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Here Are Some Interesting Facts About Accounting in Dubai That You Are Unaware Of
The United Arab Emirates, and Dubai to be more specific, have become business hubs. Owing to the fact that Dubai’s economy is flourishing, there are hundreds and thousands of people that not only look to work here but also wish to set up their businesses. Since the economy has only been growing, it is extremely profitable for business owners, local or otherwise, to set up their companies here or to at least expand their area of operation to Dubai as they can be assured of high returns and profits.
For any business to be successful, owners need to oversee the functioning of all the departments and need to make sure that everything is being done as it should be. While it is true that the various departments such as advertising, sales, marketing, human resource management, research, etc. all play a very crucial role in shaping up business, but one of the most factors to be considered is finances. Any business will have a constant flow of money, whether it is incoming or outgoing, and these need to be recorded, so that future decisions pertaining to any matter can be made. In order to manage finances, companies or businesses hire professionals known as accountants.
The importance of Accounting for a company
Any business will have a large number of financial transactions in the form of receipts, sales, purchases, payments, discounts, invoices, etc. and all of them need to be organized and recorded systematically. This is precisely what accounting is. It refers to the process of systematically recording, organizing, and processing or analyzing all financial data so as to prepare reports on the same. This is the work of accountants, while bookkeepers perform a similar task. These reports are extremely important since they provide an idea of the company’s financial state, and on the basis of these reports, accountants can advise you on how to save more money, where you are spending extra, which department needs more financial attention, etc. Besides being of extreme importance to the company, these reports are also presented to auditors, tax collectors, regulators, investors, etc.
Without the work of accountants, it would not be possible to properly organize and process all the financial data, and it would become difficult to keep track of all finances and make decisions such as those regarding savings, allocations, payments, and investments, taxes, etc. However important all other operations may be, it would be next to impossible to implement their strategies without funding, and it is the work of accountants that decides how much money can be allotted to different departments.
Interesting Facts About Accounting in Dubai
Given the fact that there are so many businesses operating in Dubai, there is a constant need for accountants, especially since it is an established fact that the work of accountants is nearly central to the basic functioning of an enterprise. While accounting, in general, is a common profession all over the globe, the laws or rules surrounding the profession differ everywhere. So, here are some interesting facts about accounting in Dubai that you were perhaps not aware of:
- Basic Information: When it comes to accounting in Dubai, the tax year is from 1st January to 31st December, and IFRS or International Financial Reporting Standards financial statements are necessary for every single company that is listed on the UAE stock exchanges and also for banks. The UAE Ministry of Economy is the regulatory body of accounting while the UAE AAA or the UAE Accountants and Auditors Association, UAE National Accountants and Auditors Association are the professional accountancy bodies. Companies are required to provide the Ministry of Finance with audited annual activity reports and the financial statements too should be prepared every year (the State Audit Institution of the United Arab Emirates serves as the main audit organization).
- Offer Payroll Services: An interesting fact about accounting in Dubai is that accountants, even when you outsource the work, is that accountants can help you manage the payroll for your company. Payroll is the process through which employees are paid their salaries after tracking their working hours and then depositing the money in their accounts. Not only can the accountants do that for you, but you can also purchase a payroll software from them so you can do the work yourself.
- Tax-related Work: A very important role that accountants play with respect to your business is that they help you with everything related to taxes. Accountants are well educated about taxation policies and laws, not only in the UAE in this case, but elsewhere as well, and can help you get an idea of how other businesses are doing. Moreover, since the UAE introduced VAT or value-added tax, tax filing has become slightly more complicated for businesses, and so, accountants help you calculate the corporate tax you would have to pay along with the VAT you would have to charge, and would also help you file returns.
- Financial Consultants: Accountants are professionals that deal with finances and management. So, they serve as excellent consultants for businesses, small or big alike. Not only do they help prepare comprehensive reports about your company’s financial situation and help file your tax returns, but they can also advise you on how you can expand your area of operation, especially in terms of money. They can explain to where you are spending more than required, where you must allocate money or where you must invest, how you can save money, how you should go about your pricing policy etc. so as to maximize profits.
- Financial Analysis and Auditing: As mentioned above, companies are obligated to prepare financial statements and activity reports on an annual, half-yearly, or monthly basis, and accountants can help with that. They can help you prepare your statements and can go over your financial situation and advise you on how you can bring about necessary changes in your business. Accountants can sometimes act as internal auditors and go over all the reports and see if there are any errors or discrepancies, correcting any before an external audit.
- ERP/ Accounting System Set-Up: Not only do accountants do all the basic functions such as recording, organizing and analyzing financial data to prepare reports, help with auditing, preparing financial statements and filing tax returns, advising you on matters of finances, but they also help with setting up ERP or Enterprise Resource Planning and/or accounting systems. These are, in the long run, quite profitable for you since they offer the possibility of automatically recording, processing, and managing business processes or financial data.
Dubai is home to thousands of businesses, all of the different kinds, which means there is a constant commercial, financial, and economic activity, and this activity needs to be recorded and analyzed. In order to ensure that everything is done within the framework of the law, there are different kinds of regulations imposed on businesses. Financial management is key for the proper functioning of any company, and thus, it becomes important to hire accountants who provide a variety of services that help businesses not only in the short run but also in the long run. Without their work, it would be nearly impossible to keep track of all finances and also make any kind of decision.