Small business accounting software is the app in which a small shop or business makes its bills, records its stock and keeps its books of accounts. In India, it is often called billing software or GST billing software. It usually runs on a phone or a laptop, and it is the system of record of a small business.
Say a mobile accessories shop in Siliguri sells a phone cover and a charger to a customer for ₹1,000 plus GST. The shopkeeper opens the app and picks the two items. The app adds 18% GST, which is ₹180, and prints a bill for ₹1,180, or sends it to the customer's phone as a PDF. The bill shows the shop's GSTIN, the 15-character GST registration number, and an HSN code for each item. An HSN code is a number that classifies a product for tax. The app also reduces the stock by one phone cover and one charger. And it records ₹1,180 as a sale in the books.
At the end of the month, the app adds up every sale and every purchase. From them, it prepares the figures for the shop's GST returns. A GST return is the statement of sales, purchases and tax that a registered business files on the GST portal. Before filing, many businesses check their purchase figures against what their suppliers have reported, using GST reconciliation software. At the end of the year, the same books are used for the income tax return, with tax preparation software.
The app often records payments too. Many apps print a UPI QR code on each bill, and receive confirmation of each payment through a payment gateway. So the shopkeeper can see which bills are paid and which are still due. A restaurant that sells through food delivery apps can bring each app's payouts into its books, and check them with delivery app reconciliation software.
Most such apps are sold as SaaS, for a yearly subscription of a few hundred to a few thousand rupees, and many offer a free basic version. India has crores of small businesses, and more than 1.6 crore businesses are registered for GST. So several Indian apps compete for them. Their main selling points are a simple phone screen, Indian languages and GST rules built in.
The same kind of software is sold abroad, under each country's own tax rules. For example, small businesses in the United States and in Japan use such apps to keep their books.