Maintaining Book of Accounts for Company - Companies Act

All companies incorporated in India are required to mandatorily maintain Book of Accounts under the Companies Act, 2013. Compliance with this act is essential for companies maintaining good governance and transparency in financial matters. In this article, we explore the requirements for maintaining a Book of Accounts as per the Companies Act, 2013.

Books of Accounts

Books of Accounts include records maintained in respect of:

Sum of money received and expended, and matters in relation to which the receipt and expenditure take place
Sales and purchase of goods and services
Assets and liabilities
Item of cost as prescribed under section 148 [2(12)]

"Books and Paper" include books of account, deeds, vouchers, writings, documents, minutes, and registers maintained either on paper or in electronic form.

Place for Maintaining Book of Accounts of Company

The Book of Accounts must be maintained at the registered office of the company. However, after providing intimation to the Registrar of Companies, the Board of Directors may decide to keep or maintain Books of Accounts at any other location suitable to the business. For more information on setting up a virtual office address, explore the available options.

Maintaining Book of Accounts of Company - Online

A company can maintain its Books of Accounts online or in an electronic form, subject to the following conditions:

The electronic records must be accessible in India.
Information should retain the format in which it is generated and remain complete and unaltered.
Information provided by branches should not be altered.
Electronic records should be capable of being displayed in a legible form.
Backup must be kept on a server located in India.
The company should intimate the Registrar of Companies on an annual basis with relevant information related to the service provider.

Maintaining Records of Branch Office

If a company has more than one office, the main Book of Accounts must be maintained at the registered office. Additionally, records of transactions effected at a branch should be kept at the branch office itself. A regular summary report must be sent to the registered office and should be open to inspection by the Directors.

Inspection of Book of Accounts

The Board of Directors of the company have the right to inspect the Book of Accounts and other books and papers of the company. However, in the case of inspection of records of a subsidiary company, it can be conducted only by a person authorized by the Board of Directors.

Time Limit for Maintaining Book of Accounts

Books of Accounts of a company must be maintained and preserved for at least 8 years immediately preceding a financial year. The following individuals in a company are responsible for maintaining the Book of Accounts:

Managing Director
Whole Time Director, in charge of Finance
Chief Financial Officer
Any other person charged by the Board of Directors

Failure to maintain the Books of Accounts as per the detailed provisions can attract a penalty of up to Rs.5 lakhs or imprisonment for up to 1 year.

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Frequently Asked Questions

Common questions about Maintaining Company Book of Accounts India.

A book of accounts is a record of all financial transactions, including money received and expended, sales and purchases, assets and liabilities, and cost items. According to the Companies Act, 2013 and the Income Tax Act, it is mandatory for all companies incorporated in India to maintain books of accounts.

The books of accounts must be maintained at the registered office of the company. However, the Board of Directors can decide to keep the books at another location suitable for the business after intimating the Registrar of Companies.

Yes, a company can maintain its books of accounts online or in electronic form, provided certain conditions are met, such as ensuring the electronic records are accessible in India, retaining the original format, and keeping a backup server in India.

The books of accounts of a company must be maintained and preserved for a period of not less than 8 years immediately preceding a financial year.

The Managing Director, Whole-Time Director in charge of Finance, Chief Financial Officer, or any other person charged by the Board of Directors are responsible for maintaining the books of accounts in a company.

Failure to maintain books of accounts of a company as per the provisions of the Companies Act, 2013 can attract a penalty of up to Rs. 5 lakhs or imprisonment of up to 1 year.

If a company has more than one office, the main books of accounts must be maintained at the registered office. Additionally, records of transactions effected at each branch should be kept at the respective branch offices, and regular summary reports should be sent to the registered office.

The Board of Directors of the company has the right to inspect the books of accounts and other books and papers of the company. In case of a subsidiary company, inspection can be done only by a person authorized by the Board of Directors.

According to the Companies Act, 2013, "books and papers" include books of account, deeds, vouchers, writings, documents, minutes, and registers maintained on paper or in electronic form.

Yes, there are specific conditions for maintaining books of accounts online or in electronic form, such as ensuring the electronic records are accessible in India, retaining the original format, keeping a backup server in India, and intimating the Registrar of Companies annually with relevant information related to the service provider.