As you may know, it is essential for businesses to maintain records of their financial transactions, no matter how small. The reason behind this is that the Registrar of Companies demand a strict record of income tax payments at the end of the year. Without maintaining your accounts, this is rather difficult to do, and you may, in fact, end up paying more tax than you should. Even apart from this, though, all businesses should be interested in their books of accounts, as it is crucial while planning expenses and keeping a tab on how the business is shaping up.
The answer would be simple: misplaced bills and confusing records. This may result in frustrations at the end of the year while you do your tax calculations or even while splitting up profits. Regular maintenance of records is essential, and only a person dedicated to it, like an accountant, can do the needful in this instance.
If you’re not an accountant, it’s unlikely that you will be able to have your balance sheet tally at the end of the year. The reason behind this would be misclassification of expenses and assets and liabilities. One needs to ensure that all aspects of the business are correctly classified so that there is no confusion in future. This is the job of an experienced accountant, even though there is software today to do much of the work.
No, it is mandatory to maintain books even if you are incurring losses. Any financial transactions made for the business, such as purchase of goods, selling and so on, needs to be updated and submitted at the end of the year for filing income tax.
Yes, even if your Tax liability is lower than what you would pay under the PTS scheme, books are required as a proof to show at the end of the year. Book maintenance, can, thus, be not avoided under any circumstances.
Accounting, a process of storing, sorting and recording financial transactions, is required to be submitted by all businesses at the time of filing their tax returns. Since one cannot go about sorting accounts and dealing with financial matters at the time of filing their returns, it is better to go with the bookkeeping from the beginning, and keep everything in order. Also, apart from the income tax perspective, keeping the books updated can give a good impression to the investors and shareholders. Similarly, the Companies Act, 2013 and the LLP Act, 2008 decrees that the books of all accounts need to be maintained for any company or a partnership business.
The law demands that the account books should include the daily financial transactions, and bills of the financial transactions made. The account books generally include ledgers, trial balance, original and copies of bills and so on. Now, however, with the online accounting, things have become much streamlined and easier to maintain.
Startups often look for loopholes to save money, but accounts is not the area to do it in. After all, it’s what your investors will want to have a look at every now and then. Therefore, maintaining the books irregularly is not an option. You need to either buy expert software or outsource your account maintenance and bookkeeping to a professional channel, to ensure your accounting is maintained as per the guidelines provided.
Yes, one can submit computerised accounts, too. Now, it is easier to maintain records and all details of financial transactions on designated software or through computerized records, to eliminate any errors and miscalculations.
It is your personal choice whether to appoint an expert on your payroll to work on your accounts or engage an agent to do the needful. There is an advantage in taking the opinion of an expert, such as an agent who can maintain the accounting records as demanded by the income tax, and thus, save you a lot of man hours and hassles of dealing with daily bills and transactions.