Setting Up Your Accounting

Overview

Companies must keep books of account on an accrual basis and under double-entry bookkeeping at the registered office (or another place the board decides, with notice to the Registrar), and preserve them for the period set in section 128 of the Companies Act. LLPs have similar obligations under the LLP Act. Good accounting from day one makes tax returns, audits, investor due diligence and loans far easier.

Who this is for

Newly incorporated companies and LLPs
Founders doing their own books in the first year
Businesses moving from spreadsheets to software

Step by step

Choose accounting softwarePick software that supports GST invoicing, bank feeds and an audit trail. Companies must use software with an audit-trail (edit log) feature under the accounts rules.
Design the chart of accountsKeep it simple and aligned to the Schedule III format your financial statements will follow.
Set up master dataCustomers, vendors, items or services with HSN/SAC codes, tax rates and bank accounts.
Record opening balancesCapital introduced, pre-incorporation expenses and any loans from founders.
Appoint the statutory auditorCompanies appoint the first auditor within the period set by the Companies Act.

Documents you will need

Certificate of incorporation, PAN, GSTIN
Bank statements from the first day
Invoices and bills
Founders’ loan and capital records

The process

There is no filing to "set up" accounts, but the records you keep become the basis of the audit, the financial statements filed with the Registrar and the income-tax return.

Authorities involved

Ministry of Corporate Affairs: Sets books-of-account and audit-trail requirements for companies.

Common mistakes

Using software without an audit trail.
Not recording founders’ personal payments for company expenses.
Leaving bank reconciliation until year-end.

Checklist

Choose accounting software with an audit trail
Set up the chart of accounts
Create customer, vendor and item masters with tax codes
Record opening balances and founder contributions
Appoint the statutory auditor

Ticks are saved in this browser only. See your full checklist.

Frequently asked questions

Can I keep books in a spreadsheet?

Spreadsheets are risky for companies because the accounts rules expect software with an audit trail. Small proprietorships can, but software saves time at tax-filing season.

Official sources

MCA portal — company and LLP forms and services — Ministry of Corporate Affairs
India Code — official text of Central and State Acts — Legislative Department, Government of India

GST Accounting & Monthly Compliance — from ₹1,651 (incl. GST) + Govt. Fees, if applicable
Virtual CFO Services — from ₹11,681 (incl. GST) + Govt. Fees, if applicable

Tools: Business cost calculator