Question 1

Do we legally have to maintain books of account, or is it just good practice?

Accepted Answer

Both, depending on your structure. Every company must maintain books from incorporation under the Companies Act, regardless of size or activity. Businesses and professionals above certain income or turnover thresholds must maintain them under income tax law, and certain professions — medical, legal, engineering, accountancy among others — must do so regardless of income at all. GST-registered businesses have a further, separate record-keeping obligation. It is rarely optional in practice, whatever the size of the business.

Question 2

How long do we have to keep our accounting records?

Accepted Answer

Longer than most businesses assume, and the period differs by law. Companies must retain books for eight financial years preceding the current one under company law. Records required under income tax law have their own retention period, recently affected by the transition to the new Income-tax Act. Rather than apply a single rule of thumb, we advise on the longest applicable period for each category of record, since destroying records too early under one law can leave you short under another.

Question 3

Can we keep our books electronically instead of on paper?

Accepted Answer

Yes, and most businesses do. But electronic maintenance under company law comes with specific conditions — the records must remain accessible in India at all times, held on servers physically located in India, and preserved with daily backups, with the location reported to the Registrar each year. A business using an overseas-hosted cloud accounting product should confirm where its data actually resides, since this is easy to overlook and not something most accounting software vendors volunteer.

Question 4

We only reconcile our accounts once a year, before the audit. Is that a problem?

Accepted Answer

It usually costs more than it saves. Reconciliations left to the year end become a rushed, expensive exercise, and by then several things can no longer be fixed — most importantly, input tax credit that depended on a supplier correcting an unreported invoice, which has its own annual cut-off. Monthly reconciliation is what actually protects credit and produces a cleaner, faster audit, rather than being an added cost on top of an eventual one.

Question 5

Do you handle payroll as well as general bookkeeping?

Accepted Answer

Yes — payroll is treated as an integrated part of the accounting function rather than a separate exercise, since payroll figures feed directly into TDS deduction, PF and ESIC compliance, and the accounts themselves. Handling all of it together avoids the reconciliation gaps that arise when payroll is run separately from the rest of the books.

Accounting & Bookkeeping

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Accounting & Bookkeeping Services in Raipur

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