So you want to know what is tally?
It is popularly known as an accounting software for small and medium businesses. It does all the functions of accounting that a particularly mid sized business has. This is the view of most of the persons who know about Tally.
But this accounting software is much more than that.
Tally is NOT just an accounting software.
After the release of ERP version of Tally, the capability and functioning of Tally is much more widened.
For example (I give this example often to various people) did you know that you maintain Employees information in Tally?
Right from his/her name to everything about duties, work, profile, groups and so on. This is a great feature if a business has a number of employees working in the business.
It is generally referred to as Payroll entries in tally.
This was just one example and there are hundreds (if not thousands) of examples I can give you like the one above.
Now along with the introduction of GST (Goods and Services Tax) in India, Tally is used by more people than before.
The reason for this is that for most of the people, this is a go to software for accounting and that is because of the simplicity and ease of use.
I am using Tally since 2012 when I first learned it from my principal during my CA articleship (internship). Since then, I have not found any other simpler software for the purpose of accounting.
I know why you have many questions in your mind.
You want to know whether it is an accounting software and whether you can successfully do your accounting in Tally with GST.
Let me tell you that, yes it can.
What is Tally ERP 9 with GST
Well, Tally is a complete Enterprise Resource Planning system with an excellent grip in accounting features.
Although Tally has many more core features that a business requires but its hold in accounting is truly commendable. Therefore it is known more for accounting rather than any other of its features.
If I have to mention a single software for a business need even if the business is just starting out, Tally is the one which I would recommend.
The reason for this recommendation is because Tally does all the things that a business at a time of starting up requires.
And, not just the business, but you can use Tally to maintian your personal accounting also.
For example, let’s say, you are a salaried person and have investments in shares, mutual funds and some other small investments.
- You can easily pass entries for your monthly salaries. – Receipt Entry in tally.
- Easily pass the entries for Stock Market and Mutual Fund Investments (along with capital gains) – Stock Market Entries in tally with capital gains.
- You can also pass entries for investments in Real Estate. – Normal Payment Entry in tally for investment.
And the best thing is that you do not have to prepare Balance Sheet in tally or Profit and Loss Account in tally or any of the reports because they are automatically prepared while you are passing the entries.
Now let’s say for an example, if you are starting up a business, what would you require?
- Billing or Invoicing
- Purchase Management
- Sales Management
- Inventory Management
- Cost Centres
- GST, TDS, TCS and other taxation
- Budgeting & Scenario Management
- Storage & Classification
- Order Processing
- Auditing for Chartered Accountants
- Other Functions
I have brainstormed the needs of a newly opened business which are all covered by Tally.
This was just an example of a general store and almost any business which requires a software for its functioning, Tally can be a best fit.
I will now take you to a mesmerizing journey through the core features and will also explain all of them.
You can learn about the features and uses or you can simply go and start learning Tally for free since now, you know the basic meaning.
Core Functions of Tally
I’ve discussed some of the very core features or you can say some of the important functionality of Tally here. The features are listed without giving any specific rank to them.
I am sure you will like the detailed listing of some of the amazing features of Tally.
This is like an introductory guide for a first time reader if you have not heard about Tally before or just heard a little bit.
Accounting in Tally ERP 9
Of course, accounting is the main function of Tally and that is what it is known for.
The first word that comes in the mind of a person when hearing about Tally is accounting.
Accounting is a basic function of this software and most people do not ever use any other functions other than accounting in Tally.
Because many people do not exactly know how to use those functions and in many cases they do not even require them.
If we particularly talk about accounting, it has been segmented further in 6 different functions. They are:
- Contra Voucher in Tally (Only for cash and bank related entries)
- Payment Voucher in Tally (For payment entries)
- Receipt Voucher in Tally (For receipt entries)
- Journal Voucher in Tally (For entries which doesn’t include cash or bank and for closing entries)
- Sales Voucher in Tally (For sales billing)
- Purchases Entry in Tally (For purchase billing)
There are many more functions related to accounting like Credit Note, Debit Note, Reverse Journal, Memos and so on which helps in performing accounting entries in an easy way.
We will also some of them later in this post so that you can get a better explanation.
Let’s go to billing!
Billing or Invoicing
Billing is an inevitable part of any business and it’s care is duly taken by Tally ERP 9.
Actually billing is included in Accounting feature discussed above but it has somewhat a separate function rather than accounting.
The best thing in Tally is that you can create an accounting entry just like you are creating an invoice or a bill for the customer.
I call it billing-accounting technique in tally.
The format of the entry is just like any other invoice but at the same time, accounting of that bill is also done.
This reduces redundancy in entering a big amount of data. In other words, you do not have to enter the same data twice.
So if you are having a shop or a business and you do billing from Tally, the accounting is automatically done.
You can also do accounting entry and bill is automatically generated. This is also possible.
You can also create sales and purchase invoices with GST and the GST is also calculated automatically.
GST Sales and Purchase vouchers in tally are actually for billing but they can also be used as a simple voucher.
Everything in a bill you can imagine is there in Tally for the purpose of billing.
In purchase management in tally, you can add and track additional cost of purchases while doing the manfucaturing entry in tally.
For example, you are manufacturing t-shirts from cotton, you can also add up certain other expenses like labour, wastage as the percentage of the cost of the t-shirts produced.
This is a must have feature if you are doing manufacturing accounting in tally.
The option to track additional costs of purchases is available in inventory features in tally under the head purchase management.
Once you enable it, you have to go to inventory voucher and pass either a manufacturing entry or a stock transfer entry and you will see the option to put additional costs of purchase in tally.
In sales management, there is a very important feature which is to use multiple price levels in tally.
With the help of multiple price levels, you can set different price levels for different stock items on the basis of number of quantities sold.
You can also add discounts to the price levels.
With the help of price levels, you can create specific price lists and can use those price lists in sales, whenever required. Because of this, you will not have to remember the prices of the items that you are selling.
You just have to go in the price list and check it.
Additionally, you can also add the price level while creating a sales voucher. The option of price levels is present on the top right corner of the sales voucher.
This feature is of use when you are having a good number of employees.
For maintaining Payroll in Tally, there are functions like
- Employee Categories
- Employee Groups
- Attendance or Production Types
- Pay Heads
- Salary Details
- Income Tax Details
For a manufacturing entity there are functions such as Units (Work) and Production Types by which information regarding production done by employees in specific units can also be measured.
Complex payroll calculations are automatically done in Tally when we use the Payroll function.
These calculations often require many hours for the calculation but it is done here automatically.
You can easily set the pay heads and salary details on the basis of which the salary can be calculated automatically by just entering one attendance voucher and one payroll voucher.
With attendance voucher, you can enter the number of days that an employee came to the company for work. You can also set paid or upaid leaves as per your comoany rules.
Once you have entered the attendance voucher, you can then pass the auto payroll voucher which on the basis of the information in the attendance voucher.
Cost Centres or Profit Centres Management in Tally ERP 9
You can maintain cost centres in tally with the help of which you can easily track the costs of your business centre wise or location wise.
For example, if you are selling t-shirts, you can create different cost centres for different manufacturing locations. You can also create different profit centres for branches through which you sell the goods.
Apart from the above, if you are in the business of job work, you can maintain cost centre for job work in tally.
For example, you can enter the information when your material goes out of the factory and when it comes after the job work being done.
If you are the job worker, you can also put in the information when someone else’s material comes into your godown or factory and when it goes out of your godown.
All of the above functionalities make your work faster and easier to do with all the information present at the correct place and in a single software.
Inventory in Tally ERP 9
As billing is an inevitable part of a business and so is the inventory.
Effective inventory management can save huge amount of costs especially if you are functioning in a manufacturing environment.
You can classify inventories in tally on the basis of
- Stock Groups
- Stock units or Units of Measure – Kg, Litre etc.
- GST Configuration in Stock Items i.e. GST rate setup for each of stock items
- Stock items
- Godowns in which stock items are located
- Reorder levels on the basis of stocks
- Stock Catgories
We can also create Price Lists and Reorder Levels for convenience.
Inventory management is done via inventory vouchers for which you can have a look at this post.
If you or your clients have a business in which stock management is required and if you have Tally then there is no need to worry about inventory management.
For example, let’s say, you sold 10 mobile phones with GST from your stock 50 mobile phones.
When you pass the sales entry for the above mobile phones, the stock of the mobile phones will be automatically reduced to 40 mobiles.
You can see your entire stock or inventory in Stock Summary in Tally.
Stock summary will show your entire stock on one page with all the information that is required in any business.
You can also see your stock on the basis of stock groups, stock categories, godowns and so on.
Stock Summary will also show all of your closing stock in tally. You can also have different types of closing stock valuations like FIFO, LIFO, WAM and so on.
You can also see gross profit, stock inwards and stock outwards in stock summary.
Of course, you can print as well as export the reports as per your choice and settings in PDF, Excel and Image formats.
Banking in Tally ERP 9
In this era of digitization, without banking no business can survive.
Banking functionality is very well covered by Tally. Though it was not present in earlier versions of but it is there in Tally.ERP 9 and all of its versions.
The option of banking is available on the Gateway of Tally under the menu of Utilities in Tally.
You can directly do the following banking functions in tally.
- Cheque printing on the basis of the payment that you have made via cheques.
- Maintaining bank wise cheque register to see reconciled and unreconciled cheques.
- Bank reconciliation including auto bank reconcilation and bank reconciliation statements.
- Creating cheque and cash deposit slips and printing them.
- Payment advice for giving it to the person to whom the payment is made via bank.
- Post dated summary for all the post dated cheques issued as well as received by you.
Most important function in Banking is Bank Reconciliation (BRS).
BRS will eliminate the tedious task of reconciling the bank statements with the books of accounts and this will save a lot of your valuable time.
I have created 2 different tutorials on bank reconciliation in tally. They are:
- Bank Reconciliation in tally – Part 1 – For simple bank reconciliation
- Bank Reconciliation in tally – Part – 2 – For automatic bank reconciliation by importing your bank statement in tally.
When you pass a payment or receipt entry, you will see the details of banking during the voucher entry.
The details about banking during the voucher entry that you can enter for the transaction are:
- Transaction type – cheque, e-fund transfer, others.
- Cheque range – if you have configured the cheque book i.e. entered the cheque numbers available.
- Instrument number – cheque number, UTR number or any other similar transaction number.
- Instrument date – date of the instrument i.e. date of the cheque or date of the transaction.
GST in Tally ERP 9
A business cannot operate in isolation. It needs a society to operate which is governed by a government which levies different types of taxes on a business as it is a commercial activity.
Well, Taxation is also covered by Tally.
Previously Income Tax, VAT, Excise, Customs and Service Tax were taken care of by Tally.
Now GST is also included in Tally’s latest version. You can upgrade Tally to have the GST functionality right now.
The process is simple and easy and almost same as previous taxation entries.
You can create GSTR-1, GSTR-2, GSTR-3B and export them from tally as well.
GST E-Way Bill can also be created in Tally ERP 9 easily at the time of passing GST entries.
In short, entire GST is covered in Tally. You will not need any other software for accounting in GST as well as for return filing.
There is a cool feature called GST classifications in tally with the help of which you have to set the GST details only once and you can use that any number of times after that.
If you are covered under Audit as per Income Tax Act, 1961 then there are different functions for that also such as Form 3CD, Form 3CA, 44AB Audit, Form 3CB and so on.
If you have taxation functions enabled then billing is done including GST on the sales or purchases.
A lof people also require the use the TDS. You can easily use TDS in tally, whether you are the TDS deductor or your TDS is being deducted.
TDS is a very easy subject once you understand it in a complete way. After GST, TDS is also applicable on GST which is available.
If you are selling products online on different e-commerce operators such as Amazon, Flipkart etc. you can easily created TCS entry in tally for e-commerce which is required in those kinds of transactions.
At the end of the year or a particular accounting period tax credit or tax payable automatically gets calculated.
Budgeting and Scenario Management
You can easily create different types of budgets in tally and compare with the actual data to see the variance in budget and where it happened.
There are 3 different types of budget which are available in tally. They are:
- Budgets of Groups
- Ledger Budgets
- Budgets of Cost Centres
In these 3 categories, you can have all of your accounting information and you can easily compare budgets with the actual data on the basis of different time periods in tally.
There is another feature which is quite useful if you are dealing in credit in your business.
With the help of scenario management, you can create different types of scenarios in which you can see how the profit and loss account will look like if this transaction happens.
For example, you have sold something and you will be getting your money after 6 months. But, with the help of scenario management, you can see how the accounts will look after you will get the money.
In this way, you can add different types of scenarios together to see how your business will look if a particular set of events will happen in the near future.
Reporting in Tally ERP 9
Different types of reports are required at different times for making effective business decisions.
In Tally there are reports such as
- Statutory Reports such as
- Provident Fund
- Employee State Insurance
- Professional Tax
- National Pension Scheme
- Income Tax
- Payroll Reports
- GST Reports
- TDS Reports
- TCS Reports
- Cash Flow including cash flow projections.
- Funds Flow
- Job Work In and Out Reports
- Receipts and Payments
- Expat Reports – reports for overseas employees working in your company.
- Exception Reports such as
- Negative Stock
- Negative Ledgers
- Overdue Receivables
- Overdue Payables
- Negative Batch
- Memorandum Vouchers
- Reversing Journals
- Optional Vouchers
- Cancelled Vouchers
- Post-Dated Vouchers
- Marked Vouchers
- E-mail IDs
I like Exception Reports because it displays the information what should not have happened and that is what is necessary to take a look at while running a business or simply writing accounts for a client.
Reports are not limited to just reports in Tally.
In fact at every screen, you can print it or export it and that can also be called a report in a certain sense.
For example, if you are in Sales Register then you can print that which can also be called an essential piece of information in the form of report.
This option is not used by many people and the simple reason is that not many people are interested in analysis or they do their own analysis.
But Tally has included that in it.
In the Gateway of Tally there is an option called Ratio Analysis which displays many important ratios on the basis of information which is entered by you at the time of creating vouchers.
Some of the common ones which are included here are Current Ratio, Quick Ratio, Debt/Equity Ratio and Inventory Turnover.
You can also alter the timing for which you want to have a look at ratios. For example you want to know the Current Ratio for the first six months of the year which can also be done in Tally.
Moreover Ratio Analysis helps us to make quick decisions about our business or our client’s business whatever the case may be.
Image Credit: korafotomorgana
Wrapping it up
This is what Tally is. I have not seen a software like this which is so simple and still have so much in it that I cannot even remember all the things.
This is why Tally is used in more than 100 different countries apart from India.
From a personal accounting to shop to manufacturing enterprise, it can do all of it.
At last all I want to say is now onward if anybody asks you, you can easily put this article before his eyes and he will understand what is Tally.
Do you have any questions, please comment down below and I will reply.
I reply to each and every comment. 🙂