Bookkeeping & Accounting

Bookkeeping and accounting services maintain a business's day-to-day financial records — recording transactions, reconciling banks, preparing ledgers and producing financial statements. Accurate books are the foundation for GST returns, TDS, income-tax filing and audit, and are a statutory requirement for companies and audited entities.

Who needs this: Every company must maintain books under the Companies Act; businesses above the audit threshold and professionals must keep books under the Income Tax Act. Even small businesses benefit from clean books for loans and compliance.

Government portal: Not a registration — accounts feed the GST, TDS and Income Tax portals.

Indicative fees: ₹2,000–₹25,000 per month depending on transaction volume and whether GST/payroll are included.

Timeline: Ongoing monthly; year-end financials prepared before the ITR and audit deadlines.

Documents required

Sales and purchase invoices
Bank statements
Expense bills and vouchers
Payroll and TDS records
Previous year's financial statements and balances

Step-by-step process

Set up a chart of accounts suited to the business
Record every sale, purchase and expense with supporting vouchers
Reconcile bank statements and ledgers monthly
Track GST input/output and TDS for periodic returns
Produce a monthly trial balance and management reports
Prepare year-end profit & loss and balance sheet
Support the statutory/tax audit and the income-tax return
Retain books and records for the statutory period (8 years for companies)

Penalty for non-compliance

Failure to maintain books under section 44AA can attract a penalty of ₹25,000 under section 271A, apart from best-judgment assessment.

The law sets a minimum, and it is more than a spreadsheet

Companies must keep books of account that give a true and fair view, on an accrual basis and by double entry, at the registered office, and they must be preserved for the prescribed period — generally eight years. Under the Income-tax Act, specified professions and businesses above prescribed thresholds must maintain books under section 44AA. Under GST, registered persons must keep records of supplies, stock, input credit and output tax. Three regimes, one set of records if it is designed properly.

Your books have to reconcile with what the departments already see

This is the practical shift of the last few years. Sales must reconcile between your books, GSTR-1, GSTR-3B and e-invoice or e-way bill data. Purchases and input credit must reconcile with GSTR-2B. Income and TDS must reconcile with Form 26AS and the AIS. Books that are internally consistent but disagree with those sources will generate notices, because the department starts from its own data rather than from yours.

Keep business and personal money apart

Commingling is the most common and most expensive habit in small-business accounting. Personal expenses paid from the business account weaken the deductibility of genuine expenses, complicate every reconciliation, and in a partnership or company raise questions about drawings and loans to directors. A separate account from the first day costs nothing and removes an entire category of dispute.

Cash transactions have specific limits

The Income-tax Act disallows expenditure above prescribed limits when paid otherwise than through banking channels, restricts cash receipts above specified thresholds with a penalty equal to the amount received, and limits cash donations for deduction purposes. These rules bite hardest on businesses that are otherwise compliant but settle large amounts in cash out of habit. Route payments through the bank and the problem does not arise.

Audit thresholds and what triggers them

A statutory audit applies to every company regardless of turnover. Tax audit under section 44AB applies above prescribed turnover or gross receipts, with a higher threshold where cash receipts and payments are within a small proportion of the total — and it applies to a taxpayer who declares lower profits than the presumptive rate. GST records may also be examined. Knowing which threshold you are approaching, well before year end, is the difference between an orderly audit and a scramble.

📘 Income tax in India AY 2026-27 — full guide

Frequently asked questions

Is bookkeeping legally required?

Yes for companies (Companies Act) and for businesses/professionals above the turnover thresholds (Income Tax Act, section 44AA). Books must be retained for the prescribed period — eight years for companies.

What is the difference between bookkeeping and accounting?

Bookkeeping is the day-to-day recording of transactions; accounting interprets those records to produce financial statements, analysis and tax computations. Both are usually offered together.

How long must accounting records be kept?

Companies must preserve books for eight financial years; income-tax records are generally kept for six years, longer where reassessment is possible.

Can bookkeeping be outsourced?

Yes — most small businesses outsource to a CA firm or bookkeeping service, which is cost-effective and ensures compliance-ready records for GST, TDS and ITR.

How does bookkeeping help at tax time?

Clean, reconciled books make GST returns, TDS filing, and the income-tax return accurate and audit-ready, and reduce the risk of notices from mismatches in AIS/26AS/GSTR data.