Overview of Accounting and Bookkeeping Services

Company formation is not an easy task. It needs lots of effort. Even after it is formed, the members have to manage its day to day affairs efficiently. As a company runs a business, it is obvious that it will have some important documents and records. These include books of accounts, financial statements etc. The company has to maintain accounting and bookkeeping properly. Books of accounts are used to record profits and losses of a company. Even in our daily lives, we keep checking on how much money we earn and how much we spend. Books of accounts help us maintain this balance.

What are Accounting and Bookkeeping Services?

All companies have to look after their accounts. Accounts are maintained to see where your money is going. Accountants are people who maintain accounts. They help companies to know how to save and invest money. Without accountants companies would suffer losses. Accountants study the financial transactions of companies. They then advise the company on profits, losses, taxes, debts etc.

Bookkeeping is recording of such accounts, as it is impossible to remember them. Total expenses, costs, income, payments, investments etc. of the company are noted down. This is known as Bookkeeping. In olden days, bookkeeping was done in books. However, now all entries are made on the computer.

Companies can maintain accounts and bookkeeping by themselves. However, this turns out to be hectic. This is because the company has many other things to focus on. Therefore, there are various services which offer this help. They charge money for this service. Therefore, hiring such agencies or services is better than doing all the work yourself.

List of Services Comes under Accounting

Some of the services which comes under the accounting are:

• Bookkeeping services- With accounting, these external services offer help with bookkeeping too. It comprises all necessary financial information stored in one place. It is not possible for anyone to keep in mind each and every transaction. This is where bookkeeping is helpful.
• Money to be paid- A company deals with many people at a time. Therefore, it needs to know how much money it has to pay them. This service helps a company to avoid getting indebted. It also maintains records of payments made to employees.
• Money to be received- At times a company has to get money from its customers. Hence, keeping its records is very important.
• Record Taxation- Accounting services keep track of tax paid and unpaid by the company. It saves companies from paying unnecessary tax too.
• Bank Transactions- These services help companies to know the amount credited and debited from its bank account.

List of Services comes Under Bookkeeping

Some of the bookkeeping services are:

• Invoice- Keeping invoices safely is very important. As they are used as proof of payments. Bookkeeping services mention details of invoices for companies which is helpful.
• Maintain Ledger- Ledger is very helpful for a company. These services make different sections and note down earnings, expenses, payments etc. in it. This is known as a ledger. It helps to know all transactions in one glance. It must be updated from time to time. 
• Credit card transactions- Most of the transactions are made through credit cards nowadays. Therefore, it is very essential to keep track of them. Bookkeeping services record these details.

Type of Bookkeeping Services in India

Mainly there are two types of bookkeeping services which are discussed below:

• Single Entry System

This type of bookkeeping service is generally used by small companies or businesses. This is because they have less transactions and are easy to maintain. This type of service is not so reliable. For eg: if one small company has made 3 transactions with another small company, then each transaction is not recorded. A total of the three will be recorded. Also, each income and expense is not recorded. This does not give accurate information. Therefore, proper results may or may not be obtained. Also, it is hard to find mistakes, errors or fraud.

• Double Entry System

In this type of service two kinds of entries are made. Those are Debits and Credits. For eg. A company purchases something by spending money. The thing purchased will be the debit and money spent will be the credit. Accordingly, entries will be made for each debit and credit. This is how bookkeeping under the double entry system has been done.

Laws that Mandates Accounting and Bookkeeping Services

There are various laws in India which mandates bookkeeping as well as accounting services in India. Some of them are given below:

Section 128 of the Companies Act of 2013

This section talks about maintenance of books of accounts by companies. There are three items to be maintained here:

• Books of accounts, which means records of sale, purchase, expense, earning etc.
• Books and papers, here papers include minutes of meetings held in company.
• Financial statements

Books of accounts have to be kept in the registered office of the company. However, this is not mandatory. Other places to keep the books have to be decided by the members of the company. They have to inform the Registrar of Company (ROC) where the books of accounts are. If any director wants to inspect the books of accounts, he/she can within business hours.

Section 34 of Limited Liability Partnership Act of 2008

A limited liability partnership (LLP) has to maintain books of accounts. They have to keep it in its registered office. These books should be according to the double entry system. The members have to prepare a statement of account and solvency. This should have details of one financial year. It has to be signed by all partners. They have to submit the statement to the ROC, along with fees. If these things are not followed by the LLP, then it has to suffer a penalty.

Section 44A of the Income Tax Act of 1961

This section talks about maintaining books of accounts by some people. The professions of these people are given under this section. These include lawyers, doctors, engineers, architects, film artists etc. If the gross receipts in any condition crosses the limit of more than Rs 1,50,000 in the last three years then keeping books of accounts is mandatory.

Why One Needs Accounting and Bookkeeping Services ?

When we talk of business, it involves many things. They are sales, investments etc. Handling all these things at a time is a very tough job. Therefore, hiring experts to handle accounts and bookkeeping can give some relaxation. Also bookkeeping and accounting require a lot of concentration. They involve minute details in it. So, one mistake while handling them can cause great loss. So, hiring outsourcing services reduces the tensions of maintaining accounts with perfect results.

Advantages of Outsourcing Accounting and Bookkeeping Services

Some of the key advantages of accounting and bookkeeping services are:

• Saves Time and Reduces Work-Lord

Having an external team saves a lot of time for the company. The company already has many things to focus on. So, this helps companies to concentrate on important matters. Forming and managing companies is not an easy task. The members of the company are always under work pressure. So, appointing an external agency to handle accounts lessens the workload of the company.

• Reduces Cost

Company is free to hire employees for accounting. They are called in-house employees. However, this method becomes expensive as the employees have to be given training first .Whereas, service providers should only be paid for the number of hours they work. Hence, outsourcing accounting and bookkeeping is cost-effective.

• Accuracy

The outsourcing accounting and bookkeeping services possess knowledge and experience of accounting. They also use updated methods for their work. This helps the company to have accurate results. Bookkeeping and accounting is one of the most crucial jobs of the company. Therefore, even a slight mistake can lead to the downfall of the company. Hence, it is necessary to hire experienced people who can do this work very carefully and effectively.

• More Focus

Work of accounting and bookkeeping comprises minute details. This requires or we can say needs a lot of attention as well as focus. It becomes difficult to do such work in the company as it is crowded with employees already. Therefore, hiring an independent service helps. India too, provides Outsourcing Bookkeeping and Accounting Services to other nations. They prefer to seek services from India as India has low charges as compared to oyster nations.

Why should Small Businesses Outsource their Accounting and Bookkeeping Services?

Small businesses are suggested to outsource their accounting and bookkeeping services because of the following:

• Small businesses have less number of staff and therefore work- load is more. Hence, such companies should not burden themselves with the work of accounting too, when they have the option of outsourcing.
• Small businesses or small companies already are short of capital. And hence they should not waste money on recruiting and training staff.
• Small companies are not that well developed. Therefore, they have a small space where they carry on their daily activities. Hiring separate employees for accounting will require more space for them to work.

Instead of hiring employees for accounting and wasting time, energy and resources on training them. Small businesses should hire outsource bookkeeping and accounting services and focus more on business expansion. They should utilize their resources and time for growth in the business.

Documents Required for Accounting and Bookkeeping Services

• Company must have some important documents. These documents are required for accounting and bookkeeping. It is very important to update these documents from time to time:
• This is a paramount document. It describes the sale, purchase and other costs etc. incurred by the company in one month. It helps to calculate taxes. It has to be maintained by the company.
• Tax receipts prove that the company has paid the tax. The payment of tax too has to be mentioned in the accounts by the accountants.
• These receipts prove that the company has made payment to its employees. It is important to include them in the accounts regularly.
• Companies obviously from time to time sign contracts. It is very important for the accountants to keep record of such contracts too.
• A ledger is a document with separate sections in it. Whenever a company receives or makes a payment, it is supposed to be mentioned in the ledger. The details of the receipts too have to be mentioned.
• Bank statements are also very essential. They show the details of transactions a company makes from its accounts. They show the amount credited and debited from company accounts.
• It is mandatory for the companies to send these documents regularly to the accountants. If they fail, then it leads to problems.

Process of Hiring Accounting and Bookkeeping Services in India

This process is a crucial task. It has to be done very carefully. This is because appointing wrong accounting services can lead to downfall of business. Below is the procedure of hiring the best service, which must be followed by every company:

• Understand the type of Service- There are many kinds of services provided such as only bookkeeping, only accounting, tax accounting or both etc. The company has to choose what services it wants. And as per its needs it must hire the service.
• Search and Research- After choosing the kind of service according to the needs, search for the best services. Research everything about them. Check reviews and their previous works online. If possible, communicate with their clients to cross-check their work. Only after satisfaction move to the next step.
• Communication- The next step is to interview them. As communication is the best way to ask what you exactly want from them. Face to face communication helps to strengthen relations. It helps the company and the services to understand each -others requirements properly. During this, the costs too must be discussed clearly.
• Agreement- This step is the most important one. Once both agree with each other’s terms and conditions, they must sign an agreement. Fees and the conditions must be clearly mentioned in the agreement.

Fees for Accounting and Bookkeeping Services in India

The fees for such services are not the same all over India. It varies with differences in the services they provide. There are certain factors which affect the cost of the services such as:

• Big companies obviously need more service. Therefore, they have to pay high fees as compared to small companies.
• Only book-keeping services are always cheaper as compared to other services. As services increase, so does the cost.
• Fees of the best or old service providers are generally high.
• Services which are situated in big cities have higher fees than ones in small places.
• If a company wants the best accounting and bookkeeping services, then it should be ready to pay more fees. Paying high fees for seeking the best services can reduce chances of further loss to the company.

How Whizseed helps in maintaining Accounting and Bookkeeping for you?

Reliable accounting and bookkeeping services should provide a comprehensive and accurate overview of the company's financial structure every month. This information is significant for gaining insights into the company's financial health and developing strategies to maintain and improve it.

Whizseed is a company that specializes in offering complete accounting and bookkeeping services. We can help you with everything from providing advice in the initial phase to ensuring that you meet all the necessary requirements and compliances.