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The world has been undergoing a sudden shift with respect to the business sector. Due to the fear of a pandemic, many entrepreneurs are showing more interest in establishing online ventures. Many offline businesses have been shifted to online platforms to keep up with the current scenario. However, this transition of shifting towards online ventures in Dubai has both pros and cons.
- Some of the pros include less expenditure on infrastructure and avoiding miscellaneous expenses of staff members as most of the people have been involved in Work from Home (WFH).
- But there are some cons as well, that involve proper management of accounts of e-commerce. People have this tendency of managing all the accounts related information by their own self using MS excel and notepad. However, it is time to update your e-commerce with some of the tricks that can ensure the steady working of your e-commerce venture.
Tips for managing e-commerce accounting in Dubai
- Updating to new technology- It is time to update the techniques of accounting in Dubai by replacing MS excel and notepad with proficient online softwares that provide a wide range of options to record your transactions, analyzing it and coming out with authentic financial statements. Having well-defined software for accounting will not only record all the information in a structured way but also ensures that you can get any information with just a click of the button.
- Knowledge of accounting terms- The main focus of an entrepreneur should be to find out strategies to grow the business. But it will not cause any harm if the entrepreneur has some insights about the basic terminologies of accounting in Dubai and updating himself with new laws that have been implemented in Dubai related to accounting in e-commerce.
- Information about VAT- In Dubai, there is a 5% VAT which is applied to the majority of the goods and services. So, having in-depth knowledge regarding the VAT policies is crucial. And moreover, applying this knowledge in the trading of your products will help you in a long way. There are some products which don’t fall under this category, and prior knowledge of them is equally important.
- Constantly analyzing your expenses- No doubt, e-commerce helps in minimizing the expenses which are spent in offline businesses by either establishing infrastructure, renovating the offices or miscellaneous expenses of your employees. We often fall in this trap and consider that with the help of e-commerce, we don’t need to meet these expenses and thus start overspending in other areas which are not even necessary. So, it is highly advisable to keep a constant check on your expenses and try to minimize them if they don’t serve anything in the future.
- Having a plan- Be it an online or offline venture, we can’t emphasize enough on the importance of having a plan. Because if your business is just considering the daily needs without focusing on long term goals, then you are on the verge of getting bankrupt in the near future. So, it is necessary to have a plan and for that it’s important to record your daily expenses.
- License requirements- In Dubai, entrepreneurs need to have a license before establishing their e-commerce websites. Thus, they are required to get the license first from the Department of Economic development; only then, they will be legally allowed to own their e-commerce. Failure of getting the license and still starting an e-commerce portal is illegal in Dubai.
- Asking for help- The best thing even in e-commerce is, you can get online guidance from a certified accountant in Dubai who can aid your online venture by providing you with all the necessary information from analyzing the expenses to generating the financial statements and even guiding you to move in a certain direction for more profits. However, beware of fraudulent services and always look for certified professionals.
How is e-commerce accounting done?
With the advancement of technology, it is relatively simpler to undergo e-commerce accounting in Dubai.
The process is mentioned below-
- The first thing is to get an accounting software for your online business. There are different types of software that are readily available. One can also begin with a free version of online accounting apps or can even go for 30 days of the free trial before investing in them.
- We cannot deny the fact of having different accounts solely for the purpose of e-commerce as it won’t create confusion about the source of cash flow.
- Mention all your sales along with the date and time. Recording all the expenses, including packaging and sales, along with managing inventory, helps your e-commerce to have proper insights into your business.
- It is important to know whether you will be able to survive another month if things turn worse. So, having a proper budget will help your survival when an unforeseen situation like a pandemic happens.
- Softwares are efficient in calculating tax rates for every sale of the product and thus will not create undesirable stress of managing taxes.
- These Softwares remind you about your tax payments, thereby serving the purpose of a reminder.
- After doing everything, the last step is to understand the big picture of your e-commerce by analyzing the balance sheet. It helps you to plan for the future and also makes budgeting easier.
Businesses are growing in the UAE, and there is a constant feeling of overpowering other businesses to maintain your foothold. So, it is a must to ensure that your e-commerce is working smoothly. Moreover, many businesses are confused in the VAT policy, so having a deep understanding will set you apart and prevents your e-commerce from any unforeseen situation. Many e-commerce websites have been established in the UAE, and it is equally important to be proficient in accounting in UAE.
So, a certified professional accountant in the UAE can help the e-commerce venture in planning the future by analyzing its growth. A professional financial advisor will also be able to solve accounts related to discrepancies at the right times. Nobody knows the future of e-commerce, but one thing which is certain is, future growth of e-commerce ventures and one must be well equipped with the financial aspects of accounting.