Using GnuCash for maintaining books of accounts of small business in India

For the last two months I was working on suitability of GnuCash for maintaining books of accounts of small businesses of India. When you start GnuCash for the first it offers to setup the accounts. In Business Accounts Category it creates most accounts necessary for a Business excluding Fixed Assets. You can also select the Fixed Assets category which creates three accounts House, Other Asset and Vehicle. You can delete the accounts (e.g. House) you don't need for your Business later on. After you select the accounts the next screen offers to change the name of accounts. This is necessary because the default names are suitable for a Business in USA e.g. there is an account called "Federal" under Taxes which you can change to "Income Tax" and there is an account called "Checking Account" which you can change to "Current Account" and so on. You should also have the amounts of Opening Balances ready with you for Fixed and Current assets while setting up.

After setting up the accounts with Opening Balances you can delete the accounts (especially there are too many Expenses accounts) not relevant for your Business and also add the accounts which you need but not present (e.g. you can create Computer, Office Furniture etc under Fixed Assets.

I found a site explaining the setup nicely and there is no need to write the details here.There are more details on this page.

The next step is to import the Data from Bank Accounts. Some Banks (e.g. ICICI Bank) offer to download the statement in MS Money Format (.qif) which can be imported directly into GnuCash. I am going to write another post for importing the data from Bank Statements. If you do this correctly all Bank transactions get posted in double entry system in Books of Accounts and saves lot of time.