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As a country, the United Arab Emirates is a wonderful option since its economy is continiously growing, and work is very lucrative. However, since you have just begun, you probably wouldn’t have a lot of employees working for you due to a lack of funds. While a successful business, especially in Dubai, can earn you a lot of money, it is important to make the right decisions when you are just starting up. You cannot invest all your money into it without assessing probable returns and you cannot hire a lot of people, especially professionals, without having the means to pay a decent salary for their work.
In such situations, it is key that you make all the right decisions so you can minimize the losses you may incur. One of the most common dilemmas faced by new business owners, one that you might face as well, is keeping a professional accountant. Accountancy is a very profitable job, which is why many people choose it as their career path. If you wish to keep one, you will most likely have to pay a high salary and you would end up spending a lot of money. The smarter option, in this case, would be to outsource your accounting work; to hire a professional bookkeeper.
Difference Between Accounting and Bookkeeping
Every business needs to keep track of its expenditures and financial transactions since they somewhat determine the state of profits or losses, whether a decision was a good one, about probable taxes etc. This is where an accountant or a bookkeeper comes into the picture.
Accountants are responsible for carefully recording all financial transactions pertaining to a business. They are supposed to record, summarize, analyze said transactions as well as report them to concerned authorities of the company as well as to tax collectors and regulators. In simpler words, an accountant’s work not only creates a detailed record of all financial transactions that the business has made but also shows what that data actually means for the company or business.
Bookkeepers do a similar job. They regularly record the financial transactions of the business. They are supposed to organize and document all such transactions so there is a proper record of them. However, unlike in accounting, a bookkeeper is not responsible for summarising or analyzing all the data; they are simply required to maintain a record. Bookkeeping coms under the overall field of accounting.
How A Professional Bookkeeper Can Benefit a Business
If you cannot yet afford to hire an accountant, you cannot afford to have any transactions go unrecorded. So, you must consider letting a bookkeeper do the job. Yes, a professional bookkeeper will not provide all the facilities that an accountant would, but it is a good place to start. Once your business begins to take off, hire a professional accountant. Here are some ways in which a professional bookkeeper would help your business:-
- Detailed Records: Even though a bookkeeper will not be able to analyze the data pertaining to the financial transactions, at least you would have a proper record of them. Unless you do have a record, you would have nothing to analyze. You would be able to track incoming and outgoing money transactions much better if they are documented.
- The Business Would Meet Legal Requirements: No registered business in Dubai is allowed to let transactions go unrecorded since that would create problems later on during taxing etc. If financial transactions are not recorded in detail, business owners could get away with paying fewer taxes despite having spent a certain amount of money. Even if you cannot hire an accountant, keeping a bookkeeper would ensure that the business isn’t engaging in any illegal activities, either intentionally or not. If auditors or authorities conduct a thorough inspection of your business’ functions and find no records, you would most likely be fined heavily.
- Instrumental in Making Decisions: Despite the absence of an accountant and the subsequent facility of data analysis, having all transactions recorded would give you a basic idea of how much money is being spent or earn, where it is going, or coming from, about taxes and other financial transactions. This data is key when making future business decisions. For instance, by looking at how much money was spent on manufacturing a product, you could find alternative methods so as to cut down on any unnecessary expenditure. For a business that has just begun, it is important to avoid spending more than what is required and to find more opportunities to make money. So, a detailed record of all the transactions allows you to alter your decisions to suit the business more.
- Identifying Any Frauds: Owning a business in Dubai comes with multiple risks, one of which is the possibility of fraud or embezzlement. It is always possible that an employee or an outsider might have found a way to make illicit payments, either into their own accounts or into somebody else’s. Without a proper record of every single money transaction made in the company, it would become nearly impossible to identify or track down such a fraud. By writing down the details regarding all the monetary activities, you would be able to spot such the occurrence of such a fraud and would most probably be able to track down its source, which would, in turn, make it easier to recover the loss and punish the offender.
- Assess Probable Taxes: Every single individual in the country that earns money is required to pay taxes. The amount they would need to pay depends upon their income. The same is the case with businesses. By having a professional bookkeeper record all your earnings and expenses, you would be able to create an idea of the taxes you would end up paying. While it is difficult to know the exact amount, records would provide an estimate and you can then assess whether you have the money to pay.
An accountant can be a bookkeeper but not the other way around. While the work of an accountant is far more detailed, having a bookkeeper, especially when you have just set up your business, can really benefit it.