Mastering Tally: A Comprehensive Guide to Using Tally for Accounting and Business Management

Tally is a widely used accounting software, particularly popular in India, known for its robustness and versatility. Whether you’re a small business owner, a seasoned accountant, or just starting your journey in finance, understanding how to use Tally effectively is a valuable skill. This comprehensive guide will walk you through the essential features and steps involved in using Tally, from setting up your company to generating insightful reports. Let’s dive in!

What is Tally?

Tally is an accounting and enterprise resource planning (ERP) software designed to handle various aspects of business management. It offers a range of functionalities, including:

• Accounting: Maintaining ledgers, recording transactions, and managing financial statements.
• Inventory Management: Tracking stock levels, managing purchase and sales orders, and generating inventory reports.
• Payroll Management: Handling employee salaries, generating pay slips, and managing statutory compliances.
• Banking: Reconciling bank statements and tracking bank transactions.
• Tax Management: Filing GST, TDS, and other taxes.
• Reporting and Analysis: Generating various financial and management reports for decision-making.

Getting Started with Tally

1. Downloading and Installing Tally

Before you begin, you need to download and install Tally on your computer. Follow these steps:

1. Visit the official Tally website (www.tallysolutions.com).
2. Navigate to the Downloads section.
3. Choose the appropriate version of Tally (e.g., TallyPrime, Tally.ERP 9) based on your needs and system compatibility.
4. Download the installer.
5. Run the installer and follow the on-screen instructions to complete the installation process.
6. Activate your Tally license if you have purchased one or use the educational version if you’re learning.

2. Creating a Company in Tally

Once Tally is installed, the first step is to create your company’s profile. Here’s how:

1. Launch Tally.
2. Click on “Create Company” from the Gateway of Tally screen.
3. Enter the following details in the Company Creation screen:
• Directory: Choose the location where your company data will be saved.
• Name: Enter your company’s name.
• Mailing Name: The name that will be printed on invoices and reports.
• Address: Your company’s registered address.
• Country: Select the country where your business is registered.
• State: Select your company’s state.
• Pin Code: Your company’s PIN code.
• Telephone Number: Your company’s phone number.
• Mobile Number: Your company’s mobile number.
• Fax Number: Your company’s fax number.
• Email Address: Your company’s email address.
• Website: Your company’s website URL (if applicable).
• Financial year beginning from: Enter the start date of your financial year.
• Books beginning from: Usually the same as the financial year start date.
• Tally Vault Password (Optional): Set a password to protect your data.
4. Click on “Accept” to save the company details.

3. Configuring Company Features

After creating your company, you need to configure its features. Go to the Gateway of Tally and press F11 (Features). You will see three sections:

• Accounting Features (F1): Customize accounting features like maintaining bill-wise details, cost centers, etc.
• Inventory Features (F2): Configure features related to inventory management like stock items, godowns, etc.
• Statutory & Taxation (F3): Configure features related to taxation like GST, TDS, etc.

Carefully review and configure these features based on your business needs. For example, if you deal in inventory, you would enable the “Maintain Stock Items” feature in Inventory Features.

Core Tally Functions

1. Creating Ledgers

Ledgers are fundamental in Tally, representing different accounts such as sales, purchases, expenses, etc. To create a ledger:

1. Go to Gateway of Tally > Accounts Info > Ledgers.
2. Click on “Create”.
3. Enter the following details:
• Name: The name of the ledger account (e.g., Sales Account, Purchase Account, Bank Account).
• Alias (Optional): An alternate name for the ledger.
• Under: The group under which this ledger belongs (e.g., Sales Accounts under Sales Accounts Group, Purchase Accounts under Purchase Accounts Group, Bank Accounts under Bank Accounts Group).
• Inventory values are affected?: Yes or No (Generally Yes for stock items, No for expenses).
• Mailing details: For party ledgers, enter contact details.
• Opening Balance (Optional): Enter any opening balance if the business is not starting fresh.
4. Click on “Accept” to save the ledger.

Common Groups used in Tally:

• Capital Account: Funds invested by owners
• Current Assets: Assets that are easily convertible to cash within a year (cash, bank balance, debtors).
• Current Liabilities: Obligations payable within a year (creditors, bills payable).
• Fixed Assets: Long-term assets (machinery, furniture, land).
• Direct Expenses: Expenses directly related to the purchase or production of goods (wages, freight inwards).
• Indirect Expenses: Expenses not directly related to production (rent, salaries, advertising).
• Direct Income: Income directly related to the sale of goods (Sales Account).
• Indirect Income: Income not directly related to sales (interest received, commission received).
• Purchase Accounts: Account used to record purchases
• Sales Accounts: Account used to record sales.

2. Recording Transactions (Vouchers)

Transactions are recorded using vouchers in Tally. To enter a voucher:

1. Go to Gateway of Tally > Accounting Vouchers.
2. Select the type of voucher (e.g., Contra, Payment, Receipt, Journal, Sales, Purchase) by clicking the buttons on the right side of the screen or pressing the corresponding shortcut key (e.g., F4 for Contra, F5 for Payment, F6 for Receipt, etc.).
3. Fill in the voucher details:
   • Date: Enter the date of the transaction.
   • Debit and Credit Ledgers: Select the appropriate ledgers for debit and credit.
   • Amount: Enter the transaction amount.
   • Narration (Optional): Write a short description of the transaction.
4. Accept the voucher to save it.

Different Voucher Types:

• Contra Voucher (F4): Used for transactions involving cash and bank accounts (e.g., cash deposit to bank, cash withdrawal from bank, transfer of funds between bank accounts).
• Payment Voucher (F5): Used for payments made by cash or bank (e.g., payment for expenses, payments to suppliers).
• Receipt Voucher (F6): Used for receipts of cash or bank (e.g., sales receipts, interest received).
• Journal Voucher (F7): Used for adjusting entries, depreciation entries, provision entries, etc.
• Sales Voucher (F8): Used to record sales transactions (cash or credit).
• Purchase Voucher (F9): Used to record purchase transactions (cash or credit).

Example: Recording a Cash Purchase Transaction

1. Go to Gateway of Tally > Accounting Vouchers.
2. Press F9 to select the Purchase Voucher
3. Select the ‘Mode’ as Item Invoice
4. Select the Date
5. Select the Supplier’s Ledger by Creating a new one if it does not exist
6. Select the Purchase ledger (Create if it does not exist under Purchase Accounts Group).
7. Select the Stock Items from the list (create them if they do not exist under inventory info) Enter Quantity and Rate.
8. If there are other charges, select them as a ledger under direct or indirect expenses.
9. Enter the Narration if any
10. Accept the Purchase Voucher.

3. Inventory Management

If you’re dealing with physical goods, inventory management is crucial. Here’s how to manage it in Tally:

1. Creating Stock Groups: Organize your stock items into categories (e.g., Electronics, Clothing, Groceries). Go to Gateway of Tally > Inventory Info > Stock Groups > Create.
2. Creating Stock Items: Define the individual products you buy and sell (e.g., Laptop, T-shirt, Rice). Go to Gateway of Tally > Inventory Info > Stock Items > Create. Provide details like name, units of measure (e.g., Pieces, Kilograms), and opening balance.
3. Managing Godowns: If you have multiple storage locations, create godowns in Gateway of Tally > Inventory Info > Godowns > Create.
4. Recording Stock Transactions: Use purchase vouchers to record purchases and sales vouchers to record sales, specifying the items, quantities, and prices.

4. Generating Reports

Tally’s strength lies in its reporting capabilities. Some important reports include:

• Trial Balance: Shows the debit and credit balances of all ledgers. Go to Gateway of Tally > Display > Trial Balance.
• Profit & Loss Account: Shows your company’s revenues, expenses, and profit or loss for a specific period. Go to Gateway of Tally > Display > Profit & Loss Account.
• Balance Sheet: Shows your company’s assets, liabilities, and equity at a specific point in time. Go to Gateway of Tally > Display > Balance Sheet.
• Day Book: Shows all transactions made on a particular day. Go to Gateway of Tally > Display > Day Book.
• Stock Summary: Shows the current stock levels. Go to Gateway of Tally > Display > Inventory Books > Stock Summary.
• Cash/Bank Books: Shows the movement of cash and bank balances. Go to Gateway of Tally > Display > Account Books > Cash/Bank Books.
• Ledger Vouchers: To view all the transactions of a particular Ledger. Go to Gateway of Tally > Display > Account Books > Ledger and select a ledger from the list.

You can further customize reports by changing the period, adding filters, and exporting them to different formats (like Excel, PDF, etc.).

Advanced Features

1. GST Management

Tally simplifies GST compliance with features for GST registration, tax calculation, and report generation. To manage GST:

1. Enable GST in Statutory & Taxation features (F11).
2. Enter your GSTIN (Goods and Services Tax Identification Number) in the company details.
3. Create GST ledgers (e.g., CGST, SGST, IGST) under duties and taxes.
4. Record GST-compliant transactions.
5. Generate GST reports (GSTR-1, GSTR-2, GSTR-3B).

2. Payroll Management

For managing employees’ salaries:

1. Enable Payroll features (F11).
2. Create employee groups and employees.
3. Define pay heads (e.g., Basic Salary, HRA, Allowances).
4. Process payroll and generate pay slips.
5. Manage PF (Provident Fund) and ESI (Employees’ State Insurance) deductions.

3. Data Backup and Restore

Regular backups are crucial. To back up your data:

1. Go to Gateway of Tally > Company Info.
2. Select “Backup”.
3. Choose the destination folder for the backup.
4. Click Accept.

To restore from a backup:

1. Go to Gateway of Tally > Company Info.
2. Select “Restore”.
3. Choose the location of your backup data.
4. Click Accept.

Tips for Effective Tally Usage

• Regular Practice: Familiarize yourself with Tally through regular usage.
• Use Shortcut Keys: Learn shortcut keys for faster navigation and operations.
• Keep Data Organized: Maintain a structured data entry process for accuracy.
• Regular Backups: Back up your data frequently to prevent loss.
• Stay Updated: Keep your Tally software updated to benefit from the latest features and bug fixes.
• Utilize Tally’s Help: Tally has a comprehensive help system; use it when you encounter problems.
• Consult a Professional: If you’re unsure about specific accounting procedures, seek help from an accountant.

Conclusion

Tally is a powerful tool that can significantly improve your business accounting and management processes. By understanding its features and following the steps outlined in this guide, you can effectively use Tally to manage your finances, track your inventory, and make informed business decisions. Remember, consistent practice and staying updated with the software will lead to mastery. Happy tallying!

This comprehensive guide aims to provide a solid foundation for beginners and offers useful insights for experienced users. Always tailor your Tally usage to the specific needs of your business for optimal efficiency and effectiveness. Remember that Tally is constantly evolving with new features and updates, so it’s essential to stay informed to fully leverage its capabilities.

Disclaimer: This guide is for informational purposes only. Always consult with a qualified professional for financial advice. Software versions and specific features may vary slightly.