Maintaining Company Accounts

Maintaining of company Book of Accounts is mandatory for all types of companies under the Companies Act, 2013. Private Limited Company, One Person Company and Limited Company including Small Companies are required to maintain proper book of accounts. Further, the Books of Accounts of a Company is the basis on which financial statements of a Company are prepared for company annual return filing. Therefore, maintenance of proper company account is both mandatory and necessary. In this article, we look at the procedure for maintaining company account of book of accounts.

Company Book of Accounts

A company accounts or company book of accounts is includes the books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form pertaining to the transactions of the Company.

According to the Companies Act, 2013, a Company's Book of Accounts are considered to be maintained properly if it satisfies the following two conditions:

Books which are necessary to give a true and fair view of the state of affairs of the company is kept along with the documents required to explain the transactions.
Books are kept on accrual basis and according to the double entry system of accounting.

Maintaining Company Accounts

The Company Accounts can be maintained in document format or as an electronic document. With advancements in technology, it is recommended that the accounts be maintained in electronic format through accounting softwares like Tally or QuickBooks.

Both of the above accounting softwares maintain company accounts in accrual basis and on double entry system of accounting, thereby complying with the rules of the Companies Act, 2013. Further, accounting softwares like QuickBooks are very easy to use and intuitive. Therefore, company accounts can be maintained properly with little or no prior accounting knowledge or experience.

Preserving Company Accounts

The Companies Act, 2013 casts an obligation upon a company to preserve in good condition the book of accounts together with relevant vouchers to any entry for upto 8 years. Newly incorporated companies are required to maintain accounts and vouchers for upto 8 years from date of incorporation. In case any other regulation requires books to be maintained for a longer period, then the company would be obliged to maintain books for a longer period.

Penalty for NOT Maintaining Company Accounts

The Managing Director, the Whole-Time Director, in charge of finance, Chief Financial Officer or any other person of a company nominated by the Board of Directors is responsible for ensuring that the book of accounts of the company is maintained properly.

In case, the Company does not maintain proper Book of Accounts, imprisonment or penalty of upto Rs.5 lakh can be levied under the Act. Therefore, it is vital to maintain the books of accounts of a company properly with professional help.

Visit IndiaFilings for services relating to company accounts maintenance or company annual filing.

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Frequently Asked Questions

Common questions about Maintaining Company Accounts Under Companies Act 2013.

According to the Companies Act, 2013, all types of companies, including Private Limited Companies, One Person Companies, and Limited Companies, including Small Companies, are required to maintain proper books of accounts.

Maintaining proper books of accounts is both mandatory under the Companies Act, 2013 and necessary because the financial statements of a company, which are required for annual return filing, are prepared based on these accounts.

A company's books of accounts are considered properly maintained if they give a true and fair view of the company's state of affairs, including all necessary documents to explain transactions, and are kept on an accrual basis following the double-entry system of accounting.

Companies can maintain their accounts in document format or as electronic documents. With advancements in technology, it is recommended to use accounting software like Tally or QuickBooks, which maintain accounts on an accrual basis and follow the double-entry system, complying with the Companies Act, 2013.

The Companies Act, 2013 requires companies to preserve their books of accounts, along with relevant vouchers, in good condition for up to 8 years from the date of incorporation. If any other regulation requires a longer period, the company must comply with that.

The Managing Director, Whole-Time Director in charge of finance, Chief Financial Officer, or any other person nominated by the Board of Directors is responsible for ensuring that the company's books of accounts are properly maintained.

If a company fails to maintain proper books of accounts, the responsible person (as mentioned in the previous question) can face imprisonment or a penalty of up to Rs. 5 lakh under the Companies Act, 2013.

Yes, with the use of intuitive accounting software like QuickBooks, a company can maintain its accounts properly with little or no prior accounting knowledge or experience.

No, the Companies Act, 2013 does not mandate maintaining accounts electronically. However, it is recommended to use accounting software for better efficiency and compliance.

Yes, a company can seek professional help from services like IndiaFilings for maintaining its accounts and ensuring compliance with the Companies Act, 2013, and other regulations.