short-cut Keys Command would definitely be an additional benefit to your organization.

Conclusion 

So, these above-mentioned points are some of the most important characteristics that make a GST Software easy to use, especially in terms of Small Businesses. And, if you want to comply with the new indirect tax regime, keeping in view the benefits and ease, it is good to go for thorough research.

HostBooks has been known to be the most credible, certified, and affordable GST software. And especially for small businesses, this has become a popular name that allows the user to obtain a great experience including all the above-discussed features. For more details please visit www.hostbooks.com and to get instant support call us @ 9152343434.