Keeping books and records

01 Why books matter

Without records you are guessing. Books show which products earn money, who owes you, what you owe, and how much cash you really have.

Banks ask for bank statements and accounts before lending. Clean books make the loan faster and the terms better.

02 What to keep

You can keep these in a notebook, a spreadsheet or accounting software. What matters is that every entry has a date and a bill or receipt behind it.

• Cash book: every rupee in and out in cash.
• Bank book: every deposit, payment and charge in the business account.
• Sales register and copies of all invoices.
• Purchase register and all supplier bills.
• Stock register: what came in, what went out, what is left.
• Debtors and creditors list: who owes you and whom you owe, with due dates.
• Wage and attendance register for staff.
• Loan papers, licences, registrations and asset bills.

03 What the law asks

If you are registered for GST, the CGST Act, 2017 (section 35) requires you to keep true and correct accounts of production, stock, sales, purchases and tax at your principal place of business. Section 36 says these records must be kept for 72 months (six years) from the due date of the annual return for that year.

Income-tax law also requires books of account once your income or turnover crosses set limits, and a tax audit above higher limits. These limits change, so check the Income Tax Department's site or ask a chartered accountant for your case.

04 A 15-minute daily routine

Keep a separate bank account for the business and never pay household bills from it. Take a fixed monthly amount for yourself instead.

Each evening, enter the day's sales and purchases, file the bills, and count the cash. Once a month, match your bank book with the bank statement.