Accounting Firms in Dubai: How Startups Should Manage Accounting from Day-One?

When you start your business in Dubai, it is exciting and obviously a dream come true for many entrepreneurs. They have a business-friendly environment, offer tax advantages and thriving free zones. That’s why startups flourish in UAE.

While businesses are busy in product development, marketing and license registration, there is one area that most of them ignore, accounting. According to accounting firms in Dubai, it is important for businesses to ensure solid accounting practices for solid and sustainable growth.

This checklist will help you understand why getting your financials in order is important and how accounting firms can help you manage them as a startup.

1.       You should begin your accounting journey by opening a separate business bank account. In Dubai, if you are working in the free zone, you need this separate account for license renewal. It is also essential for clean bookkeeping. This will help you keep the personal and business expenses separate. Next, it makes keeping track of your bookkeeping, reconciliation and VAT easier. Lastly, you would add credibility for applying loans or pitching investors. You should choose a bank that can integrate with your accounting books like Xero and Zoho Books to improve data syncing.

2.       To ensure error-free tax and return filing in UAE, you should use the right accounting approach. There is no mandate on a particular accounting approach, you should pick one that remains consistent throughout. In most cases, the startups use accrual accounting, wherein you can record the income and expenses. It is basically for earned and incurred amounts, and no when the money changes hands. In case you are a solopreneur or service business, you may also be using cash accounting in the starting stages. Accrual accounting is required for corporate tax readiness and audited financials. You can also cause confusion when you use inconsistent methods for tax filing or investor reviews. With the help of an accounting firm, you can choose to setup a method that works best for your business model and future growth plans.

3.       Accounting firms in Dubai believe you should register for VAT if it is applicable in your case. This is true if your revenue from the business exceeds AED 375,000 in the 12 months. This will make you want to opt for VAT registration. In case you are below this limit, you might want to opt for voluntary registration, especially if you deal with VAT registered suppliers or clients. If you don’t register, you might attract FTA penalties that start at AED 10,000. After registering, you must ensure you file the returns every quarter or month. This will help you keep track of the revenue threshold and prepare your VAT registration. It can also ensure your invoices and record keeping meet the FTA standards.

4.       You should use a reliable accounting software for your business from day one. Many startup founders tend to use Excel, which can lead to more errors and compliance issues in your accounting. With the accounting software, you can track expenses and income in real-time. I tcan also help connect with your bank and support tax return and filing in UAE. It also helps generate financial reports for the investors and tax prep. You must choose from the top UAE compliant tools, the one that fits your needs.