Business Accounting Basics for Indian Entrepreneurs

I see books of 100+ businesses yearly. Clean accounting saves 50,000 per year in tax and compliance costs on average.

Understanding basic accounting is essential for every business owner. Clean books lead to accurate tax filing, better decision-making, and audit readiness.

The Three Financial Statements

• Profit & Loss Statement: Revenue - Expenses = Profit/Loss over a period
• Balance Sheet: Assets = Liabilities + Owner's Equity (snapshot)
• Cash Flow Statement: Tracks actual cash movement in/out of business

Basic Bookkeeping Rules

• Record every transaction — even small cash expenses
• Keep receipts for all purchases above ₹500
• Reconcile bank statements monthly
• Separate personal and business bank accounts
• Use accounting software (Tally, Zoho Books, or even a simple spreadsheet)

If your turnover exceeds ₹25 lakh (professionals) or ₹1 crore (business), maintaining books of accounts is mandatory under Section 44AA.