Many entrepreneurs are attracted to the UAE due to the expanding economy and business-friendly environment. Yet, amidst the excitement of launching a new venture, accounting and bookkeeping are not given enough importance. There are several challenges startups face, including sustainability and finance. Competition in the market place in Dubai and the UAE requires thorough planning and proper management for a successful startup.
Studies reveal that inadequate management of finances is one of the key reasons for failure among startups. Proper accounting and bookkeeping record-keeping ensures that risks can be minimized. Effective financial management can be a tough process for startups. Delegating such activities to an expert accounting firm, such as ADS Auditors, will bring a host of benefits.
You can free up time and resources for business activities by outsourcing your bookkeeping and accounting responsibilities to experienced experts. ADS Auditors is one of the prominent accounting and bookkeeping service providers in Dubai that helps businesses have a clear understanding of their financial position.
Why Accounting & Bookkeeping Compliance is Crucial for UAE Startups
- Avoids penalties: Non-compliance can lead to fines, damaged reputation, and disruptions.
- Builds trust: Accurate bookkeeping helps build trust with government authorities, financial institutions, and stakeholders.
- Helps with financial decision-making: Timely reports from bookkeeping help with financial decision-making.
- Prepares for audits: Bookkeeping helps prepare companies for audits and safeguard against fraud.
- Maintains cash flow: Accurate bookkeeping helps maintain positive cash flow.
Proper accounting and bookkeeping are decisive for any business. They provide a clear picture of businesses financial health, which is essential for making crucial business decisions. Accurate accounting records also help you comply with UAE tax regulations and avoid any penalties.
Profitability Through Value-Added Services
Businesses can benefit from more than just compliance assistance from accounting and bookkeeping firms. They will also help to enhance profitability by providing tax advisory services that can assist in navigating intricate VAT and corporate tax regulations, helping them optimize tax liabilities and maximize savings.
What Are the Accounting and Bookkeeping Requirements for Startups in the UAE?
The UAE has a number of specific accounting and bookkeeping requirements for businesses. These requirements can vary depending on the size and type of your business, but some of the most common include:
- Maintaining a general ledger
- Tracking your income and expenses
- Preparing financial statements, including the balance sheet, income statement, and other relevant reports
- Maintaining a record of your inventory
- Filing tax returns
Basic Bookkeeping Tasks for Startups
There are a number of basic bookkeeping tasks that all startups should keep in mind. These include:
- Issuing invoices and collecting payments
- Paying bills
- Reconciling your bank statements
- Tracking your payroll
Financial Records to Maintain
In addition to the basic bookkeeping tasks, startups in the UAE are also required to maintain a number of financial records. These include:
- Sales invoices
- Purchase invoices
- Bank statements
- Payroll records
- Inventory records
It’s important to develop a routine for bookkeeping. Weekly and monthly bookkeeping tasks will help you stay on top of your finances and ensure that your records are accurate.
Essential Bookkeeping Checklist For Businesses in Dubai An efficient record-keeping system is essential for any business. Neglecting this can lead to significant issues, particularly at year-end. Manual payroll management is often an error-prone process, consuming valuable time and potentially failing to comply with evolving regulatory requirements. A comprehensive accounting solution can simplify this complex task, requiring considerable time and effort. To maintain accurate records, businesses should keep several key records.
Below are various types of accounting checklists in the UAE that we recommend for smooth operation:
Invoice
- Ensure the invoice type complies with Article 65 of the Federal Decree Law no. (8) of 2017.
- Confirm that invoices are raised in sequential order.
- Cross-check exchange rates against the Central Bank UAE exchange rate.
- Verify accurate VAT treatment as per the business activity.
- Confirm whether sales invoices have been raised as per business activity.
- Confirm whether sales invoices have been issued as per article 25.
Purchases & Expenses
- Check key invoice details: date, invoice number, vendor & customer details, TRN number, and VAT treatment.
- Convert bills in foreign currency to AED using the CB UAE exchange rate.
Bank Reconciliation
- Confirm payment received entries match the bank statement.
- For invoices in foreign currency paid in AED, verify the exchange rate using the remittance slip from the client.
- Record entries for exchange gain or loss due to currency differences.
- Validate payment-made entries against the bank statement.
- For invoices in foreign currency paid in AED, verify the exchange rate using the remittance slip from the client.
- Check entries for bank fees and charges based on bank tax invoices.
Profit & Loss statement and balance sheet –
- Compare P&L and balance sheet of the last 4-5 months.
- Identify any variances in revenue and expenses.
- Analyze exchange gain or loss variations over recent months.
- Scrutinize for any suspicious transactions.
- Cross-verify Accounts Payables and Receivables ledgers.
- Detecting and rectifying duplicate entries.
- Validate output & input VAT ledgers.
- Crosscheck Prepaid Schedule entries for accuracy.
Other accounting entries
- Review depreciation entries (if applicable).
- Validate any amortization (if applicable).
- Check Gratuity Payable entries (if applicable).
Key Advantages of Accounting and Bookkeeping for Businesses in the UAE
There are a number of benefits to setting up a proper accounting and bookkeeping system for startups in the UAE. Strong financial management systems can significantly contribute to business operational efficiency for companies in the UAE. Efficient financial decision-making enables businesses to strategically allocate their resources and respond to market shifts.
Adherence to tax policies in the UAE ensures that the business operates according to the law while minimizing the possibilities of penalties. It protects assets of the company, makes financial integrity, and builds confidence among the stakeholders.
Conclusion
When you run a business, you must either know or outsource your bookkeeping. Setting up a proper accounting and bookkeeping system, you can ensure that your startup is on the right track to success. This blog post should give you good grounding in the accounting and bookkeeping needs of UAE startups. ADS Auditors provides you with accounting, bookkeeping, and tax advisory services to ensure that your business grows. We can guide you through the regulations in the UAE and help ensure your financial operations are efficient and compliant. Contact ADS Auditors for a free consultation.