Do you own a business in the UAE and you are finding it difficult to manage the numerous financial factors that affects your business? It is indispensable that you pay particular attention to the accounting and bookkeeping function, no matter if you are a new or a mature business venture. Just as important, the financial records assist with compliance with the laws of the country of operation while offering important information on such aspects as decision making, cash management and overall business strategies. In this article you will learn why it is critical for your business in the UAE to maintain accurate accounting and bookkeeping records.
1. Compliance with UAE Regulations
The UAE has a vibrant business environment; however, this means that there are many legal and regulation mechanisms that ought to be followed. In recent years, the UAE has made a number of changes to tax regulation especially with the implementation of VAT (Value Added Tax) in 2018. The implementation of these laws has therefore called for corporate entities to develop adequate record keeping systems. This ranges from the sales invoice to the supplier’s payment, every financial transactions being recorded.
Failure to these obligations exposes business operating in the UAE to fines and penalties. By law, some of the authorities like the Federal Tax Authority (FTA) are very keen on ensuring that tax laws are followed, and this may be very bad news for any firm that does not keep good records of all its transactions. Correct record keeping helps keep your business legal by filing for VAT returns, Income Tax, and any other Tax compliance. It assists you in preventing them from being landed with additional fines as well as penalties and guarantee you meet specific deadlines without running into numerous legal issues.
2. Informed Decision-Making
The best organizations often have to make certain decisions based on sound financial information. Whether it is a decision to spend on a new product line, opening new facilities or employing more people, business owners need to know their company’s financial position. It limits your ability to measure your business performance or identify units that are struggling financially if proper accounting is not done.
They enable you to know your revenue, expenditure, and profitability as well as other measures of organizational performance such as KPIs. This means that you are able to make sound decisions on the data collected that can help the business to grow and become profitable. In addition, financial records assist in the preparation of future trends, budgeting and establishment of appropriate financial targets. More particularly, in the context of the UAE as a competitive environment, these insights might prove critical for developing competitive advantages.
3. Budgeting for Cash Flow
It is common knowledge that cash flow is the most important aspect of any organization. A common problem that affects cash flow and hinders even the most profitable businesses is poor cash flow management. To the firms operating in the UAE context the management of this factor could be volatile and thereby an imperative to monitor cash flows with a view of meeting various expenses as planned.
Accounting ensures that any business entity records its revenue, follows up on all receivables, and controls its amounts owed. This makes it easy for businesses to avoid situations where they run out of cash, plan for future financial needs and generally ascertain whether or not funds are available to meet some important business requirements. No matter whether it is delivered to suppliers, used to cover overheads or spent on new projects, controlling of cash flow is crucial to prevent lots of troubles.
4. Fraud Prevention and Risk Mitigation
Fraud in financial reporting is one of the most dangerous things that can happen to a business since it brings about its closure when unnoticed and not countered, you can read more on it here. No records management in books increases chances of mistakes and deceit because of negligence in accounting. That is, fraudulent purchases, manipulation of the accounts or, in fact, theft can take place where there is no strict adherence to accounting procedures.
It will help to keep every financial transaction documented so that in the event you realize there has been fraud, you will be able to track all the transactions. The ordinary audit and reconciliation, as well as the clear accounting practices, reveal irregularities and may eliminate fraud.
However, record update helps in managing other risks like financial fraud, legal, or tax problem that may occur in any business.
5. Tax Efficiency – The Management of Taxation
The tax laws are also slowly being developed in the UAE and, therefore, are complex. The fact that VAT has been introduced, income tax on foreign businesses, and other taxes make it necessary for the business to regularly know its position. Inability to account may lead to late filing of taxes, incorrect or incomplete filing, which may lead to penalties.
Accounting and recording help the business to keep track of all taxable sales, identify all allowable expenses and file tax returns on time. Also, with good records kept by the business, it is easier to plan for tax issues, and where possible find legal ways of minimizing tax to be paid. It helps the businesses to be in constant touch with the taxes laws so as not to be trapped into paying more taxes and or facing penalties.
It will help to keep every financial transaction documented so that in the event you realize there has been fraud, you will be able to track all the transactions. The ordinary audit and reconciliation, as well as the clear accounting practices, reveal irregularities and may eliminate fraud.
However, record update helps in managing other risks like financial fraud, legal, or tax problem that may occur in any business.
6. Supports Business Growth
As your business expands, you are bound to experience a lot of changes in your financial aspect. Whether you are simply looking to take your business to the next level by extending your operation, gaining more customers or even doubling your output this means having a better accounting framework in place to handle the upturn in activity. The efficient accounting process does not only support the proper management of present processes but also contributes to future development.
And when you are ready to grow your business, the financial records will become essential for funding, attracting investors, and new financial obligations. Shareholders and creditors use historical financial statements to determine the probability of success of your business. When you sort out your books, you have a better shot at obtaining the money you need to expand your business.
7. Investor and Stakeholder Confidence
A business’s investors, partners, and other stakeholders require financial data that is clear and accurate in order to make the right decisions about your company. If you are likely to go for capital or looking for capital, then good and clean source company records is highly desirable and will help form a good impression when negotiating with investors and funding companies. Thorough records show that one is serious with financial reports, which plays an important role in sourcing for capital.
The investors in your business will of course want to be sure your business is in the black, legal and has prospects to grow. Having good records ensures that you are able to show your business in the best light and investors and stakeholders are easily convinced.
How Apeiron can help in Accounting and Bookkeeping
We know at Apeiron that accounting and bookkeeping may be a challenge, particularly for companies operating in the UAE and facing a constantly changing business environment. That is why, we provide all kinds of accounting and tax services appropriate for the UAE business environment.
Our specialized team of accountants and tax consultants provide you with professional services to keep your books accurate, stay on the right side of the laws governing business in UAE, and minimize your taxes. Whether you are registering for VAT, getting accounts prepared and Profit & Loss accounts, submitting VAT returns or merely require bookkeeping, Apeiron is what you need to stay ahead.
We also provide tailor made services for small business as well as large corporations with a view of making sure that the accounting system that we devise for your company is effective and sustainable for the current business and as the business grows in future. Outsource your accounting and bookkeeping services to Apeiron and leave all your business expansion worries to us.
Conclusion
Bookkeeping and accounting, therefore, go beyond simple compliance with the law; they are significant means of keeping a check on the financial stability of your business, your tax planning, and your growth. That way, you can keep your business efficient, legal, and on track—and ready for the complex market in the United Arab Emirates.
To take advantage of our professional accounting and tax consultancy services, call Apeiron now. Allow us to assist you in laying down a healthy financial framework within your company in the UAE.