Accounting And Book Keeping
High-Quality, Trustworthy, and Precise Bookkeeping Services
Elevate Your Business: Embrace Our Comprehensive Online Accounting and Bookkeeping Service, Designed to Cater to Your Year-round Financial Needs. Experience the Power of a Well-Structured Financial System as We Propel Your Business to New Heights with Tailor-Made Bookkeeping Services.
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Advantages of Bookkeeping
Bookkeeping is important for all the businesses. It helps the businesses in managing the cash flows effectively, future forecasting, and being well aware of the working of the business. Further, Bookkeeping helps in complying with the legal requirements. Bookkeeping helps in performing various functions and is important for the business in various ways
- Helps in taking proper decisions
- Helps in determining the business assessment
- Proper communication with investors
- Controls the cash flows
- Enforcing proper tax compliance
Functions of Bookkeeping
Bookkeeping is the process of recording daily transactions in a persistent. Bookkeeping is essential to structure a financially successful business. Bookkeeping consist of:
- Recording financial transactions
- Producing Invoices
- Recording Debit and Credit entry
- Balancing subdivision and ledger accounts
- Completing remunerations.
Role of Bookkeeper
- Accounts payable and receivable,
- Payroll,
- Daily financial entries and
- Account reconciliation.
The Bookkeeper perform daily accounting activities like:
- Financial reporting,
- Maintaining Ledger entries, Record payments, and reconciliation.
- Recording of income and expenditure transactions and updating them to various accounts.
- Clearing payments.
- Managing daily banking activities.
- Preparing various financial reports.
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Accounting & Bookkeeping – FAQs
What is accounting?
Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business. It helps in tracking income, expenses, assets, and liabilities to understand the financial health of an organization.
What is bookkeeping?
Bookkeeping is the day-to-day process of recording financial transactions in an organized manner. It is the foundation of accounting and includes tasks like recording sales, purchases, receipts, and payments.
What is the difference between accounting and bookkeeping?
Bookkeeping is the recording part, while accounting includes analysis, interpretation, and financial reporting. Bookkeepers maintain records; accountants use those records to prepare statements and make financial decisions.
Why is bookkeeping important for a business?
Proper bookkeeping:
- Keeps accurate financial records
- Helps in tax filings
- Tracks cash flow
- Supports business decisions
- Provides legal compliance
- Helps in detecting errors or fraud
What are the different types of bookkeeping systems?
There are two main types:
- Single-entry system – suitable for small businesses, records one side of transactions
- Double-entry system – standard method, records both debit and credit for every transaction
What are the key financial statements in accounting?
- Profit & Loss Statement (P&L): Shows income and expenses
- Balance Sheet: Shows assets, liabilities, and equity
- Cash Flow Statement: Tracks cash movement in and out of business
Who should maintain books of accounts?
All businesses, especially proprietorships, partnerships, LLPs, and companies, must maintain proper books of accounts as per the Income Tax Act and Companies Act, especially if turnover crosses threshold limits.
Is bookkeeping mandatory in India?
Yes, as per Section 44AA of the Income Tax Act, certain professionals and businesses must maintain books of accounts. For companies and LLPs, it’s mandatory under the Companies Act and LLP Act.
What are the tools/software used for accounting?
Commonly used accounting software includes:
- Tally
- Zoho Books
- QuickBooks
- Busy Accounting
- Marg ERP
- Xero (for global businesses)
Can accounting be outsourced?
Yes, many businesses outsource bookkeeping and accounting services to professionals or agencies for cost-saving, accuracy, and compliance. It allows them to focus on core business activities.
What is the role of a bookkeeper?
A bookkeeper’s duties include:
- Recording transactions
- Managing ledgers
- Reconciling bank statements
- Creating basic financial reports
- Assisting in audits and tax preparation
What is the role of an accountant?
An accountant performs:
- Financial analysis
- Budgeting and forecasting
- Tax planning and return filing
- Preparing financial statements
- Advising on financial decisions
- Ensuring compliance with laws
How often should bookkeeping be done?
Bookkeeping should ideally be done daily or weekly, depending on the volume of transactions. Regular updating helps in accurate reporting and financial decision-making.
What is cash accounting vs accrual accounting?
- Cash accounting records income/expenses when cash is received or paid.
- Accrual accounting records income when earned and expenses when incurred, regardless of payment status. Accrual is more accurate and standard for companies.
What happens if a business does not maintain proper accounts?
Failure to maintain proper accounts can result in:
- Penalties and fines from tax authorities
- Inaccurate financial decisions
- Problems during audit or loan application
- Legal issues in case of disputes or scrutiny
What is GST reconciliation in accounting?
GST reconciliation involves matching the GST filed in returns (GSTR-2A/2B) with your purchase and sales records. It helps ensure correct input tax credit claims and prevents GST notices.
Do I need a professional accountant for a small business?
While small businesses can start with basic bookkeeping, hiring a professional accountant is recommended for accurate tax filing, financial reporting, legal compliance, and business planning.
What is depreciation in accounting?
Depreciation is the reduction in value of assets over time due to wear and tear or obsolescence. It is recorded as an expense in the books and affects profit and tax calculation.
What is the importance of bank reconciliation?
Bank reconciliation ensures that the business’s books match with the bank statement. It helps in identifying discrepancies, avoiding fraud, and maintaining accurate financial records.
How long should business records be kept?
As per Indian tax laws, books of accounts and supporting documents must be preserved for at least 6 years from the end of the relevant financial year.