Efficient accounting solutions are critical for the success of startups and small businesses in the UAE, just like for more prominent companies. Unfortunately, many small businesses struggle with cash management and only use a single-entry system for bookkeeping, which hinders their growth prospects. Complete books of accounts are necessary for financial transparency and long-term success. In such cases, it is always better to opt for outsourcing accounting and bookkeeping services to experts like Fortius, UAE.
Most business owners don't start their business to do bookkeeping, but it's a necessary process for financial transparency. Bookkeeping records and documents financial transactions, while accounting encompasses a broader range of financial management. Adopting good bookkeeping and accounting practices can save time and provide valuable insights into a company's financial performance.
Outsourcing Accounting and Bookkeeping Service in the UAE- Top Tips
Bookkeeping is crucial for any business, and while it may seem complex, it can be relatively straightforward when done properly. However, start-ups and small businesses may need some guidance to set up and manage their bookkeeping and accounts effectively. Here are some tips to ensure that bookkeeping and accounting are well-maintained for these businesses.
Keep accurate records
Effective bookkeeping relies heavily on the systematic organisation and storage of financial records. Invoices, income and expense records and accounting records are the main types of records that your company needs to keep.
Under various statutes, you're required to keep this data for at least five years. Businesses in the UAE are subject to fines for failing to keep accurate records. Even if it is not required by law, it is in your company's best interest to keep correct records.
Establish an effective procedure.
When appropriately done, bookkeeping serves many purposes beyond just keeping records. The primary reasons for keeping all these documents are to aid in the management and provide a basis for government agencies to assess your company's success.
When a system is configured in a way that works for your company, you'll have an easier time handling data entry and access to a wide range of reports that can be used to better manage your operations. It's essential to ensure the system is configured correctly, with basic functions tested, bank accounts integrated where possible, and standardised reporting in place.
Keep your business and personal finances separate.
Separating these two finances is essential for maintaining accurate records. Make sure there are strict policies in place that prevent employees from using business funds for personal reasons. Money flow problems caused by inaccurately allocated funds can make tax filing and auditing more difficult.
Separate finances & bookkeeping will also enable you to avoid legal trouble. Creating independent business checking and credit card accounts is a good start. Ideally, a separate business bank account with online banking and statement access should be established immediately after a company is formed.
Establish a schedule for bookkeeping duties.
If you want to stay on top of your books, you need to do specific bookkeeping tasks regularly. This includes billing clients, reconciling bank accounts, depositing cash, and recording and paying vendor invoices. So, it's time to start keeping meticulous records!
These areas need to be checked at least once per week and more often if necessary, depending on the nature of the business and the volume of transactions. It's essential to keep track of money coming in and going out. You must also conduct a complete monthly bank account reconciliation and accurately record all transactions.
Invest in reliable accounting software.
Digitalisation is altering how accounting and bookkeeping are handled in the UAE. So, you should use reliable accounting software to facilitate your work and maximise efficiency. Daily transactions are recorded, estimates are generated, invoices are managed, and data is easily accessed using high-quality software solutions.
The accounting process is streamlined and less time-consuming, thanks to automation. Among other benefits, it simplifies the process of creating P&L statements for tax purposes. Firms can better focus on their core competencies after engaging the services of an accounting firm that makes use of automated systems.
Review your progress
After establishing your system and entering your transactions consistently, keeping a tab on the process is essential. Analysis and review of books is an essential aspect of business management because it enables double-checking of accuracy.
Similarly, it's crucial to check the consistency of the entries being made to guarantee that the various transactions are always placed at the right location. This makes it much easier to review and understand your financial records. Also, when you review books regularly, you can learn more about your company and find places to expand and improve.
Use the help of UAE accounting firms.
In the early stages of a company's existence, there aren't many transactions to keep track of. However, as time passes, the volume of transactions rises dramatically. So, the current workforce may need help to keep up.
It's best for businesses to understand the need for bookkeeping services and opt for outsourcing accounting and bookkeeping services. It will help get more done in less time while maintaining a high level of quality and competence.
Checklist to Ensure Accurate Accounting and Bookkeeping
Business owners need to know everything about the business’s finances. The most important benefits are that it helps companies to prepare for audits and reduces the likelihood of fraud. It helps business owners make the right decisions and plan for the future. An efficient bookkeeping system enables businesses to accomplish this in minimal time.
Pick the right accounting method.
Entrepreneurs need to decide on an accounting system for their businesses. The two methods are cash and accrual. Unlike the cash accounting method, which records transactions only when they are paid, the accrual accounting method records them when they occur.
Keep the right records.
Legal documents such as business licenses and permits, tax licenses, and any other documents with legal significance are primary documents. So, they need extra safe custody. Client contracts, invoices, receipts, payrolls, cash registers, and other financial transactions are considered supporting financial documents. Hence, it is also crucial to keep their records handy.
Know what and how to record.
Everything that references money and explains your transactions should be recorded properly. Keeping a daily log of all money coming in and going out is crucial. Record the amount of cash in the form of payments for the goods and services you sell.
Manage documents effectively
Effective document management can help your business save time and money by reducing errors and increasing accountability. You should clearly understand the location of business documents, the types of templates required, and the procedures for using them.
Present financial statements properly
Balance sheets and Profit & loss statements, also known as Financial Statements, are one of the most vital requirements for decision-making. You need to maintain them irrespective of your business size and turnover. When financial statements are presented in the correct format, they give an accurate picture of your company's financial standing.
Accounting professionals lay the groundwork upon which every successful business can be built. Despite what many business owners believe, bookkeeping is not tedious work, and the information gathered by a good bookkeeper can be very beneficial. If you stick to our guidelines from this article, you can streamline your company's operations and make accounting and bookkeeping a breeze. And by outsourcing accounting and bookkeeping services to our experts at Fortius, you can avoid all the probable hassles and troubles of inaccurate accounting. To know more, get in touch with us today.