GSTN’s Free Accounting & Billing Software for MSMEs: A Boon or Pitfall?

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Shrushti

Senior editor

Parul Saxena

Chief editor

Last updated: January 28, 2021

Horizon

Horizon : No. 1 In Billing and Invoicing Software

In a bid to democratize free access to accounting software for small companies, Goods and Services Tax Network (GSTN) made an announcement on Tuesday, May 28, 2019.

The Announcement

GSTN announced that it has started to offer free Accounting and Billing software to micro, small, and medium enterprises (MSMEs) that have an annual turnover of up to INR 1.5 Crore. It would benefit about 80 lakh small businesses.

This service is made available to the active taxpayers, SEZ Developers or SEZ Units, and taxpayers who chose for composition scheme under the Goods and Service Tax (GST) regime.

Looking for GST Software? Check out SoftwareSuggest’s list of the best GST Accounting Software solutions.

In this article, we will cover all you need to know about input credit – how to calculate it, the right time to claim it, and more. So let’s begin. 

The chief executive of GSTN, Prakash Kumar, said, “This move is aimed towards making digitization easier for small companies.” He added, “Such taxpayers are nearly 80% in number under GST regime, and thus this is going to benefit a large number of taxpayers. GSTN on directions of GST Council has identified eight vendors to provide the accounting and billing software without any cost to such taxpayers.”

There are about 13 million GST payers, out of which, 6-7 million are B2B, and 5-6 million are B2C. India’s MSME sector contributes about 8% of India’s GDP, 45% of the manufacturing output, 40% of the exports, and 40% of the total workforce. Nevertheless, this move of GSTN may put forward challenges for start-ups who have taken up the initiative to help individuals and businesses manage their GST requirements.

Software Vendors that have partnered with GSTN & Software that is available for free now

  1. Zoho Corporation Private Limited – ZOHO Books
  2. Marg ERP Limited – MARG GST Pro
  3. Relyon Softech Limited – SARAL ACCOUNTS
  4. Seshaasai Business Forms Private Limited – GENIEBOOKS
  5. Focus Softnet Private Limited – FOCUS LYTE
  6. Adequare Info Private Limited – UBOOKS
  7. Cygnet Infotech Private Limited – Cygnet FACE
  8. IRIS Business Services Limited – IRIS Vyapari

The software listed above is available under the Download tab on the official GST Portal, which is www.gst.gov.in. For downloading the Accounting and Billing software on the GST Portal, the taxpayer requires logging in to the GST Portal with validating credentials.

Accounting software would be available free of cost to eligible taxpayers till March 31, 2021, or till the taxpayer’s annual income remains under INR 1.5 Crore in a financial year.

Here is the list of basic features that the software providers will offer for free –

  • Sale/purchase/cash ledger
  • Inventory Management
  • Supplier/Customer Masters
  • Generation of invoices and account statements
  • Preparation of GST returns

However, additional features like bank reconciliation, account receivable would be chargeable.

Pros & Cons of Free Accounting and Billing Software for Small Businesses & Software Vendors

The Pros:

Almost all of the small business owners love to save money by doing things themselves. With a million things to do each day, accounting doesn’t always take priority on their to-do list. But, leveraging accounting and billing software can help small businesses to manage invoices and payroll with greater efficiency. And, when they do not need to pay a penny, accounting or invoicing software is even better.

GST and Billing software has revolutionized the way business handles accounting-related stuff. It has been proven to result in streamlined processes, time and cost savings, and increased profitability.

Here’s what small business owners can benefit from with free Accounting and Billing Software:

  • Faster accounting and billing
  • Instant invoices
  • Automatic inventory updates
  • Holistic integration
  • Easy generation of account statements
  • Filing GST returns at ease
  • Streamlined sale/purchase/cash ledger

While talking about how this announcement will be beneficial for software vendors, it’s always simple, secure, and the best way to bait customers with free things. Vendors often provide free stuff for promotion. For them, small businesses are a critical entry into the marketplace. As it’s hard for small business to switch products midway, they are likely to remain loyal for more years. And, as the small businesses grow, so does the vendor’s market.

Providing free accounting and billing software is their primary investment for future sales from small businesses.

The Cons:

Free things come with limitations. This is also the case with free accounting or retailing software.

One cannot expect to avail advanced features as most of the free software comes with limited functionality. Likewise, Accounting and Billing Software that is available free of charge miss many product features.

Here are a few disadvantages of free accounting and billing software:

  • Limited user accessibility and settings
  • Flexibility in Billing and Accounting
  • Problems in data retrieval
  • Missing out on product features
  • Little to no tech support
  • Interfacing with other software
  • Might not support cloud services

Sometimes, you may require additional email features so that you can send invoices to multiple users for approval of billing amount. At times, you may need some more information on a client record. With free billing or invoicing software, you cannot receive such flexibilities. Moreover, you also receive limited reporting functionalities with free versions.

What should you do as a business owner – Use free Accounting and Billing Software or buy a good one?

Though everyone loves to get free software, some software is worth paying for. Being a business owner, what should you do – pay out your hard-earned cash or not?

1. Paid Software offers better support

The difference between free and paid software seems irrelevant in terms of quality. But, it does matter in terms of support. When you pay for software, you get the support systems that go with it. You can expect regular upgrades and instant assistance for solving issues with your software from the vendor when the version is paid. However, free software providers don’t have many obligations for their users and thus result in inadequate support.

2. Free Software doesn’t meet every need

When it comes to choosing accounting and billing software for business use, you will need paid software. Why? Because you will require doing specific kinds of tasks like bank reconciliation or account receivable which are available only with paid software. Sometimes to thrive in this tough competitive market, you find the need to work on the platform that your competitors or other professionals are using.

Free software comes with limited functionality. To get access to additional features, you will require paying.

So, don’t just choose free accounting and billing software because it’s free. Determine whether or not you need to upgrade to a paid tool.

Things you should look for while getting a paid Accounting and Billing Software

While looking to capitalize down the road, the latest trend found in the accounting industry is to provide software free of cost. This might make sense to certain businesses, but companies experiencing rapid growth must be careful before getting free software.

With a multitude of tools available, it becomes challenging for small businesses to select which solution is right for them. There might be some who have enough money to buy extensive software. But, do they need all that customization? On the contrary, some would choose to get away with free software. But, is that tool efficient to handle complex issues?

Here are four key factors you must consider before buying paid Accounting and Billing software.

1. Pricing

Any accounting toll – whether free or paid – should be able to handle account management, expense tracking, invoicing, and sales. These are the minimum tasks any tool must accomplish. If you require nothing more than this, then a freemium tool is the best choice to make. But, when your needs start growing; you must evaluate the paid versions available on the market.

For example, you want your software to handle payroll or accounts receivable; you will probably require investing in paid software. Although all free tools can handle sales data efficiently, you might need a more complex tool that allows you to enter sales data department-wise.

2. Flexibility

One of the principal reasons why businesses choose paid accounting software over free ones is its flexibility. They can leverage potential benefits with its unlimited customizations. Moreover, they are built to suffice every accounting need of your business.

Many small business accounting tools do not provide such flexibility. But, this doesn’t mean you are stuck. See to it if your tool is capable of offering third-party integrations. Can you integrate it with your CRM? Will it be able to retrieve data from your ecommerce software? If it readily provides third-party integrations and add-ons, you don’t require investing in pricey enterprise-level software. But, if it doesn’t, you need to make the shift soon.

3. Security

The main difference you will observe between a paid and free accounting and billing software is the degree of security that the vendor provides. When you aren’t paying a penny for your software, do you expect top-notch security?

Further, clients prefer on-premises application rather than cloud-based tools as they don’t trust the security and control in the cloud-based version. However, all cloud-based tools aren’t inherently less secure. Some stores the data on protected servers and encrypt it. Some enable administrators to control the access i.e., who can access specific data inside the tool, or the information must be made available to employees at a certain level.

4. Customer Service

As your business expands, so does the importance of customer service. Ensure you are capable of reaching your accounting and billing software vendor whenever a problem arises in the software. Determine if the vendor lets you contact them through any medium and don’t force you to communicate via a specific platform. Also, make sure that the service representatives speak the language as yours, and the service center is not outsourced.

These are some incredible things you must consider before selecting software. When you are getting paid software, you will probably receive 24/7 support. However, if you are looking to choose a freebie, don’t forget to have a close look at its services and support.

If you are struggling to manage your small business accounting tasks, and an accountant is out of your budget, accounting software will be of immense help. It will not only automate your business processes but also speed up the time spent on daily tasks.

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Shrushti K. Chaware Works as a Digital Marketing Executive, at SoftwareSuggest. She is a Sports lover and always curious to explore new stuff. When she is not working hard at work, she can be found writing, reading or just wandering.

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