Business StartUp Entries in Tally – With Cash/Bank/Capital

Business StartUp Entries in Tally

When we start a business, there is a simple way to pass basic accounting entries in tally. They are called business startup entries in tally.

Starting a business is in itself is a mammoth and tough task. With that, basic business accounting is one of the most important tasks.

Because without basic accounting, you won’t be able to know whether you are in profit or loss in your business.

So, let’s quickly see what you are going to learn in this post.

What you will learn in this post

  • How to enter Capital Account in Tally for the 1st time
  • Entering Cash & Bank Accounts in Tally
  • Passing entries for Fixed Assets and Liabilities for the 1st time in Tally
  • Entering Opening Stock and Closing Stock in Tally at the beginning
  • Creating Sundry Debtors, Creditors & Investments in Tally
  • Entering Sales, Purchase and Expenses entries in Tally with GST
  • Analyzing the Balance Sheet and Profit and Loss Account in Tally

How to enter Capital Account in Tally for the 1st time

When you start a business for the first time, you get some cash either in the form of loan or from your savings.

So, how do you enter that in Tally?

Let’s see.

For this example, we will take ₹20,000 as capital that you have saved in the form of cash. Now, you want to start a business from that.

Here are the steps for an accounting entry in tally that you have to do for starting a business with cash for the first time.

  • From Gateway of Tally, go to Accounting Vouchers.
  • Select Receipt Voucher in tally because as a business, you are receiving money from your personal account into the business.
  • On the Credit Side, you have to select the Capital Account which is a ledger created under Capital Account.
  • Enter the amount of ₹20,000.
  • On the Debit Side, select Cash and enter the amount of ₹20,000.
  • Press Enter a few times and save the entry.
Entering Capital for the first time in Tally
Entering Capital for the first time in Tally

Congratulations! You have successfully added cash as capital in your new business in tally.

Before you go ahead, here are a few important tally notes that you should know about the entry above.

First one is that, generally for a capital account, it is named after your business. For example, if the name of my business is TallySchool – the capital account will be named as TallySchool.

Secondly, you have to create a ledger in tally for capital account but for Cash, it is by default created in Tally. You don’t have to do anything for the ledger of cash.

In the similar way, you can enter share capital in a company in tally as well.

Now, moving ahead, we will see how you can enter cash and bank amounts for your business in tally.

Entering Cash & Bank Accounts in Tally ERP 9 for 1st Time

We have already entered the cash in the form of capital. Now, we will see how to add money in the bank account as well as withdrawing some of it.

Continuing with our example, let’s deposit some cash in the bank account that you have newly opened for the first time in the form of capital.

Here are the steps to do that.

  • In Accounting Vouchers, select the Receipt Voucher in Tally or press F6 which is a tally shortcut for receipt voucher.
  • On the Credit Side, select Capital Account and enter the amount of ₹15,000.
  • On the Debit Side, select Bank Account and ₹15,000.
  • As soon as you press Enter, you will be asked to enter the bank details like cheque no., date etc. Enter them.
  • Press Enter a few times and save the accounting entry for introducing capital in the bank account.
Enter Bank Account in Tally for the first time
Enter Bank Account in Tally for the first time

Congratulations! You have successfully entered the capital account in your bank account for the first time.

You can also withdraw an amount for your business to personal account. It is called drawings entry in tally.

Now, we will transfer ₹5,000 from bank account to cash account in tally.

For that, we have to do a contra entry in tally.

Here is how you do that step by step:

  • In Accounting Vouchers, select Contra Voucher in Tally as this is a transfer between cash and bank.
  • On the Credit Side, select Bank and enter the amount of ₹5,000. Also, enter the bank details for the withdrawal from the bank.
  • On the Debit Side, select Cash and enter the amount of ₹5,000.
  • Press Enter a few times and save the entry.
Withdrawing Cash from Bank Account for the First Time in Tally
Withdrawing Cash from Bank Account for the First Time in Tally

Congratulations! You have successfully withdrawn ₹5,000 from your newly opened bank account to cash.

This were some of the entries that you would require in tally, as you start your business for the time.

One thing to note in the above entries is that you have to create a ledger for bank accounts in the name of your bank (SBI, ICICI, Axis etc.) under the Bank Account in tally.

You can see the entire list of ledger accounts in tally here to understand what to select in the Under option in tally.

Now, we will see how you can enter fixed assets and liabilities in tally when you are starting a business for the first time in tally.

Passing entries for Fixed Assets and Liabilities for the 1st time in Tally

If you are following the above example, you must be knowing that we have introduced cash and deposited money in the bank as well in the form of capital.

We have put ₹20,000 as cash and ₹15,000 in the bank account in the form of capital. From that, we made a withdrawal of ₹5,000 cash from our bank account.

So, right now, we have ₹25,000 in cash and ₹10,000 in bank account.

From this, we are going to make 2 more transactions in tally which are required for any business startup entries in tally.

They are:

  1. We will purchase a computer – a fixed asset of ₹10,000 + 18% IGST.
  2. We will take a loan from bank of ₹50,000.

Let us first purchase our computer from our cash. Let’s see it step by step.

  • From Gateway of Tally, go to Accounting Vouchers.
  • Then, select Purchase Voucher in Tally and press CTRL + V for doing the purchase entry as a voucher because we are not buying stock, we are buying fixed assets.
  • On the Credit Side, select Cash as we are buying our computer with cash.
  • Amount of cash will be ₹11,800 (₹10,000 + 1,800 as GST).
  • On the Debit Side, select Computer ledger and enter the amount of ₹10,000.
  • Once again on the Debit Side, enter IGST of ₹1,800.
  • Press Enter a few times and save the entry.
Purchase of Fixed Assets in Tally for the 1st Time
Purchase of Fixed Assets in Tally for the 1st Time

Congratulations! You have successfully purchased fixed assets with GST in tally for your startup. It is a part of business startup entries in tally.

Now, we will take a loan from a bank of ₹50,000 from the bank.

  • So, in Accounting Vouchers, select Journal Voucher in Tally.
  • On the Debit Side, select Bank Ledger and enter the amount of ₹50,000.
  • On the Credit Side, select Bank Loan ledger and enter the same amount.
  • Press Enter a few times and save the ledger.
Bank Loan in Tally for your Business Start Up
Bank Loan in Tally for your Business Start Up

Congratulations! You have successfully taken a loan of ₹50,000 from a bank for your business startup.

A few notes to pay attention on here.

Firstly, for a computer which is a fixed asset, you have to create a ledger in tally under Fixed Assets named as Computer.

Secondly, Bank Loan ledger will be under Loans (Liability) as it is our liability.

Now, we will see how you can enter stock for the first time in your business.

Entering Opening Stock and Closing Stock in Tally in the Beginning

There is a common thing about opening stock and closing stock. They both are the same.

Let me give you an example.

You purchase 10 units of mobiles. As soon as you purchase them, it becomes your closing stock unless you sell it, right?

Understood what I am trying to say here?

So, if I sell 8 units and 2 are still remaining at the end of the year, it becomes my closing stock in tally for this year.

And, the same 2 units of mobiles will become the opening stock of the next year.

This is how opening stock and closing stock are connected and are in effect the same.

Tally has taken care of stocks in a very good way. You will see it once you pass the entry of stocks purchase in tally as well as in stock summary in tally.

I am going to show you that right now.

  • From Gateway of Tally, go to Accounting Vouchers.
  • Select Purchase or press F9 which is a shortcut for purchase voucher in tally with GST.
  • Select the supplier or party from which you are purchasing stock of 10 mobiles from Computers Ltd.
  • Under the Name of Item, enter Mobile.
  • Enter the total amount as ₹10,000 therefore it will be ₹1,000 per mobile.
  • Enter the purchase ledger as Purchase – 18%.
  • Now, enter the GST Taxation Ledgers in Tally for CGST and SGST to calculate GST.
  • Press Enter a few times and save the entry.
Purchase of Stock for starting up the Business in Tally
Purchase of Stock for starting up the Business in Tally

Congratulations! You have successfully purchased your stock of 10 mobiles along with GST in Tally.

Now, if you see your profit and loss account in tally, you will see it is showing as closing stock.

And you know why is shows as such.

During the entire year, if some of the above mobiles remain unsold, they will become the opening stock for the next year.

A few important notes to understand the above purchase entry of closing stock in tally.

Firstly, you will have to create a Sundry Debtor’s ledger in tally named Computers Ltd.

Secondly, you have to create a Purchase Ledger for recording the purchase of stocks.

I have named it Purchase – 18% so that I can know it is 18% GST.

Thirdly, I have created a stock items in tally for mobiles along with GST configuration.

Fourthly, you will have to create two more GST Taxation Ledgers for CGST and SGST because we are now purchasing from within the state.

All the above ledgers will have to be GST configured in tally if I have forgotten it to say it.

Now, we will look at creating sundry debtors, sundry creditors and investments in tally.

Creating Sundry Debtors, Creditors & Investments in Tally

We have already created sundry creditors in the form of Computers Ltd when we bought mobiles in the above entry.

In the exact same way, you can create sundry debtors ledgers as well.

We will talk about investments now.

Let’s say you make investments in mutual funds of ₹5,000 from the loan that we have taken.

So, now let us do the entry.

  • From Gateway of Tally, go to Accounting Vouchers.
  • Select Journal Voucher or press F7.
  • On the Debit Side, select Mutual Fund.
  • Enter the amount of ₹5,000.
  • On the credit side, select Bank and see the amount of ₹5,000.
  • Press Enter a few times and save the entry.
Investments Entry in Tally ERP 9
Investments Entry in Tally ERP 9

Congratulations! You have successfully passed a mutual fund entry in tally.

You have to create a ledger called Mutual Fund under Investments.

Entering Sales, Purchase and Expenses entries in Tally with GST

The best part is that we have already seen a purchase entry in tally in one of the above examples when we purchased 10 mobiles.

So, now I will show you how you can pass a sales entry in tally by selling some of the above mobiles.

Let’s do it.

  • From Gateway of Tally, go to Accounting Vouchers.
  • Select Sales from the right hand side or press F8.
  • Now, in the Party A/c, select Mobiles Store because we are selling our mobiles to them. They are our sundry debtors.
  • Under the name of item, select Mobile, for quantity – type 8 and for the Rate, enter ₹1,500 per mobile.
  • Press Enter and select Sales – 18% ledger.
  • After that, enter the CGST and SGST ledgers.
  • Press Enter a few times and save the entry.
Sales Entry in Tally for a Business Startup
Sales Entry in Tally as a part of Business Startup Entries in Tally

Congratulations! You have successfully passed the first sales entry for your business startup entries in tally.

A few important notes to take care of while you pass the above accounting entry.

Firstly, you will need to have a Sundry Debtors ledger named Mobile Store so we select it in the Party A/c field.

Secondly, a sales ledger needs is required for recording sales. Therefore, a ledger named Sales – 18% is required under Sales Accounts to be created.

We have already created CGST and SGST ledgers, so we can use them in every entry containing CGST and SGST in tally.

You can also see the purchase returns as well as sales returns in tally here.

Now, we will incur some expenses for our startup so I can show you the accounting entries for the expenses in Tally.

Let’s say, in our startup, we have internet expenses of ₹3,000 and beverage expenses of ₹1,500 via cash.

Let’s pass the business startup entries in tally for both of the above expenses in tally.

  • In Accounting Vouchers, select Payment Voucher in tally as we are paying for the above expenses with cash.
  • On the Debit Side, select Internet Expenses and Beverage Expenses. Enter the respective amounts as well.
  • Select Cash on the Credit Side and enter the amount of ₹4,500.
  • Press Enter a few times and save the entry.
Direct Expenses Entry in Tally
Direct Expenses Entry in Tally

Congratulations! You have successfully passed the expenses entry in tally using the payment voucher.

In the above entry in tally, you will have to create two ledgers for both the expenses i.e. Internet expenses and Beverage Expenses under Direct Expenses.

Till now, we have done all of the basic entries that are required for starting up the business.

Sure, there are many more entries as well but all of it cannot be covered here.

But, with all the basic entries, you are good to go and easily start accounting for your business in the beginning.

For the final step, we are going to look at profit and loss account and balance sheet. I will explain to you how you need to analyze them.

Analyzing the Balance Sheet and Profit and Loss Account in Tally

Let us first look at the Profit and Loss account in Tally.

We have purchased 10 mobiles and sold 8 of them. We have also incurred beverage and internet expenses.

If you see the profit and loss account after passing the above entries, you will see we have a loss of ₹500.

Profit and Loss Account in Tally ERP 9
Profit and Loss Account in Tally ERP 9

In reality, there is a profit in selling the mobiles but because of internet and beverage expenses, our profit and loss account is showing loss of ₹500.

Also, you will see that there is closing stock of mobiles because we still have not sold 2 mobiles.

Now, let us move onto the Balance Sheet and see what is happening there.

You will see, we have capital of ₹35,000 and bank loan of ₹50,000.

Duties & Taxes are showing ₹1,440 on the debit side and that means we have GST credit with the government. We can pass a GST Tax Payment entry in tally, if we are liable to pay any tax.

Balance Sheet in Tally for the First Time
Balance Sheet in Tally for the First Time

Otherwise, if you look at everything else like computer, mutual fund, closing stock and so on, they are all the extensions of the accounting entries we have passed and profit and loss account as well.

This is how you should look at and analyze the two most important statements of any business.

Of course, this is very much simplified version of all the business transactions. When more transactions will occur, the statements will become more and more complex.

But, at that point of time, your business startup will definitely pick up some traction and you will be able to hire a CA or an accountant to help you out with all the business startup entries in tally.

Business Start-Up Entries in Tally – With Cash/Bank/Capital – Video

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Conclusion

At the end of this post, I am sure you would have definitely understood a lot of the basic and beginning accounting entries that you have to do while starting up the business.

Also, I have given sufficient links in each of the topics to learn them in detail if you have any specific doubt regarding those specific topics.

And, if you have any doubts or difficulties from this post, you can comment down below.

I reply to each and every comment.

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