How is Bookkeeping Essential for Freelancers in UAE?

Are you a freelancer or solopreneur? Do you need a strategic plan for attaining your financial objectives? No matter the dimensions of your start-up, you can enjoy the benefits of employing a firm that helps to organize your finance. When you’re a solopreneur you’re liable for not so thrilling business operations for instance accounting. For freelancers, there may be always some concerns about getting paid. In most cases, it is difficult to maintain a record of money the client owes, for how long it's pending etc. The importance of bookkeeping for freelancers arises here.  Typically, bookkeeping comprises a spread of services to make sure that each financial transaction is recorded. Bookkeeping services can include sales, invoices, purchases, payroll, payments, earnings, and more. 

If you would like to make a successful business within the future, then financial tracking and planning may be a critical part of your long-term success. Failing to stay up with the numbers is one among the most important mistakes that you simply can make as a freelancer. Common mistakes are delaying book-keeping monthly, skipping tax payments, ignoring income issues, manual calculations that are susceptible to human errors. Hiring an outsourced accountant to handle your finances adds an additional advantage to your business to eradicate the mistakes. 

The five common bookkeeping mistakes freelancers make include:

1. Linking personal and business expenses
2. Lack of proper receipts storage
3. Recording transfers as income
4. Failing to possess an accounting software
5. Working without a budget

Why is Bookkeeping Essential for Your Business?

Freelance bookkeeping in UAE helps to ensure financial objectives, accurate record-keeping, profitability and maintaining tax compliance. The primary reasons to urge your accounts with proper bookkeeping are:

1. Tax compliance - Avoiding tax penalties may be a good reason in itself to urge on top of your accounting, this may appear to be a bitter pill to swallow for lower-income freelancers, however, employing a solopreneur that's under-reporting their income puts the employing company in danger of colluding with freelancers evading their tax obligations.
2. Under UAE VAT Law, every taxable entity must keep complete and accurate records of all goods and services supplied, imported or exported. All purchases, credit notes, adjustments also as taxation payable and recoverable got to be documented and these records got to be kept for five years.
3. Failure to stay or maintain proper tax records may result in hefty fines - AED 10,000 for the primary offence and AED 50,000 for every successive instance. This is often a scenario that the majority of business owners would like to avoid.

Tips for Freelancers in Bookkeeping

• Start doing it directly, as soon as you begin freelancing. Don't put this off as you'll find it difficult to recollect it at a later date
• Seek advice with a certified bookkeeper. Ask them which software they use for accounting. It makes it much easier if you use online/cloud-based accounting software. So that you can share data efficiently and securely, from anywhere
• You must set a time to reconcile your books a day or week. If you do not do that, it is often challenging to catch up. Nevertheless, if this is often just impossible, consider employing the services of an appropriate bookkeeper
• Keep records of key areas in your business: key elements of your business that you simply should include, your hours spent working for every client, your business expenses, all payments you create including bank transfers and each payment you receive from clients. Modern accounting software uses this information to form accurate invoices, produce income reports, and identify your best clients and worst
• Offset your expenses against VAT returns
• Get paid faster: one of the benefits of updated accounts is getting paid more quickly. Collecting payment is an actual issue for several freelancers, but bookkeeping can help them to receive timely payment
• Keep money aside for your bill: unlike a daily employee, your tax isn't getting to deduct from your pay, keep the cash aside and record it while doing your bookkeeping

CDA Bookkeeping Services in UAE

Employing a professional firm within the UAE can assist in avoiding these pitfalls and keep your business on the proper track to profitability and compliance. CDA is a UAE based firm providing high-quality financial services, enabling its clients to realize a transparent, strategic and competitive advantage, whilst also adhering to professional business ethics. A variety of expert services within the fields of accounting, auditing, and management consultancy can help take your business to the subsequent level of wealth management. 

Also read, How Bookkeeping in UAE Helps a Company in Times of COVID-19?

CDA provides comprehensive accounting, advisory, and consultancy services tailored to serve freelancing financial needs and may bring financial expertise to your business. Our services include Accounting, Bookkeeping, VAT Consultancy, CFO Services, Management Accounting, Auditing Services. For any queries and concerns related to financial aspects, please feel good to contact us. Our expert will offer you a one-hour free consultation.