Starting a business in the UAE is always an exciting adventure. From the vibrant business district of Dubai to the strategically positioned corporate offices in Abu Dhabi, the UAE is a place that offers thriving conditions both for startups and established companies. But along the road of development, customer acquisition, and day-to-day activities, one can easily lose the sense of controlling one’s financial standing.
For many entrepreneurs, accounting and bookkeeping is something that needs to be done once a year for filing corporate taxes or VAT. However, regular, month-end bookkeeping is what makes up a flourishing business. Monthly bookkeeping allows for keeping everything under control and being fully compliant with local requirements without any last minute worries.
From incorporation through Business Setup Services in Dubai to a well-established multi-branch company, creating a routine and doing the needed work on a monthly basis is crucial. The following list contains the most important monthly bookkeeping activities of every business in the UAE.
1. Balance All Bank and Credit Card Accounts
The first principle for bookkeeping that ensures clean accounts is bank reconciliation. Towards the end of each month, every bank account and credit card used by your business should be properly reconciled to your book of accounts.
- Balance Transactions: It is important that all deposits, withdrawals, fees, or any transaction shown on your bank statement should be balanced on your bookkeeping software.
- Spot Errors: This will help you spot any unauthorized charges, missed customer payment or duplications made early enough before they become a problem.
- Keep Audit Preparedness: With clean bank reconciliations, your business will have no problem passing an audit should it ever happen in UAE.
2. Classify all expenses
It’s not just necessary to categorize the expenses for budget purposes but also to determine the net profit and manage the corporate taxes.
- Collect Receipts: You should gather all the receipts, bills, and expense statements that you’ve collected over the entire month.
- Proper Allocation: This is an extremely crucial step as it helps you to classify your expenses correctly. This includes classifying the expenses as operating costs, cost of goods sold, capital expenses, and entertaining expenses.
- VAT Invoices: In the case of UAE, maintaining proper tax invoices for all business related purchases is extremely important in order to account for VAT. However, in case if you find the above tasks too cumbersome to do yourself, it might be useful to hire professional people providing Accounting Services in Dubai.
3. Manage Accounts Receivable (AR) and Send Payment Reminders
For businesses, cash flow acts as the blood that pumps life into it. Postponing analysis of whom you should be invoicing till the end of the quarter or year may cause serious problems for your liquidity.
- Run Your Aging Report: You should generate your Accounts Receivable aging report on a monthly basis to check for overdue client invoices.
- Send Friendly Reminders: You should make sure to remind your clients about their overdue invoices politely before it becomes an urgent issue.
- Credit Terms Check: See which of your clients often pay after the deadline and change your credit terms if necessary.
4. Manage Your Accounts Payable (AP) and Make Payment Plans
Just as it is necessary for you to make sure that you receive payments that are due, you should be able to manage the payments that your business has to make to others.
- Know Your Liabilities: Look at the Accounts Payable ledger and see which payments you have to make next month.
- Make Timely Payments: Pay your vendors in time to build good supplier relations and get early payment discounts.
- Plan Your Budget: By knowing your liabilities every month, you will be able to manage your budget effectively.
5. Check Payroll and Corresponding Liability Accounts
For those running their businesses in the UAE, handling of payroll is more than just ensuring that salaries reach employees at the end of the month; it involves following the local laws governing payroll strictly and using the Wage Protection System (WPS).
- Payroll Reconciliation: Make sure that your payroll ledger balances with your attendance figures, overtime and leaves.
- WPS Compliance: Make sure that all your salary payments have been made successfully through the WPS channel provided by the UAE authorities.
- End-of-Service Benefits Account: Maintain a record of your monthly end-of-service gratuity benefits account.
6. Creation and Analysis of the Monthly Financial Statements
It is not all about entering figures; rather, bookkeeping is about creating information that can lead to intelligent decisions. At the end of every month, your bookkeeping staff will create the basic financial statements:
- Statement of Profit and Loss (also called Income Statement): It shows your income, expenditure and net profit or loss for the period in question. This way, you will be able to find out if your company is achieving the income objectives.
- Balance Sheet: Gives information on your assets, liabilities and equity and helps you know the net worth of your company financially.
- Cash Flow Statement: Tracks the real inflows and outflows of cash in your company.
Analysis of such information will help business leaders notice the financial trends, reduce costs where needed and change course of action to prevent small problems from becoming big ones.
7. Preparing to Meet Regulatory and Tax Requirements
Compliance with federal law is a must in the UAE business world, including corporate taxes and VAT rules. Keeping your monthly accounting updated will make filing your taxes during tax season a breeze.
- Output and Input VAT Calculation: As a VAT registrant, your job is to ensure that your output tax and input tax are properly recorded each month to help you file your quarterly reports.
- Preparation for Corporate Taxes: Organize your financial records and ledgers to meet the federal corporate tax requirements. If you’re dealing with complicated tax structures or setting up corporate bodies, then Tax Services Abu Dhabi will guarantee full compliance with the FTA’s rules.
Optimize Your Financial Journey With Planners Tax Consultancy
These monthly bookkeeping functions demand time, effort, and specific skills. Although there are some developing companies which manage this function by themselves, many businesses choose the cooperation with the experienced specialists who give a possibility for management to work exclusively on the development of the company, customer attraction and strategy.
Regardless of whether you start a new business with our reliable Business Setup Services in Dubai, optimize the financial control with our professional Accounting Services in Dubai, or need the proper advice using our Tax Services in Abu Dhabi, Planners Tax Consultancy will be your best partner.
Let us deal with the numbers while you create your vision. Contact us now and learn how we can assist you in making your business successful in the UAE.
