With United Arab Emirates continually expanding and sealing its name as the leading business hub in the world, the need for assistance in maintaining books of accounts, particularly VAT accounting, has become even more important. As per the UAE VAT legislation and UAE Federal Commercial Company Law of 2015, business entities operating in the UAE are to keep proper accounts of transactions for a minimum of five years. As businesses want to ensure they satisfy the requirements of government authorities, the majority of them are outsourcing VAT accounting onto third party experts.
It can be hard for businesses to manage accounting and bookkeeping, especially related to VAT, as tiny mistakes or errors can result in hefty fines and penalties. Also, there are so many benefits from outsourcing VAT accounting including increase in profits, consistency and compliance to changing regulations, and more resources for the growth of a business.
What is outsourced VAT accounting in UAE?
Outsourced VAT accounting in UAE is a practice of the majority of businesses in UAE in having accounting for VAT passed on to a third-party service provider rather than being carried out in-house. An outsourced VAT accounting service in UAE provides a business, even a startup, access to a full, seasoned team of professionals on accounting to address the business’ accounting needs and requirements. The team will handle the transactions that relate to VAT including daily transaction coding, management financial reporting, accounts receivable and accounts payable.
Is outsourcing VAT accounting necessary for a business?
Although it is not necessary, outsourcing VAT accounting has become the norm or the usual practice of companies. An inhouse department that is maintained by a business can have inexperienced staff if the business does not have the budget or resources to spend. Also, a business can have outdated technology skills. It is, therefore, an excellent choice for any business to make sure that it is fully compliant with relevant laws and making business processes easier to manage through VAT accounting outsourcing in UAE.
When a business opts to outsource the responsibility of VAT accounting and bookkeeping, it gets the ability to focus on the core business areas which can help in generating income. Also, outsourcing avoids the cost of retaining more employees and providing them with benefits!
Is bookkeeping important?
The main reason why bookkeeping is necessary for any business is because it is the process of keeping accurate records of a company’s financial transactions with the use of a systematic approach. Bookkeeping ensures transactions of the business are all reflected in its books of accounts. Bookkeeping is the tool that is also utilized by company administration or business management in analyzing business performance.
The following are involved in the process of bookkeeping for a business in UAE:
- Chart of accounts preparation
- Keeping of receipts and transaction records from sales and purchases
- Billing of goods or services sold
- Verifying and recording of invoices from the company’s suppliers
- Dealing with payment to employees
- Making sure reports are prepared for submission to government authorities, especially for VAT return filing
- Allocating appropriate account entries
How can experts help with outsourced VAT accounting?
Outsourcing VAT accounting has now changed the previous trend of having an inhouse team for bookkeeping as businesses are dealing with skill shortages and cost control. Experts from service providers of outsourced VAT accounting in UAE can provide businesses with the following:
- Business advisory – an outsourced team can provide your business with assistance in creating strategic plans for its growth. As a firm has seasoned accounting experts that are helping your business, you will be able to solve multifaceted issues that are specific to your industry and help make sure that you have reports to view when you want to check the cash flow of your business. Experts can provide advice as well if you are looking into opportunities of the business for growing and optimizing. A service provider, if you choose an established and reputable firm in the UAE, can not only address your VAT accounting responsibilities, but also provide you with a platform in improving cash flow and driving profits, ultimately helping your business grow.
- Avoiding tax penalties – one of the main responsibilities of a firm that offers outsourced VAT accounting in UAE is to help organizations avoid tax penalties. Local legislation related to tax filing and preparation constantly changes. This is why it’s necessary for a business to be updated on all the changes to tax policies. Also, mistakes in the filing or preparation of tax reports can be very costly. When tax responsibilities are outsourced, experts are the ones carrying them out which means you no longer have to worry about fines and penalties from the tax authorities.
Click here for more about this topic.