Accounting & Bookkeeping Guide for Indian Businesses
Everything you need to know about accounting for Indian businesses — methods, compliance, software, and how to avoid the common mistakes that trigger notices.
Accounting & Bookkeeping, Step by Step
Prepared by TaxClue's CA/CS team. Updated for FY 2026–27.
Why Proper Accounting Matters
Maintains accurate financial records required for ITR, GST, and MCA filings. Enables sound business decisions with real-time P&L visibility.
Accounting Methods
Mercantile (Accrual) basis — mandatory for companies and firms. Cash basis — allowed for individuals and some professionals.
Books to Maintain
Cash book, bank book, sales register, purchase register, journal, ledger, and stock register. Under GST: tax invoice register and ITC register.
Period of Retention
Books must be retained for 6 years from end of assessment year under Income Tax Act. GST records: 72 months from date of filing annual return.
Accounting Software
Tally Prime (most popular), Zoho Books, QuickBooks, Busy, Marg. Cloud-based options: FreshBooks, Xero for online collaboration.
Monthly Closing Process
Reconcile bank, post all invoices, match GSTR-2B with purchase register, compute TDS payable, prepare trial balance.
Statutory Audit Requirement
Mandatory for companies (regardless of turnover), and for businesses with turnover > ₹1 crore (₹10 crore if 95%+ digital transactions).
Common Mistakes to Avoid
Not reconciling GSTR-2B with books monthly, missing TDS deductions, not accounting for depreciation, mixing personal and business expenses.
Need Expert Help?
Our CA/CS team handles everything — registration, compliance, filings, and representation.