Should I Do Monthly Bookkeeping for My Small Business?
As a small business owner, there are many things you may need to manage, including your customers, orders, staff and chasing payments. So keeping track of your finances may not be the first thing on your mind.
Many small business owners think they only need to worry about bookkeeping when they come to do their GST returns or annual financial statements.
However, you should still complete Monthly Bookkeeping.
Why?
Regardless of whether you own a small retail store, start-up, consultancy, service-based business or family-run business, keeping your accounts up to date will help you understand where your money is going.
Let’s look at some reasons why you need to complete Monthly Bookkeeping and when you should consider using our professional Accounting And Bookkeeping Services.
1. Why Should I Complete Monthly Bookkeeping for My Small Business?
Even if your business has low volumes of transactions, you should still keep accurate books. For example, if you have 10–20 transactions per month, you should keep track.
This can include if your customers aren’t paying on time, your suppliers are sending invoices and you’re making regular payments from your bank account. Without keeping track of this accurately, it can be hard to know exactly how much money you’ve made.
Having Monthly Bookkeeping will help you:
Know what income you have had and expenses you’ve incurred.
Track any money owed by your customers.
Keep track of money paid to your suppliers and purchases.
Understand your profit and losses each month.
Have organised financial documents.
Prepare for GST and income tax.
The main reason you should complete Monthly Bookkeeping is you won’t have to spend days at the end of the year trying to get your books in order.
2. What Will Happen If I Don’t Keep My Accounts Up to Date?
Although it seems harmless to put off your bookkeeping, small errors can cause bigger issues for your finances.
Below is a list of common issues small business owners face.
| Issue | Description |
|---|---|
| Not keeping track of your expenses | May not know how much you can claim as a business expense. |
| Not keeping track of your sales | Your financial reports may not be accurate. |
| Not keeping track of payments | Can lead to an increase in money owed by your customers. |
| Not reconciling your bank statements | Can cause errors and unexpected differences. |
| Not keeping your GST in order | Can make it harder to prepare your returns. |
| Not having monthly reports | May make decisions without knowing how profitable your business really is. |
For example, your business may have sales of ₹3 lakh per month, but after paying rent, salaries, payments to your suppliers, marketing and other expenses, your profit may be far less than you expect.
Without keeping your books up to date, you may think you’re making more profit than you are.
3. What Should I Include in My Monthly Bookkeeping?
Monthly Bookkeeping doesn’t have to be complicated as long as you are doing it consistently and keeping track of all your financial transactions.
Below is a list of what should be included in your small business bookkeeping.
| Activity | Reason |
|---|---|
| Sales | Keep track of your income each month. |
| Purchases | Keep track of your suppliers and purchases. |
| Expenses | Know where your money is going. |
| Bank Reconciliation | Match your bank statements to your accounts. |
| Accounts Receivable | Keep track of money owed by your customers. |
| Accounts Payable | Keep track of money you owe. |
| Payroll | Keep track of your staff salaries. |
| GST | Keep track of your GST for accurate reconciliation and returns. |
| Reports | Know your income, expenses and profitability each month. |
Pro Tip: Don’t leave until the end of the month to get all your invoices. Try to upload your bills, payments and bank statements regularly to make life easier.
4. Should I Complete Monthly Bookkeeping?
Some business owners prefer to keep their accounts up to date once or twice a year. Whilst this may seem like a good idea, it can cause unnecessary stress when it comes to your tax and financial reporting.
Below lists the differences between monthly and Annual Bookkeeping.
| Monthly Bookkeeping | Annual Bookkeeping |
|---|---|
| Keeping track of your finances | Delayed updates |
| Easier to track expenses | Hard to remember older expenses |
| Know what your cashflow is like | Limited knowledge on your cashflow |
| Faster to prepare your financials | Takes longer to prepare at the end of the year |
| Can spot errors quicker | May not notice any errors |
| Better planning for your business | May make decisions based on old information |
By completing Monthly Bookkeeping, you’ll have a better insight into your business finances.
This can be particularly useful for growing businesses as you’ll have more information to help plan your investments, staff and expansion.
5. Should I Outsource My Bookkeeping?
As a small business, it may not be practical to hire an in-house accountant. You may not have many transactions, a small team and a set budget per month.
This is where outsourcing your Accounting And Bookkeeping Services can help.
This means you can utilise the expertise of accountants to complete your regular bookkeeping tasks.
Benefits include:
Cost savings – No cost of having a full accounting department.
Professional support – Help with keeping track, reconciling and preparing your financials.
More organised – Invoices, bills and financials will be well kept.
More time – You can focus on your customers, sales and growing your business.
Improved compliance – Your financial information will be well organised for your applicable taxes and statutory requirements.
We can help you manage your accounting and bookkeeping requirements. Whether you are a start-up, small business or established company, having your finances well organised can help you manage your business more easily.
6. What Are the Latest Bookkeeping Practices for Small Businesses in 2027?
Bookkeeping is becoming more digital. Many businesses now use digital systems to make sure their financial records are quick and organised.
Some practices to consider include:
Digital invoicing – Store your sales invoices, purchase bills and expense receipts digitally.
Using cloud accounting – Use appropriate accounting software to keep your financial information.
Bank reconciliation – Reconcile your accounts each month.
GST reconciliation – Reconcile your sales, purchase and applicable GST with the relevant GST portal.
Payment reminders – Use your accounting software to remind you of any overdue payments from your customers.
Monthly reviews – Review your profit and loss, money owed and expenses to help with your planning for the next month.
This will help your small business have a more reliable accounting process.
7. FAQs
Q1. Do I Have to Do Monthly Bookkeeping?
Whilst it may not be a legal requirement for all Small Businesses, it is important to keep accurate books under the applicable tax and business laws in India. Your requirements will depend on your business type, turnover and applicable regulations.
Q2. Can I Do My Own Bookkeeping?
Yes. If you don’t have many transactions, you can use accounting software. However, professional support can help you keep track of your accounts, reconcile and meet your compliance requirements.
Q3. How Long Will Monthly Bookkeeping Take?
This will depend on how many transactions, invoices, staff members and activities you have. If you have a small business with organised records, it may not take too long.
Q4. What Documents Should I Keep?
Sales invoices, purchase bills, bank statements, expense receipts, payroll, payment details and relevant GST documents.
Q5. When Should I Outsource?
If you’re struggling to keep your records up to date, increasing transactions, having issues reconciling or spending too much time on your accounts.
Q6. Do Start-ups Need Professional Accounting And Bookkeeping Services?
Yes. Having your finances well organised from the start will help you keep track of your expenses, cashflow, profitability and help you plan for the future.
Final Thoughts: Small Businesses, Big Responsibilities!
No matter how small your business is, you should still keep your finances in check. Even a small amount of transactions per month can affect your cashflow, profitability and tax.
By having Monthly Bookkeeping, you’ll understand how your business is performing. This will help spot any financial issues early and make better decisions.
If you’re finding it difficult to manage your invoices, expenses, bank reconciliations and reports, our professional support can help make things easier.
We can help you keep your finances organised using our reliable Accounting And Bookkeeping Services. Choose the right accounting support to give you more time to focus on growing your business.
Are you looking to get your business accounts organised? Get in touch with us at ChennaiAccounts to get Monthly Bookkeeping done regularly.