Just after your business registration in UAE, you become liable to comply with all the regulations related to the financial reporting of your company.  In the UAE, the authority is very strict when it comes to financial regulations. They expect every business to follow the regulations stringently and record every transaction with utmost accuracy. Any irregularity in the financial report can result in to heavy penalty. It is required to file reports accurately and within time. Every company is mandated to keep a proper record of their financial transactions for a minimum of five years.

However proper accounting and bookkeeping is a healthy practice for any business. It ensures a company’s sustainable growth and prosperity. If a business maintains its daily transactional records, it will help the management in creating policies for growth, making key decisions, and planning in the business’s best interest. But a sound financial management of a business, especially in the UAE is much more than recording daily financial transactions and filling accurate reports. To leverage the best for your business, you must ensure a comprehensive management of your business account. Only a well-oiled machinery can ensure that every aspect of accounting and bookkeeping, from the posting of invoices to the timely filling of VAT reports, is done flawlessly.

But what are the best practices to ensure the smooth running of the entire operations? Let’s dig deeper to find out.

Best practices for effective bookkeeping

For a layman, bookkeeping might seem a humungous job. But, if a few aspects are covered properly, the entire procedure becomes seemingly smooth. Let’s start from the basics and understand the efficient way of bookkeeping.

Understand the law - Every company operating in the UAE is governed by Federal law. Apart from that, some other laws like the Corporate Tax law and the UAE VAT law also apply to them. The basic rule of the game is that every company must maintain a proper financial record for tax compliance. The report must be submitted to the concerned authorities either quarterly or annually. But not just that, under these laws, there are multiple provisions for the benefit of businesses. Therefore, it is crucial to understand these laws properly, for effective tax compliance and leveraging the provisions.

Use accounting software - Like in all other aspects of business management, the use of technology in accounting has eased the process of recording financial transactions. A suitable accounting software can provide you with accurate reports and other relevant data analytics as per your requirements. Needless to say, it will save you from the tiring task of manual accounting.

Timely reporting of financial transactions - Be it a consumer-faced business that involves hundreds of transactions every day, or a business with fixed days of transactions, the healthy habit for any business is to maintain a timely record of every financial transaction. It is the primary aspect of bookkeeping. Not only does it help in tax compliance, but the readily available data is useful for effective management as well.

Track expenses - Make sure you record every expense, be it on office supplies, salaries, or anything else. Use proper software tools to track the expenses of your business. It is a crucial part of tax preparation. Along with that, it also helps in the cash flow management.

Monitor cash flow - By effectively monitoring cash flow, you can ensure that your business has adequate funds for meeting its expenses and investing in opportunities. A cash flow projection is the data that projects the estimated revenue and expenditures for the upcoming months of a fiscal year. A time to time comparison between the actual cash flow and the projected cash flow can help you to identify any unforeseen gap and keep your business financially secure.

Adhere to tax compliance - Use accounting software that can compute VAT and prepare tax-compliant invoices. It is of utmost importance to record all tax activities and arrange all the necessary documents for timely financial reporting. If managed by skilled professionals, these can be done easily and the chances of committing any mistake are reduced.

Future planning - Use all the records and data to analyse the financial position of your business and make a financial strategy in alliance to your business objectives. If bookkeeping is done accurately, it will help you to strategize crucial business moves, like expansion, investment, or acquiring funds. Be it in business or a game of chess, long-term planning backed by data is the key to achieving success.

If you stringently engage in these practices related to accounting and bookkeeping, your business will be free of any kind of financial regulatory complications. As the UAE is a country that promotes entrepreneurship and offers immense growth opportunities, your business is more likely to taste success. In case you think that maintaining an in-house accounts team will be a bigger hassle, you can always opt for help from a professional firm providing accounting services in the UAE.