Why Accounting is important in Business

General Reason

There is famous proverb in Hindi which translate as “first write then pay”. Every transaction which take place need to be recorded so that any future dispute may be avoided. Initially businessman used to record their transactions at single entry system or at their own discretion. By the time, recording methods have changed. The most preferred accounting system now-a- days is double entry system. Double entry system has legal backing as governments and regulatory authorities prefer it.

We as a service provider, relieve you from the day to day maintenance of books of Accounts. We offer to keep & maintain books on your behalf at cost effective fees.

Legal requirement

You need to adhere to the law of the land. Every country has its own set of laws which requires maintenance of books of accounts. In India, mainly  following Acts have specified requirements. If your business falls under any regulatory authority like IRDA, TRAI, SEBI then you also need to maintain records as they prescribe.

Section 44AA of Income Tax Act 1961 has prescribed the requirements of maintenance of books of accounts which covers wider range of business entities under it.

(1) Every person carrying on the Legal, Medical, Engineering, Accountancy or Interior Decoration or any other profession as notified by CENTRAL BOARD OF DIRECT TAXES (CBDT) are required to maintain such books of accounts & other documents as may enable the Assessing Officer to compute Assessee’s total income in accordance with provisions of this act.

(2) Following are the persons who are required to maintain books of accounts:-

(i) Person carrying on business or profession if his total income exceeds Rs.1,20,000 or his total Turnover or Gross Receipts in the business or profession exceeds Rs.10,00,000 in any of the 3 years immediately preceding the previous year.

(ii) Where the business is newly setup, if his total income is likely to exceed Rs.1,20,000 or his total Turnover, Gross Receipts likely to exceed Rs.10,00,000.

(iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee u/s 44AE or 44BB or 44BBB and assessee has claimed his income to be lower than the profits and gains so deemed to be the profits and gains of his business.

(iv) where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.

Rule 6F: Books of Account to be maintained:

Every person carrying on Legal, Medical, Engineering or Architectural Profession or Profession of Accountancy or Interior Decoration or Film Artist or Authorized Representative if his Gross Receipts exceeds Rs.1,50,000 in all the three years immediately preceding the previous year or

Where the profession has been newly set up in the previous year his gross receipts are likely to exceed Rs.1,50,000 in that year.

BOOKS TO BE MAINTAINED

The following books of accounts and documents are required to be maintained:-

  • Cash book;
  • Journal;
  • Ledger;
  • Carbon copies of the bills & receipts issued by the person in relation to sums exceeding Rs.25;
  • Original bills and receipts issued to the person in respect of the expenditure incurred.

PERIOD FOR WHICH THE BOOKS & OTHER DOCUMENTS TO BE MAINTAINED

The above books of accounts and other documents shall be kept and maintained for a minimum period of 6 years from the end of relevant assessment year. If an assessment in relation to any assessment year has been reopened u/s 147 all the books of accounts and other documents shall continue to be kept and maintained till the assessment so reopened has been completed.

PLACE WHERE BOOKS TO BE MAINTAINED

The books and documents shall be kept and maintained at the place where the person is carrying on the profession or where there is more than one place at the principal place of business.

Every registered person is required to keep and maintain all records at his principal place of business.

Every registered person whose turnover during a financial year exceeds the prescribed limit (2 crore) will get his accounts audited by a chartered accountant or a cost accountant.

What records must be maintained under GST?

Every registered person must maintain records of-

  • Production or manufacture of goods
  • Inward and outward supply of goods or services or both
  • Stock of goods
  • Input tax credit availed
  • Output tax payable and paid and
  • Other particulars as may be prescribed

As per the GST Act, every registered taxable person must maintain the accounts books and records for at least 72 months (6 years). The period will be counted from the last date of filing of Annual Return for that year.

The last date of filing the Annual return is 31st December of the following year.

For example:

For the year 2017-2018, the due date of filing the annual return is 31.12.2018. The books & records of 2017-2018 must be maintained for 6 years, i.e., 31.12.2023

If the taxpayer is a part of any proceedings before any authority (First Appellate) or is under investigation then he must maintain the books for 1 year after the order of such proceedings/appeal has been passed.

Section 128 of Companies Act 2013 prescribes as follows:

 “Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting.”

Accounting Services Include

  • Transaction recording related to income, expenses, assets and liabilities
  • Preparation of ledgers
  • Bank Reconciliation
  • Reconciliation with GST Return
  • Reconciliation with TDS (26AS)
  • Profit & Loss Account
  • Balance Sheet
  • Cash Flow Statement

Why outsource Accounting to T P Gupta & Co.

We use latest updated software for your accounting need to include all transaction such as GST. We have Tally licences exclusively for our clients.

We have multiple clients of Accounting resulting in distribution of fixed cost. Therefore we are able to provide best quality service in cost effective manner.

We have trained team for handling due dates pressure so that you never miss any deadline.