The Accounting & Bookkeeping Requirements for Start-up Companies in UAE
For an established company in UAE, the risk of failure and tight margins may not be a matter for worry. But for a start- up, sustainability, better financial management and marketing are vital. The survival for start-ups in Dubai or UAE is very difficult when they compete with the established companies unless they have proper planning and vision and management. Study suggests that some of the major reasons for the failure of start-ups are poor financial management, sustainability problems and marketing issues. If you are up to date with proper Accounting & Bookkeeping, these problems can be solved to a great extent.
In the busy schedule, it may not always be possible to stay up to date with limited knowledge and resources. In this situation, outsourcing is a better option. Since your balance sheet, your bookkeeping and your cash flow forecasts often control your growth strategy, as a beginner, you may be in a dilemma. An established Accounting and Bookkeeping firm like CDA can help you to come out of this chaos.They Provide the best authorized bookkeeping and accounting services in Dubai.
Basics of Bookkeeping
As a business owner, if you are unaware of the basics of the bookkeeping, you will be a failure. The followings are some of the basics of bookkeeping an entrepreneur must keep in mind: -
a. Financial Records or Cash Journal that includes Cash Receipts & and Cash Disbursements
b. Up to date Record of Accounts Payable & Accounts Receivable
c. Physical counts of Inventory. An inventory is a comprehensive list of substances such as goods in stock, property, the contents of a building, etc.
d. Journal Entry
e. Sales Entry & Purchases Entry
f. Loans Payable Record
g. Payroll Management, etc.
New Business Accounting
When you run a business, you must either know or outsource your bookkeeping. Here are some of the steps that a start-up should follow to move forward.
- Opening of Business Bank Account
- Setting up Payroll System
- Determine your getting payment and Tax Obligations
- Accounting Software
- Establishing a bookkeeping system
- Tracking Expenses
- Calculation of Gross Margin, etc.
Financial Records to Maintain
A good record keeping and proper cash flow management can make your business competitive and successful. The following financial records are to be maintained periodically once you start a new venture.
- Cash Receipt Book
- Sales & Purchase Book
- File for Debtors and Creditors
- Sales Invoices & Payroll
Keeping up the proper records must be at the forefront when you run the business, otherwise you will be in great trouble by the end of the year. The payroll management every month can be a nightmare for you if you do it manually, as it is time consuming and the features may not be up to date. A comprehensive accounting solution can make this mammoth task less hard as it can save you several hours when payslips, gratuity calculations and other statements become automated. A bookkeeping checklist includes the following details:
- Record for customer payments and billing
- Record for Vendor bills and payments
- Payroll file updation
- Cash flow forecast review
- Invoice maintaining
- Record for VAT/Tax Returns
- Analyses of inventory
- Analyses of Financial Reports, etc.
Weekly and monthly Bookkeeping Tasks
A better accounting solution can make your procurements easier as it can bring all your bills, receipts, purchase orders and other payments under one roof. It makes your auditing or tax filing easier.
Weekly and Monthly bookkeeping tasks include the following: -
Checking the cash position
Documentation and Filing of Receipts
Filing for every Transaction like customer billing, cash receipts, payments etc.
Appraisal for unpaid bills
Appraisal for projected cash flow
Maintenance of invoices, etc.
Since VAT is introduced in the UAE from 1 January 2018 onwards, all VAT registered companies should maintain a precise and up-to-date accounts for every transaction. You may be asked by the authority at any time to submit any document like VAT ledger, general ledger, credit notes, debit notes, and invoices, etc. Since most of the start-ups do not have experienced and dedicated experts to manage all these tasks, it can be highly cost ineffective, time consuming and a nightmare to manage these areas by yourself.
A Financial Statement shows the inflows, outflows and the present condition of a company’s money. It includes:
a) The balance sheet or the statement of the financial condition
b) The Income Statement or Profit and Loss Statement (P&L Statement)
c) The Cash Flow Statement that shows the cash inflows, cash outflows of a company
d) Net Profit Margin Report
A reputed accounting firm can focus on the accounting tasks and make you free when you focus on the core areas. They ensure that your accounts are fully compliant. They also save your time by preparing your tax filing and payroll. Given below are the common accounting methods adopted by the experts.
a) Accrual Method – In this method the income is recorded when it is earned, and the expense is recorded when it is incurred.
b) Cash Basis Method – Here, income is recorded when it is received and expenses are recorded when it is paid.
c) Hybrid Method – it is the combination of income methods and accrual methods.
So, for a start-up, outsourcing the Bookkeeping is better as it is cost-saving, time-saving, and concern saving. It helps you reduce your expenses on software subscriptions, training, computer hardware, office supplies, salary, and many other things. An inhouse accounting error can cost you much more than that of an outsourced one. Such kinds of mistakes can bring loss of reputation and attract fines. An expert bookkeeping firm like CDA can avoid negative consequences of an error in the accounting.
Your needs grow when your company grows and you need more services to comply with the laws of the land. CDA is a dedicated Accounting & Bookkeeping Service Firm with more resources to meet your needs. We can provide you with better support and guidance on procurement, cash flow management, marketing, risk management and many other tasks you need to fulfill while galloping.
Dubai and UAE are gold mines for a start-up because of the super friendly ecosystem. It is quite easy to start a business here as there is not much so-called red tape system or bureaucracy blocking your path. To build up a business, focus on revenue, marketing and be a customer-centric.
CDA Dubai has an optimized and effective digital marketing tool that can bring you more revenue and make sure that the right client knows about you.
Other than the Accounting & Bookkeeping Services, CDA offers a wide range of Business Services in Dubai and UAE, like VAT Consultancy Services, CFO Services, Due diligence services and many more related to your business.
If you have any queries, feel free to contact us. Our experts are at the receiving end to attend your call and answer to your queries. CDA offers one-hour free consultation.