You might have heard that Numbers Don’t Lie. However if your numbers are not correct then such truth will do more harm than anything else. A small business owner puts on many hats including Marketing, Sales, Operations etc. However when it comes to accounting the owners mostly don’t focus on it being a technical area. In UAE, we see that most of the times one person in the company is in-charge of Administration, Accounting, HR and other non-core function. This approach often leads to wrong presentation of accounting numbers as the job is not handled by qualified accountants. Although many companies overcome this situation by outsourcing the accounting function.
VAT Accounting Requirements:
As VAT (Value Added Tax) will be implemented in UAE from 2018, the accounting records would be the only source to prove your VAT admissible transactions. And it is very important for all businesses to have a proper accounting system to record all Sales & Purchase related transaction. This would save you from the last minute rush due to VAT deadlines. An improper VAT Accounting record can cost you loss of VAT claim or penalties and fines for incorrect reporting. So better start planning now.
Get the True Financial Picture of Your Business:
Many small businesses focus only on cash inflow/outflow. While if you do not record all your expenses, incomes, payments, receipts as per the accounting principles, you may be getting a wrong picture of the vital business numbers. e.g. Sales not recorded on timely basis can misrepresent your Accounts Receivables which ultimately affects your cash budgets. So it is important that someone who knows the accounting principles and is appropriately qualified should be taking care of your accounting record keeping.
Get 24×7 Reporting of Your Financial Numbers:
With the increasing use of cloud based accounting software, all you business financial numbers are just a click away. If you use an accounting software and a qualified accountant enters in all the transactions, you can generate your Income Statement, Balance Sheet and Cash Flow Statement with a click of a button. However all this can only be possible if you are maintaining your accounting records properly.
Better Plan for Future:
Once you have maintained the proper and correct accounting records, you can then base your future planning on the historical trends in your income statement and balance sheet. This way you would avoid any surprises in your financial numbers in future periods.
Better Valuation of Your Business:
Whether you are planning to sell your business or not, it is always a good idea to periodically assess the net worth of your business. This way you can be certain that you are achieving the main objective of your business i.e. to maximize the business net worth.
To maintain your accounts properly, you have two options. Either you hire a full time accountant or you outsource the accounting function. If the transaction numbers are high and you can afford it, then the better option would be to have a full-time accountant. However if it doesn’t fit in your budget, you can go for outsourcing. The benefit of outsourcing is the you get free from all worries of having employment visa, health insurance, one month paid leave, sitting place and any other expenses/issues related to full time employees. One more important aspect is continuity of the services. You have no tension of a full-time employee leaving the company when you have outsourced the accounting function to a professional accounting service firm, you have peace of mind and services of qualified accountants at an affordable rate.
However, no matter whether you choose outsourcing or a full-time accountant, now is the high time to start maintaining your financial record with proper accounting and bookkeeping practices. Don’t wait the VAT worries to hound you and start early to align yourself with upcoming accounting requirements in UAE.