Accounting Services

The UAE has its own set of GAAP accounting principles. The International Federation of Accountants (IFAC) is in charge of maintaining these standards. The GAAP principles apply to all the UAE government entities and state-owned companies.

The accounting standards of the UAE are based on the following principles:

Income is recognised when it is realised or realisable. Expenses are recognised when they are incurred. Revenue is recognised when it is earned.

You should measure assets and liabilities at fair value, except for financial instruments and leases. These are measured at amortised cost using the effective interest rates.

Running your own business in Dubai is a fun challenge. However, it can also be a struggle when it comes to accounting and bookkeeping. Here are five policies you need to follow:

Under the UAE Federal Law, you should keep your financial records and statements. You must ensure those records are intact for at least five years. The Ministry of Finance recommends keeping records for ten years to prove tax compliance.

Transactions of up to AED 1,000 need evidence supported by a receipt. Receipts must be in the name of the business. They must include the date of issue, signature of the person issuing the receipt, and recipient.

You must also indicate the amount and nature of the transaction. The details are essential for proof of transactions. They also improve accounting accuracy.

All bank transactions need the support of a bank statement. The statement must include the date of the transaction and the name and address of the business receiving the funds. You also need to include the amount and nature of the transaction.

Companies can keep an electronic record of the statements. Keeping these records helps in accurately preparing an annual budget and profit and loss accounts.

Businesses operating in UAE must comply with Value Added Tax (VAT) regime, effected on January 1st 2018. The new tax applies to all companies in UAE, whether your services are local or outside UAE.

Businesses are required to register for VAT if they meet the eligibility criteria. Taxes in Dubai can be a complex matter. As such, your business should adopt a VAT Return Policy that makes sense. It should be in line with industry best practices.

Other supporting documents include invoices, credit notes and contracts. Also, include bank statements for businesses that are not registered for VAT.

The above documents should be in their original form. Copies of the documents are not acceptable.

Many small businesses attempt to do their books. This is common when a firm doesn’t want to spend money on accounting firms. Business owners also think they can keep things more “in-house.”

However, this often leads to a lot of stress and time wasted. Accounting is complex and a full-time job in itself. If you are running a business, you likely already have enough on your plate.

Instead of doing everything by yourself, consider the following options:

This involves getting an in-house permanent accounting employee. Depending on your company’s size, you can hire one or a team of accountants. The hiring process involves posting the job offer on your website or job websites.

You interview several candidates until you find the perfect fit. Some of the qualifications you should look for include experience in reconciliation, monitoring/recording accounts payables and accounts receivables transactions, basic bookkeeping and financial reporting. If you are lucky to find a reliable accounting staff member, they can handle all accounting operations. Alternatively, you can use outsourced accounting services in the UAE.

Accounting outsourcing is the transfer of accounting functions to third party accounting firms. This includes services like bookkeeping, tax preparation and financial statement preparation. You can outsource these services to an independent professional firm that specialises in that particular industry.

Outsourced accounting services take over the day-to-day tasks of your accounting department. You can choose to outsource all accounting operations or some hectic ones. Here are some of the most popular outsourced accounting services:

Payroll is one of the top reasons why companies outsource their accounting. Payroll is complex and requires specialised knowledge and expertise.

This is the department that pays your bills. The person who handles accounts payable must be very detail-oriented and knowledgeable about tax laws.

This department is responsible for collecting money from your customers. If your business offers its services and products on credit, you need agile management of these records. Poor management of accounts receivable can run your business into bankruptcy.

Bookkeeping is the process of recording your financial transactions. This can be done manually or electronically. When dealing with virtual accounting companies, you have to do it electronically.

Budgeting is the process of planning your finances. It involves determining how much money you will make and how much you will spend.

Tax accounting is the process of preparing tax returns for your business. The firm will also calculate income taxes payable by your business.

Tax accounting is different from financial accounting. You are better off having an expert who does both of these accounting tasks.

A company may outsource their accounting because they don’t have the staff to handle these tasks. Whatever the reason, it can be a more cost-effective alternative than hiring permanent employees.