1. Maintain Separate Business and Personal Finances

• Open a dedicated current bank account for business transactions
  
• Avoid mixing personal and business expenses to ensure clear financial tracking
  
• Use a separate credit or debit card exclusively for business purchases
  
• Keep business receipts and invoices distinct from personal documents
  
• This separation simplifies bookkeeping and audit preparation
  

2. Track Income and Expenses Accurately

• Record all sources of business income, including cash and online payments
  
• Maintain an expense log to track purchases, rent, utilities, and other costs
  
• Categorize expenses (e.g., office supplies, travel, advertising) for clarity
  
• Keep invoices, receipts, and bills as evidence for every transaction
  
• Use accounting software or spreadsheets for consistent data entry
  

3. Use Basic Accounting Tools or Software

• Choose accounting tools suitable for small businesses, such as Tally, QuickBooks, or Excel
  
• Set up categories for income, expenses, assets, and liabilities
  
• Automate recurring entries (like rent or salaries) to avoid errors
  
• Generate profit and loss statements monthly or quarterly
  
• Monitor business performance and cash flow regularly using reports
  

4. Keep Records of Assets, Debts, and Inventory

• Document all business-owned equipment, furniture, and tools
  
• Maintain an inventory list for products if selling goods
  
• Record any business loans or advances, along with repayment schedules
  
• Track asset depreciation and equipment lifespan for better planning
  
• This helps in calculating net income and business valuation
  

5. Preserve Financial Documents for Compliance

• Retain all financial documents for a minimum of 6 years (or as required)
  
• Store both physical and digital copies of important records
  
• Ensure all GST, license, and bank records match the financial data
  
• Use organized folders or digital storage for easy access during audits
  
• Proper documentation supports regulatory compliance and financial clarity