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Bookkeeping nitty-gritties for SME’s (Small & Medium Enterprises)

Bookkeeping is the fundamental process to help the organizations maintain the financial records. Most of the start-up entrepreneurs and small companies are aces at innovating magnificent products and services to fulfill all the customer desires. Yet, many enterprises flunk the basics of bookkeeping. As a matter of fact “Inadequate accounting” is one of the main reasons start up organizations collapse. Besides it is legally mandatory that every single business who have registered for VAT in UAE needs to maintain proper books of accounts, update their accounting records time-to-time in order to file their taxes

VAT (Value Added Tax) is introduced in UAE from 1st January 2018 and additionally there is no escape in not maintaining books for VAT purposes. According to the UAE VAT Law all the SME’s should keep books of accounts for a minimum of 5 years.

A business without bookkeeping is just like a blind chauffeur driving a car to reach its destination; accurate bookkeeping postulates a clear picture of the organization’s financial well-being. Proper bookkeeping can help businesses to avoid any potential penalties and impending unnecessary costs, not only that, they can also come across several opportunities to save more money and assist the business owners to make wiser decisions for the enterprise.

In common man terms bookkeeping is just arranging the numbers in a special and sensible way;

  1. Organizing receipts and payments into discrete accounting categories such as; expenses, income, debts and so on to improve probabilities of making profits.

  2. Verify the numbers and maintain the balances for filing the tax returns.

  3. Formulate reports based on the above numbers and the statutory needs to know in detail about your company’s progress in monetary terms such as monthly profit, quarterly sales and annual profits.

Top 5 Reasons – Why Bookkeeping is important?

  1. Bookkeeping helps in budgeting – The two major aspects of accounting, Income and Expenses should be structured to build a financial roadmap for your business. This will help in planning the future costs and how to cover those expenses.

  2. In analyzing financial statements – Business analysis is extremely important tool to evaluate their performance. This aspect of bookkeeping can help assess the company’s strength’s and tweak their weaknesses. During the analysis the enterprise cash inflow and outflow can also be tracked and monitored for any flaws.

  3. Better decision making power – Enterprises can make profitable decisions at the right time with all the financial information to support it.

  4. Effortless generation of Reports – Investors are eager to measure their value of investment in the businesses, the financial reports including Balance sheet, Cash flow statement and Income statement will let you know about the financial performance of the enterprise. Prospective investors would more likely invest in companies with clear and transparent bookkeeping

  5. Focus on Business Strategy – Strategic planning is the foundation of any business, with bookkeeping tool taking care of the financial scenario, the companies are now thinking of ways to develop their businesses further.

Bookkeeping can save your firm a lot of time, money and resources, Even though many business owners are apprehensive about the sheer idea of bookkeeping and accounting, in reality both are very straight forward. If you need to implement a bookkeeping process, hiring our expertise at Spectrum Accounting will make it as easy as a piece of a cake. Leave the trouble of bookkeeping with us, we will take care of your financial well-being!

Spectrum Account is one of the leading accounting and bookkeeping service provider in UAE.

Call us today for a free consultation tel: +971 4 269 9329 | mob: +971 50 986 6466 | mail: info@spectrumaccounts.com

Reference : nolo.com

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