Masters — Setting Up the Foundation

Meera came to the office early the next day. She was excited. Yesterday she had learned to log in and navigate ERPLite. Today, Negi Bhaiya had promised something more interesting.

"Before we enter a single transaction," Negi Bhaiya said, pouring chai, "we need to set up the Masters. Think of it like this — before you can cook, you need to buy the ingredients and arrange your kitchen. Masters are the ingredients of accounting software."

Sharma Sir walked in. "Today we set up Bisht Ji's business in the system. He is our biggest client. Wholesale spices — turmeric, cumin, coriander, red chilli. All the flavors of Uttarakhand." He smiled. "Let's get started."

What Are Masters?

In ERPLite, Masters are the foundation data — the information that you set up once and use again and again.

When you create a sales invoice, you don't type the customer's name, address, and GSTIN every time. You set it up once in the Customer Master. After that, you just select "Bisht Traders" from a dropdown, and all details fill in automatically.

There are five types of Masters in ERPLite:

Let us set up each one for Bisht Traders.

Item Master — What Does the Business Sell?

Bisht Ji runs Bisht Traders, a wholesale spice business in Haldwani. He buys raw spices from suppliers in Delhi and Rajasthan. He processes and packs them. Then he sells them to shops and restaurants across Kumaon.

His main products are:

• Turmeric Powder (Haldi)
• Cumin Seeds (Jeera)
• Coriander Powder (Dhaniya)
• Red Chilli Powder (Lal Mirch)
• Garam Masala (mixed spice blend)

Each product needs to be set up in the Item Master. Let us see what information we need.

Setting Up an Item

Meera clicked Masters → Items → New Item in the left menu.

A form appeared with these fields:

Item Name: The name of the product. Meera typed: Turmeric Powder

Item Code: A short code for quick reference. Meera typed: TUR-001

"Use codes that make sense," Negi Bhaiya suggested. "TUR for turmeric, CUM for cumin, COR for coriander. It helps when you have hundreds of items."

HSN Code: This stands for Harmonized System of Nomenclature. It is a number given to every product by the government for GST purposes.

"Every product in India has an HSN code," Sharma Sir explained. "Spices fall under Chapter 9 of the HSN classification. Turmeric powder is 0910 30 30."

"Don't worry about memorizing these," Negi Bhaiya said. "You can look them up on the GST portal. But always make sure the HSN code is correct — wrong code means wrong tax rate, and that means trouble with GST filing."

Unit of Measurement (UoM): How do you measure this item?

Meera selected: KG (kilogram)

Other common units are: PCS (pieces), LTR (litres), MTR (metres), BAG, BOX, DOZ (dozen).

GST Rate: The tax rate applicable to this item.

Most spices are taxed at 5% GST (2.5% CGST + 2.5% SGST for sales within the same state, or 5% IGST for sales between states).

Meera selected: 5%

Selling Price: The price at which Bisht Ji sells this item.

Meera typed: Rs. 180 per kg

Purchase Price: The price at which Bisht Ji buys raw turmeric.

Meera typed: Rs. 120 per kg

"The difference between selling price and purchase price is your gross margin," Sharma Sir pointed out. "Rs. 60 per kg on turmeric. That is 33% margin. Not bad for spices."

Category / Group: You can group items into categories.

Meera created a category called Whole Spices for cumin seeds and another called Ground Spices for powders.

Saving the Item

Meera clicked Save. The item appeared in the item list.

She then created the remaining items:

"Five items done," Meera said. "That was not too hard."

"Bisht Ji has about fifty items in reality," Negi Bhaiya said. "Different pack sizes, different qualities. But the process is the same for each one."

Customer Master — Who Buys From Us?

Bisht Traders sells spices to shops and restaurants. These are his customers. Let us set up one customer.

Meera clicked Masters → Customers → New Customer.

Customer Name: Nainital Spice Restaurant

GSTIN: 05AABCN9876A1Z2

"If the customer is GST-registered, always enter their GSTIN," Sharma Sir said. "It is needed on the tax invoice. If they are not registered — like a small shop — leave this blank."

Address:

• Mall Road, Nainital
• District: Nainital
• State: Uttarakhand
• PIN: 263001

Contact Person: Mr. Ravi Pandey

Phone: 94100XXXXX

Email: nainitalspice@email.com

Credit Limit: This is the maximum amount this customer can owe you at any time.

Meera typed: Rs. 50,000

"Credit limit is important," Negi Bhaiya explained. "Bisht Ji sometimes supplies goods on credit — the customer pays later. But what if a customer keeps buying without paying? The credit limit is a safety check. If their outstanding balance reaches Rs. 50,000, the software will warn you before you create another invoice."

Payment Terms: How many days does the customer get to pay?

Meera selected: 30 days

This means if Bisht Ji sends goods on 1st January, the customer must pay by 31st January. If they pay later, they are overdue.

Meera saved the customer. Then she added two more:

• Almora Kitchen Supplies — a shop in Almora, credit limit Rs. 30,000, payment terms 15 days
• Kumaon Hotel Group — a hotel chain, credit limit Rs. 2,00,000, payment terms 45 days

Vendor Master — Who Do We Buy From?

A Vendor is someone you buy from. Bisht Ji buys raw spices from suppliers. These suppliers are his vendors.

Meera clicked Masters → Vendors → New Vendor.

The form looks very similar to the Customer form. In fact, many fields are the same — name, GSTIN, address, contact. The difference is the relationship: a customer buys from you, a vendor sells to you.

Vendor Name: Delhi Spice Suppliers Pvt Ltd

GSTIN: 07AABCD1234E1Z6

Notice the state code is 07 — that is Delhi. When Bisht Ji (Uttarakhand, state code 05) buys from a Delhi supplier (state code 07), it is an inter-state transaction. The GST will be IGST (not CGST + SGST). ERPLite handles this automatically based on the GSTINs.

Address:

• Khari Baoli, Old Delhi
• State: Delhi
• PIN: 110006

Contact Person: Mr. Ashok Gupta

Phone: 98110XXXXX

Payment Terms: 45 days

TDS Applicable: Yes

"What is TDS?" Meera asked.

"We will cover TDS in detail later," Sharma Sir said. "For now, just know that sometimes when you pay a vendor, you have to deduct a small percentage and send it to the government on their behalf. The vendor gets the rest. If TDS applies to this vendor, we tick this box."

Meera saved the vendor. She added one more:

• Rajasthan Masala Co. — GSTIN 08AABCR5678B1Z4 (state code 08 = Rajasthan), based in Jodhpur, payment terms 30 days

Employee Master — Who Works Here?

Bisht Traders has a few employees. The Employee Master stores their details for payroll (salary processing).

Meera clicked Masters → Employees → New Employee.

Employee Name: Rakesh Kumar

Designation: Warehouse Assistant

PAN: ABCPK1234A

"PAN is important for employees," Negi Bhaiya said. "If you pay someone a salary above a certain limit, you need to deduct TDS from their salary. Their PAN is required for TDS filing."

Bank Details:

• Bank Name: State Bank of India
• Account Number: 12345678901
• IFSC Code: SBIN0001234

"Why do we need bank details?" Meera asked.

"Because salaries are paid by bank transfer these days," Negi Bhaiya said. "ERPLite can generate a payment file that you upload to the bank. The bank then transfers salary to each employee's account automatically. No cash handling, no risk."

Salary Components:

• Basic Salary: Rs. 12,000 per month
• HRA (House Rent Allowance): Rs. 3,000 per month
• Conveyance: Rs. 1,600 per month
• Total: Rs. 16,600 per month

We will learn more about salary components and payroll in a later chapter. For now, Meera just entered the basic details.

Chart of Accounts — The Backbone

The Chart of Accounts is the list of all account heads used in the business. We studied this in detail in the previous chapter. The good news? ERPLite comes with a pre-loaded Chart of Accounts based on Schedule III.

Meera clicked Masters → Chart of Accounts.

She saw a tree-like structure:

├── Assets
│   ├── Non-Current Assets
│   │   ├── Fixed Assets
│   │   │   ├── Land & Building
│   │   │   ├── Plant & Machinery
│   │   │   ├── Furniture & Fixtures
│   │   │   └── Vehicles
│   │   └── Investments
│   └── Current Assets
│       ├── Cash & Cash Equivalents
│       │   ├── Cash in Hand
│       │   └── Bank Accounts
│       ├── Trade Receivables
│       ├── Inventory
│       └── Advance Tax
├── Liabilities
│   ├── Non-Current Liabilities
│   │   └── Long-term Loans
│   └── Current Liabilities
│       ├── Trade Payables
│       ├── GST Payable
│       │   ├── CGST Payable
│       │   ├── SGST Payable
│       │   └── IGST Payable
│       ├── TDS Payable
│       └── Salary Payable
├── Income
│   ├── Revenue from Operations
│   │   └── Sales
│   ├── Other Income
│   │   ├── Interest Income
│   │   └── Discount Received
├── Expenses
│   ├── Cost of Goods Sold
│   │   └── Purchases
│   ├── Employee Benefit Expenses
│   │   └── Salaries & Wages
│   ├── Administrative Expenses
│   │   ├── Rent
│   │   ├── Electricity
│   │   ├── Telephone
│   │   └── Office Supplies
│   └── Financial Costs
│       └── Bank Charges
└── Equity
    ├── Owner's Capital
    └── Retained Earnings

"All of this is already set up?" Meera was amazed.

"Yes," Sharma Sir said. "ERPLite follows Schedule III of the Companies Act. The standard accounts are pre-loaded. You can add more accounts if needed, but you should never delete the standard ones."

Adding a Custom Account

Bisht Ji sometimes earns income from renting out storage space in his warehouse. This does not fall under any existing account. Meera needed to create a new one.

She right-clicked on Other Income and selected Add Sub-Account.

Account Name: Warehouse Rental Income Account Type: Income Parent Group: Other Income

She clicked Save. The new account appeared under Other Income.

"That's how you customize," Negi Bhaiya said. "The structure is already there. You just add leaves to the tree."

Understanding Account Types

Every account in the Chart of Accounts has a type. This determines how it behaves:

"You learned this in the double-entry chapter," Sharma Sir reminded Meera. "The software follows the same rules. When you post a voucher, ERPLite checks that every debit has an equal credit. If the entry is not balanced, it won't let you save."

Linking It All Together

Now Meera understood something important. All the Masters are connected:

• When she creates a Sales Invoice, she selects a Customer (from Customer Master) and Items (from Item Master). The GST rate comes from the Item Master. The invoice posts to accounts in the Chart of Accounts (Sales, GST Payable, Trade Receivables).

• When she creates a Purchase Bill, she selects a Vendor and Items. The payment links to the vendor's bank details if paying online.

• When she processes Payroll, she uses Employee data — salary components, PAN, bank details.

Everything flows from the Masters.

Masters ──► Transactions ──► Reports

Items ──────┐
Customers ──┤
Vendors ────┼──► Vouchers, Invoices, Bills ──► Trial Balance, P&L, Balance Sheet
Employees ──┤
Chart of ───┘
Accounts

"Set up the Masters carefully," Sharma Sir said. "If the foundation is wrong, everything built on it will be wrong. A wrong GST rate in the Item Master means every invoice with that item will have the wrong tax. A wrong GSTIN in the Customer Master means every invoice to that customer will be rejected by the GST portal."

What Meera Set Up Today

Here is a summary of everything Meera created for Bisht Traders:

Quick Recap

• Masters are the foundation data in ERPLite — set up once, used repeatedly
• Item Master stores products/services with HSN code, GST rate, unit, and prices
• HSN Code is a government-assigned number for every product — it determines the GST rate
• Customer Master stores buyer details including GSTIN, credit limit, and payment terms
• Vendor Master stores supplier details — similar to customers but on the buying side
• Employee Master stores staff details including PAN and bank account for payroll
• Chart of Accounts is pre-loaded with Schedule III accounts — you can add custom accounts but should not delete standard ones
• Credit Limit prevents a customer from buying more than they should on credit
• Payment Terms define how many days a customer or vendor has to settle payment
• All Masters are interconnected — Items, Customers, Vendors, and Accounts all come together when you create transactions

Practice Exercise — Try This Yourself

Rawat Aunty runs Rawat General Store in Almora. She is a small kirana shop owner. She is NOT registered for GST (her turnover is below the threshold). She buys goods from local wholesalers and sells to neighborhood customers.

Task 1: Create Items for Rawat Aunty

Create Item Master entries for these products:

Notice that wheat flour (atta) has 0% GST — it is exempt. Not all food items are taxed the same.

Task 2: Create a Customer

Set up this customer for Bisht Traders:

• Name: Pahadi Kitchen Restaurant
• GSTIN: 05AADPK4567C1Z9
• Address: Lake View Road, Bhimtal, Uttarakhand - 263136
• Contact: Mrs. Sunita Pant
• Credit Limit: Rs. 75,000
• Payment Terms: 21 days

Task 3: Think About It

1. Why is it important to enter the correct HSN code for each item?
2. What happens if you set a credit limit of Rs. 0 for a customer?
3. Bisht Ji buys from a vendor in Uttarakhand (state code 05) and also from a vendor in Delhi (state code 07). How will the GST be different for these two purchases?

Fun Fact

The word "spice" comes from the Latin word species, which means "goods" or "merchandise." In ancient times, spices were so valuable that they were used as currency. Black pepper was called "Black Gold." Arab traders kept their spice routes secret for centuries. The spices that Bisht Ji sells from his Haldwani warehouse — turmeric, cumin, coriander — are the same spices that once built empires and launched ships across oceans. And here is Meera, tracking them in ERPLite, one HSN code at a time.