What is Tally A Detailed Overview

Rishit Shah November 19, 2014

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Tally 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 Tally does 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 and extended
to a great extent.
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
could be a great feature if a business has a number of employees working in the business.
This was just one example and there are hundreds (if not thousands) of examples I can give you
about Tally like the one above.
So what exactly is Tally?
I have broken the whole explanation into different parts for your ease.

What is Tally
Well, Tally is a complete Enterprise Resource Planning system with a excellent grip in
accounting features. Although it 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.

For example, if you are starting out a general store, what would you require?
1. Accounting
2. Billing
3. Sales and profit analysis
4. Banking
5. Inventory
6. Taxation (VAT, TDS, TCS)
I have brainstormed the needs of a newly opened general store which are all covered by Tally.
There are more functions than this like Audit, Payroll, Manufacturing and so on which if needed
can be used.
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.
This was Tally and it can do much more. I will take you to explain some of the core features of
Tally.
You can also read the case studies of implementation of Tally by real businesses.

Core Features of Tally

Ive discussed some of the very core features or you can say some of the important functionality
of Tally. 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 he or she has not heard of Tally
before.

Accounting
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 Tally and most people do not ever use any other functions
other than accounting in Tally. At the most they will use Inventory management and some of the
Taxation features.

Because many people do not exactly know how to use those features.
If we particularly talk about accounting, Tally has segmented it in 6 different functions. They are:
1. Contra (Only for cash and bank related entries)
2. Payment (For payment entries)
3. Receipt (For receipt entries)
4. Journal (For entries which doesnt include cash or bank and for closing entries)
5. Sales (For sales billing)
6. Purchases (For purchase billing)
There are many more functions related to accounting like Credit Note, Debit Note, Reverse
Journal, Memos and so on which aid in performing accounting procedures in an easy manner.
Lets go to billing!
Image Credit: Alexander Baxevanis

Billing
Billing is an inevitable part of any business and its care is duly taken by Tally. 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 when you create a

billing entry you do not have to create again accounting entry for that bill. This reduces
redundancy in entering a big amount of data.
So if you are having a shop and you do billing from Tally, you or your accountant do not have to
again perform accounting for the same bills as it already done by you.
Ive discussed the above technique in detail in another article.
In Tally, Sales and Purchase vouchers 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.
Image Credit: miguelb

Payroll
This feature is of use when you are having a good number of employees. For a 1 or 2

employees it makes no sense to purchase a

software like Tally. But if your or your clients business has a good amount of transactions then
you may require Tally.
For maintaining Payroll in Tally, there are functions like Employee Categories, Employee
Groups, Attendance, Pay Heads and of course Employees.

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.
Image Credit: U.S. Army Corps of Engineers Europe District

Inventory

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.
In Tally you can classify inventories on the basis of groups, units, tariff (applicable for goods
on which VAT is levied), different stock items, godowns in which they are located.
Apart from the above, 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
video tutorial.
If you or your clients have a business in which inventory management is required and if you
have Tally then there is no need to worry about inventory management.
Image Credit: Emilio Labrador

Banking

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 Tally but is there in
Tally.ERP 9.
You can directly print cheques, maintain cheque register, create deposit slips and payment
advice in Tally.ERP 9.
Most important function in Banking is Bank Reconciliation. BRS will eliminate the tedious task
of reconciling the bank statements with the books of accounts. As per my opinion this will save a
lot of valuable time.
You can view two tutorials on Bank Reconciliation made by me. They are Bank Reconciliation
Part 1 and Bank Reconciliation Part 2.
Image Credit: epSos .de

Taxation
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. Right from Income Tax, VAT, Excise, Customs and
Service Tax everything is taken care of by Tally.
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 taxes on the sales or
purchases.
At the end of the year or a particular accounting period tax credit or tax payable automatically
gets calculated by Tally.
Image Credit: Alan Cleaver

Reporting
Different types of reports are required at different times for making effective business decisions.

In Tally there are reports such as Statutory

Reports, Payroll Reports, Job Work In and Out Reports and the most significant Exception
Reports.
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 of
a client.
Reports are not limited to just reports in Tally. In fact at every screen in Tally, you can print it or
export it and that can also be called a report according to my opinion.
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.
Image Credit: Phil Jern

Ratio Analysis

This option is not used by many people and the

simple reason is that not many people are interested in 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 creating vouchers.
Some of the common ones which are included in Tally 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 in Tally helps us to make quick decisions about our business or our
clients business whatever the case may be.
Image Credit: korafotomorgana