Bookkeeping & Accounting

Bookkeeping

Bookkeeping is the process of recording financial transactions of a business in an accounting system and the creation of reports. Bookkeeping services are necessary for all businesses to ensure accurate operational / financial information. Such information is required by Management, Regulators, and Investors. Also, it is a legal requirement for any business to maintain an appropriate book of accounts to ensure that all relevant taxes are paid and tax filings are made on time.

Advantages of Bookkeeping:

  • Cost Effective
  • Time Effective.
  • Higher Profits.
  • Reduced Tax Liabilities .
  • Peace of Mind.

Why should you maintain Books of Accounts?

  • It is a Statutory Requirement for all businesses except for Sole Proprietorship
  • Helps you review your performance and take steps to improve.
  • Maintaining books of accounts helps you when you need funding from investors.

Frequently Asked Questions

1. When Should I hire a bookkeeping service?


You should hire a bookkeeping service as soon as you start your business. This way you can avoid mistakes from the beginning and thus reduce headaches.


2. Do I need a bookkeeping service? I know how to use Excel and would prefer it.


If you own a private limited company, then it’s recommended that you hire a professional bookkeeping service. Bookkeeping requires the use of double-entry journal accounting to ensure that the Trial Balance is correct. As a private limited company, whether you have one member or fifty members, the compliance, accountability and accuracy should be the same.


3. What all the things need to be maintained in the books of accounts?


Books of accounts comprise of a Journal, a Ledger book, a Trial Balance, Original and carbon copies of bills/invoices/receipts /, Cash Book, Profit and Loss A/c, Balance Sheet and Cash Flow Statements.


4. Is there a legal requirement to maintain books of accounts?


Companies and LLPs are required to maintain books of accounts as mandated by their governing statutes, namely Companies Act, 2013 and Limited Liability Partnership Act, 2008. Further, Income Tax Act, 1961 also obligates the maintenance of the books of accounts, irrespective of the form of business, and has separate provisions related to it. Thus, there may be a situation where a Private Limited Company is required to comply with such legal provisions as well.


5. If I maintain books of accounts with the help of a professional firm, is it mandatory for me to get my accounts audited? If yes, what is the frequency of audit?


Maintaining or not maintaining books by handing over the job to a professional firm does not determine whether you need to undergo audit or not. Furthermore, there are several different types of audits such as, internal audit, cost audit, tax audit and statutory audit. Each audit has its own statutory requirements, thresholds of being conducted with relevant deadlines and due dates.