Accounting and Book-keeping

Accounting and Book-keeping: complete guide

Introduction

Every business in India, whatever its size, needs a reliable record of what it earns, what it spends, what it owns and what it owes. Book-keeping is the day-to-day work of recording these transactions: sales invoices, purchase bills, bank receipts and payments, expenses, payroll entries and journal adjustments. Accounting goes a step further. It classifies and summarises those entries into a trial balance, a profit and loss account and a balance sheet, so that owners, lenders, investors and tax authorities can see the true financial position of the business.

For many businesses, proper books are also a legal obligation. Companies must keep books of account under Section 128 of the Companies Act, 2013. Limited liability partnerships must do the same under the Limited Liability Partnership Act, 2008. Income tax law requires many businesses and professionals to maintain books once their income or turnover crosses the limits set by law, and the GST law requires every registered person to keep accounts and records of supplies, stock and input tax credit at the principal place of business. These records then feed every return you file: GST returns, TDS returns, the income tax return, and for companies and LLPs, the annual filings with the Registrar.

Many founders start by keeping accounts themselves on a spreadsheet, or by handing a box of bills to someone at the end of the year. This usually works until the first GST notice, the first loan application or the first investor conversation, when the numbers turn out to be incomplete, unreconciled or inconsistent with the returns already filed. Fixing a year of poor records is far more expensive and stressful than keeping them correctly from the start.

Professional book-keeping helps because the work is not just data entry. Each entry needs the right ledger, the right tax treatment, the right GST classification and the right period. Input tax credit must be matched against what suppliers have reported, TDS must be deducted at the correct rate and deposited on time, and bank balances must reconcile with the books every month. Our team of accountants handles this work on a monthly basis, so that your books are current, your returns are based on clean data and you can see how your business is doing at any time.

This page explains who needs an accounting and book-keeping service, the legal requirements, how our monthly process works, the documents we need from you, timelines, our fee and what you receive each month.

Who Needs It

A monthly accounting and book-keeping service is useful for a wide range of businesses, including:

• Private limited companies and one person companies. These are legally required to keep books on an accrual basis and under the double-entry system, and their accounts must be audited every year. Clean monthly books make the statutory audit faster and smoother.
• Limited liability partnerships. LLPs must keep proper books and file a statement of account and solvency every year, and an audit is required once turnover or contribution crosses the limits set by the rules.
• Partnership firms and sole proprietors. Once income or turnover crosses the limits under income tax law, books of account become compulsory, and a tax audit may be required beyond a higher turnover limit.
• GST-registered businesses. Every registered person must maintain records of outward and inward supplies, stock, input tax credit and tax paid. Monthly book-keeping keeps these records ready for each return.
• Startups preparing to raise funds. Investors carry out financial due diligence and expect organised, reconciled books, a clear cap table and proper documentation of expenses.
• E-commerce sellers and service exporters. Marketplace settlements, payment gateway deductions, refunds and foreign currency receipts need careful reconciliation every month.
• Professionals such as doctors, consultants, architects and designers. Specified professionals must maintain books once their gross receipts cross the limit set by income tax law.
• Businesses that have outgrown in-house record keeping. Owners who would rather spend their time on sales and operations than on ledgers often find outsourcing more cost-effective than hiring a full-time accountant.

Key Benefits

• Compliance with the law. Books are maintained in the manner required by the Companies Act, the LLP Act, income tax law and GST law, which reduces the risk of penalties for missing or improper records.
• Accurate tax returns. GST, TDS and income tax returns prepared from reconciled books are far less likely to trigger mismatches, notices or demands.
• Better use of input tax credit. Regular matching of purchase records with supplier filings helps you claim the credit you are entitled to and follow up with suppliers who have not reported their invoices.
• Clear view of performance. Monthly profit and loss statements, balance sheets and receivable reports show which products, clients and months are profitable, and where costs are rising.
• Faster audits. Auditors spend less time questioning entries and asking for supporting documents when the books have been kept properly all year.
• Ready for lenders and investors. Banks, financial institutions and investors rely on financial statements when deciding on loans or investments, and well-kept books make that process quicker.
• Control over cash. Tracking of receivables and payables helps you chase overdue payments, plan supplier payments and avoid cash shortfalls.
• Lower cost than an in-house team. A monthly service gives you access to trained accountants and reviewers without the cost of salaries, training and software for a full accounts department.

Book-keeping, accounting and audit are different things. Book-keeping is the recording of each transaction. Accounting is the classification, adjustment and reporting of those transactions into financial statements. An audit is an independent examination of those financial statements by a chartered accountant who has not prepared them. Our monthly service covers book-keeping and accounting. Where your business needs a statutory audit or a tax audit, that is carried out separately by an independent auditor, and our books and working papers are designed to support that audit.

How the monthly cycle works in practice. Most clients share their documents during the first week of the following month. We record the transactions, reconcile bank and payment accounts, match GST purchase records, compute TDS and share the monthly reports. Any open questions, such as an unidentified receipt or a missing bill, are listed for you in a short query sheet so they are resolved before the month is closed.

Eligibility and Legal Requirements

There is no registration or licence needed to receive an accounting service, but the law sets clear rules on how books must be kept. The main requirements are:

• Companies. Under Section 128 of the Companies Act, 2013, every company must keep books of account and other relevant papers at its registered office, on an accrual basis and according to the double-entry system of accounting. The books must give a true and fair view of the state of affairs, and must be preserved for at least eight financial years. Books can be kept in electronic form, and the accounting software used must have an audit trail feature that records every change made to entries, which cannot be disabled.
• Limited liability partnerships. Under the LLP Act, 2008 and the LLP Rules, an LLP must keep proper books of account on a cash or accrual basis according to the double-entry system, at its registered office, and preserve them for eight years.
• Income tax. Income tax law requires businesses and professionals to maintain books of account once their income or turnover crosses the limits laid down, and requires specified professionals to keep books once their gross receipts cross a set limit. The Income-tax Act, 2025, which replaced the earlier Income-tax Act, 1961 with effect from April 2026, continues these requirements. A tax audit by a chartered accountant is required where turnover or receipts cross the audit limits.
• GST. Under Section 35 of the Central Goods and Services Tax Act, 2017, every registered person must keep accounts of production or manufacture, inward and outward supplies, stock, input tax credit, output tax and other prescribed particulars at the principal place of business, and preserve them for the period required by law from the due date of the annual return.
• Accounting standards. Companies must prepare financial statements in line with the notified accounting standards, either the Indian Accounting Standards or the earlier Accounting Standards, depending on the size and type of company.
• TDS and payroll. Businesses that make payments covered by tax deduction rules must deduct tax at the correct rate, deposit it within the due dates and file quarterly statements.

Tax rates, thresholds and due dates change through amendments, notifications and circulars. We check the current position each month and at the time of every filing.

Step-by-Step Guide

Here is how our monthly accounting and book-keeping service works.

1. Initial consultation. We discuss your business, the type of entity, the volume of transactions, how you invoice and collect payments, and which returns you file. This lets us agree the scope and the monthly calendar.
2. Review of existing books. If you already have books, we review the opening balances, ledgers and recent returns to identify gaps or errors that need correcting before we take over.
3. Setting up the chart of accounts. We set up or clean up the ledger structure, cost centres, GST ledgers and TDS ledgers so that entries are classified consistently from the first month.
4. Document collection process. We share a monthly checklist and agree how documents will be sent to us, such as a shared folder or a secure upload. You or your team upload sales and purchase records, bank statements and expense bills each month.
5. Recording transactions. Our accountants record sales, purchases, expenses, receipts, payments, payroll entries and journal adjustments, with the correct GST and TDS treatment for each entry.
6. Bank and payment reconciliation. We reconcile every bank account, and where relevant, payment gateway and marketplace settlements, so that the books match the actual money received and paid.
7. GST and TDS working. We match purchase records with the input tax credit statement on the GST portal, flag supplier mismatches, and compute the TDS payable for the month so the returns can be filed on time.
8. Monthly review and query sheet. A reviewer checks the month's entries. Any unexplained entries or missing documents are listed in a short query sheet for you to answer.
9. Monthly reports. We share the profit and loss account, balance sheet, receivables and payables ageing, and other agreed reports, with a short note on any significant changes.
10. Year-end closing and audit support. At the end of the financial year, we pass closing entries such as depreciation, provisions and prepaid expenses, prepare the final accounts and coordinate with your auditor until the audit is complete.

Documents Checklist

The exact list depends on your business. We will confirm what applies to you during onboarding.

One-time documents at the start:

• PAN, certificate of incorporation or registration, and constitutional documents such as the partnership deed, LLP agreement or Memorandum and Articles of Association
• GST registration certificate and TAN, where applicable
• Last filed income tax return, audited financial statements and closing trial balance
• Fixed asset register or list of assets with purchase dates and cost
• List of loans, investments, deposits and their agreements
• Details of directors, partners or proprietor and their capital contributions

Monthly documents:

• Sales invoices, credit notes and debit notes
• Purchase invoices and expense bills
• Bank statements for all accounts, in a downloadable format
• Payment gateway, wallet and marketplace settlement reports, if you sell online
• Salary register, attendance summary and reimbursements, if payroll entries are in scope
• Petty cash records and vouchers
• Any loan statements, investment statements or new agreements signed during the month

For businesses with stock:

• Monthly closing stock statement, or stock movement reports
• Details of goods sent on approval, consignment or job work

How Long It Takes

Onboarding usually takes five to seven working days from the date we receive the one-time documents and access to the previous books. This covers review of opening balances, setting up the chart of accounts and agreeing the monthly calendar.

Once onboarding is complete, the monthly cycle generally runs as follows:

• Document upload by you: within the first few days of the following month.
• Recording and reconciliation: usually completed within seven to ten working days of receiving complete documents, depending on transaction volume.
• GST and TDS working: prepared in time for the return due dates for that month or quarter.
• Monthly reports: shared once the review and query sheet are closed.

If you need us to update books for earlier months or past years that were not kept properly, this catch-up work is planned separately, and the time depends on the number of months and the volume of transactions involved.

Pricing

Our professional fee for Accounting and Book-keeping is ₹4,999/mo.

This monthly fee covers:

• Recording of sales, purchases, expenses, receipts and payments for the month
• Bank reconciliation for the agreed number of bank accounts
• GST ledger maintenance and matching of input tax credit with the portal statement
• Computation of monthly TDS liability
• Monthly profit and loss account and balance sheet
• Receivables and payables ageing reports
• A monthly query sheet and a review call where needed
• Year-end closing entries and coordination with your auditor

The fee is based on a standard volume of monthly transactions. Businesses with very high volumes, multiple branches, inventory accounting, multi-currency transactions or catch-up work for earlier periods may need a revised scope, which we will discuss with you in advance. Return filing, payroll processing, statutory audit and tax audit are separate services unless agreed in your scope. Any government fees, late fees or interest arising on filings are payable at actual.

Common Mistakes to Avoid

• Mixing personal and business transactions. Paying personal expenses from the business account, or business expenses from personal accounts, makes the books unreliable and can create tax issues.
• Waiting until year-end. Recording a full year of transactions in the last month leads to missed input tax credit, wrong TDS and errors that are hard to trace.
• Ignoring supplier mismatches. Input tax credit claimed on invoices that suppliers have not reported can be denied, with interest. Monthly matching catches this early.
• No supporting documents. Entries without bills or vouchers may be disallowed in an assessment or questioned by your auditor.
• Not reconciling the bank. Unreconciled differences can hide duplicate entries, missed receipts, unauthorised debits and bank charges.
• Wrong classification of expenses. Treating capital purchases as expenses, or the other way round, distorts profit and can affect depreciation and tax.
• Using software without an audit trail. Companies must use accounting software that keeps an edit log of every change. Software or settings that do not meet this requirement can lead to adverse remarks in the audit report.
• Late TDS deposits. Deducting tax but depositing it late attracts interest and can result in disallowance of the expense.

What Happens After

Once the monthly service is running, your books stay current and ready for use. Each month you receive:

• Monthly financial reports that you can share with your bank, investors or partners where required.
• A list of open items, such as unpaid invoices, missing supplier filings or unidentified receipts, so they can be followed up.
• Data for return filing, so your GST, TDS and other returns are based on reconciled numbers.

At the end of the financial year, we close the books, prepare the final accounts and work with your auditor on queries and adjustments. The audited financial statements then form the basis for your income tax return and, for companies and LLPs, the annual filings with the Registrar.

We also recommend a short quarterly review call to discuss trends in revenue, costs and cash flow, and to plan for advance tax, upcoming compliances and any changes in your business. Our team can also take on GST return filing, TDS returns, payroll, income tax filing and annual compliance for companies and LLPs, so that all your financial compliance is handled in one place.

FAQs

Is book-keeping compulsory for a small business?

It depends on the type of entity and its income or turnover. Companies and LLPs must always keep books of account. For proprietors and partnership firms, books become compulsory once income or turnover crosses the limits set under income tax law. GST-registered businesses must keep records of supplies, stock and tax regardless of size.

What is the difference between your service and a statutory audit?

We record transactions and prepare your accounts. A statutory audit is an independent examination of those accounts by a chartered accountant who has not prepared them. Our service prepares the books so that the audit can be carried out efficiently, but the audit itself is a separate engagement.

Do I need to buy accounting software?

Not necessarily. We can work on accounting software that you already use, or advise you on a suitable option. For companies, the software must have an audit trail feature that cannot be disabled, as required under the accounts rules. We will check this during onboarding.

How do I send you my documents each month?

We agree a simple method at the start, usually a shared folder or a secure upload space organised by month. You upload invoices, bills and bank statements, and we confirm once everything is received.

Can you update books for previous years?

Yes. If earlier years were not recorded properly, we can take on catch-up work. The time and fee depend on the number of months and the volume of transactions, and we will share a separate quote after reviewing the records.

Does the monthly fee include GST return filing?

The monthly fee covers book-keeping, reconciliation and the GST working needed for your returns. Filing of GST returns, TDS returns and income tax returns can be added as separate services, and we can combine them into a single monthly package if you prefer.

How long must I keep my books and bills?

Companies and LLPs must preserve books of account for at least eight years. GST law requires records to be kept for a prescribed period counted from the due date of the annual return, and income tax law has its own retention rules. Where proceedings are pending, records must be kept for longer.

Can you handle accounting for an e-commerce business?

Yes. We reconcile marketplace and payment gateway settlements with your sales records, account for commissions, fees, returns and refunds, and match tax collected at source by the operator with your GST records.

Will you handle payroll entries?

We record payroll entries from the salary register you or your payroll provider share. Full payroll processing, including salary computation, payslips and statutory contributions, can be added as a separate service.

What reports will I get each month?

You will receive a profit and loss account, balance sheet, receivables and payables ageing and a short summary of key changes. We can add other reports, such as branch-wise or project-wise statements, depending on your needs.

Can I keep my existing accountant for some work?

Yes. Some clients keep an in-house person for daily entries and use us for review, reconciliation and reporting. We agree the division of work at the start so there is no duplication or confusion.

Is my financial data kept confidential?

Yes. Access to your records is limited to the team members working on your account, and we follow confidentiality practices for storing and sharing documents. You can also restrict access to specific folders or reports.

Can I stop the service at any time?

The monthly service can be stopped by giving notice as per the agreed terms. We will hand over the books, reports and working papers up to the last completed month so that you or your next accountant can continue without gaps.

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