The Importance of Accurate Bookkeeping for Dubai Startups

For a business to flourish and attain its maximum potential, it must embrace practices and procedures that save the time of the management while offering insights to the business, enabling the management to make wise decisions. Accounting is one of the important tools that is often overlooked and ignored, but when implemented religiously, it offers a strategic trajectory for businesses.

Dubai is a growing market for running startups. With the introduction of Corporate Tax law and VAT law, accounting ought to have gained importance in the past couple years.

In our blog today, we are exploring the importance of accurate accounting and bookkeeping for Dubai startups.

Legal Compliance:

The VAT law mandates VAT registration where the taxable supplies exceed AED 375,000 in the preceding twelve months. A business will be able to determine the point that triggers the applicability of VAT, only when the books of accounts are properly maintained. The profit and loss account can be monitored regularly to identify the applicability of VAT and comply with its provisions.

On the other hand, corporate tax is computed on the profits, which are derived by reducing the allowed expenses from the incomes. To keep track of expenses and income, it is imperative to maintain proper accounting practices.

Tax computations:

By ensuring correct bookkeeping practices, the tax returns could be filed on time, avoiding the levy of interest and penalties. These days, accounting software provides a VAT report, which could be used to verify the workings. However, this will be of use when the accounting is complete in all aspects.

Aids in Audits:

Having organized financial records simplifies the audit process and internal reviews. The business will be able to submit the audited financials to the authorities in a considerably shorter span when it is called for.

Further, accounting is the basis on which financials will be drawn for the audits. Proper accounting will help businesses obtain a clean audit report, which increases their creditworthiness.

Detect frauds and profit leakages:

Accounting is the record of past transactions. It is based on the principle of duality in transactions. Hence, if there is any fraud or profit leakage, the dual entry nature of the accounting will help the business in the early detection of fraud and profit leakage.

Fosters Growth:

Accounting not only showcases the commitment to transparency but also equips the business with key performance indices that, in turn, help the business make important decisions. Further, accounting helps to monitor the financial implications of a decision and provides a warning indication if the decision needs to be revisited.

Investor confidence:

Maintaining proper accounting helps the investor track the return on investment and the ability to generate profits. These will determine the long-term viability and growth of the business. Therefore, regular and clear communication builds investor confidence, which may attract more capital.

Obtaining Loans from financial institutions:

Many financial institutions require comprehensive financial data before providing loans. Proper accounting boosts credibility and helps in securing loans.

Strengthening credibility with stakeholders:

Maintaining accounting records improves the financial position of the business and, therefore, boosts the confidence of the stakeholders in the business. Accurate accounting enables investors, creditors, management etc to make well informed decisions regarding investments, lending and strategic planning.

Brand positioning:

Institutionalization of ethical accounting practices builds trust in society, thus enhancing the brand value of the business. How society perceives the business entity plays a major role in attracting customers and clients and building the profitability and creditworthiness of the business.

Further, small expenses add up quickly, affecting the profits of the business. Accounting helps in regulating these expenses and detects areas where costs could be saved, thus increasing the bottom line.

Now that we have established the importance of proper accounting, choosing the best accounting firm would be the next step to achieving accuracy in accounting. Our blog on “How to choose the best accounting firm in Dubai?” could help you in this regard. Please follow the link here.

We, at BCL Globiz, provide accounting, compliance, and advisory services under one roof at affordable and reasonable pricing. Here is a peek at our pricing.

Pricing:

• Annual package for AED 250 per month (AED 3,000 billed annually) up to 40 transactions per quarter. This is suitable for companies who have not obtained VAT registration.
• Special packages:
  • Start-up Package 1 – AED 375 per month (AED 1,125 billed quarterly) up to 40 transactions per quarter, and
  • Start-up Package 2 – AED 500 per month (AED 1,500 billed quarterly) for 120 transactions per quarter.
  • These packages include VAT compliance and data to be shared on quarterly basis.
• Monthly package: This includes monthly accounting, VAT compliance, preparation of monthly reports, and business advisory services. Pricing starts from AED 800 per month and depends on the quantum of transactions and may go up to AED 2,500 per month.

For further inquiries, get in touch with our experts today at Punith@bclglobiz.com