Irrespective of the business you hold, it is very important to have an organised structure. Even though, as an entrepreneur you would have started off in an organised manner, slowly with the growing clientele, you would be so engrossed in building businesses that you might forget to keep a clear accounts record.
Bookkeeping is extremely essential in a company as it is the sore foundation of the financial department. These are responsibilities that can never be avoided. For any company, the financial records of every client should be correct, complete and up to date. This can be helpful when you wish to find some vital information about the business you did with a specific client.
This article is going to briefly inform you of the different reasons for hiring a bookkeeping professional. You will have to hire a bookkeeper who has great knowledge of subjects like taxation and laws of the country. If you have just started a small business, you will already be aware of how frustrating it could be to handle these records accurately. Bookkeeping has to be done with great precision as you would not wish to get any penalties. Additionally, with such stringent laws in UAE, the records have to be updated time and again to ensure that no penalties are incurred by the company.
Another reason why bookkeeping is so essential is because this would not only help in evaluating the growth of the company but also increase revenues through certain factors. Even though bookkeeping is not rocket science, it is equally important to understand that if anything goes wrong, it can perhaps lead to a catastrophe or cause a downgrade in terms of business.
Besides paying your employees, you have to shell out money for taxes, investments, pay your vendors and other external units. If clean records are not kept, there is a chance that more money could be spent on things you might not be aware of. Hence, hiring a knowledgeable and professional bookkeeper can definitely help you save some money.
Thirdly, this will help you in save time. You do not have to do this by yourself which can be extremely time-consuming and stressful. Additionally, the bookkeeper will ensure that all the taxes and bills are paid within the allotted time. At times, you would be so busy with other responsibilities of the company that you might forget to pay bills and taxes on time. With a professional bookkeeper, this will be under control.
Lastly, the bookkeeper will be able to analyse the growth of the company. He will have a complete idea on the cash inflow and how it is regulated. Hence, you will have an organised feel to all your financial records. So, if you are looking out for an expert in bookkeeping, you can get in touch with our tax consultancy who provide great services. Our tax consultants have years of experience in the business industry and will ensure that the right corporate advice is given.
The introduction of Excise Duty & VAT happened almost the same time (i.e. 2017-18) in UAE. Both are a form of indirect taxation levied on selected goods & services for various purposes which leads to additional revenue for the government in UAE.
It can be a bit difficult for people to clearly understand the difference between these two terms and they usually require to approach a reliable tax consultancy services provider for assistance in registration for these prevailing tax systems in UAE.
Let us ease you a little by explaining the difference between excise tax and vat services in detail:
What are Vat & Excise taxes?
VAT: A value-added tax (VAT) is an indirect tax imposed on goods consumption and services in UAE. This tax was imposed for the purpose of creating a new source of income for the government which is utilizable for providing high-quality services to citizens like public transports. All major goods and services in UAE are chargeable under VAT excluding; financial services, residential buildings, and bare lands as per the norms of VAT registration in Dubai.
Excise Tax: Another form of indirect tax imposed on goods harmful for human health or the environment. The sole purpose of Excise Tax is reducing the consumption of unhealthy goods while increasing the government’s revenue that can be utilized for citizen welfare. Certain services and goods such as carbonated drinks (aerated drinks excluding unflavored water), energy drinks (i.e. drinks containing caffeine, taurine, ginseng, and guarana) and Tobacco (products listed in schedule 24 of GCC Common Customs Tariff) falls under Excise taxation.
Percentage of Excise & VAT
Excise Tax: Carbonated Drinks- 50%, whereas Energy Drinks & Tobacco have 100% tax imposed on them.
VAT: The Standard rate of VAT is 5% in UAE excluding international transportation and export/ import of goods or services.
How to register your business?
The business houses involved activities like; imports of goods or production of goods for consumption in UAE markets or stocking taxable goods must register for Excise Tax.
Moreover, VAT is applied on all tax registered businesses in UAE excluding some designated or free zones which are considered tax free.
The applicability of Excise tax is done only once in a supply chain, but businesses subjected to taxation and purchasing taxable goods remains ineligible for getting a refund. However, if a taxable good is used to again produce a “new” taxable good or same is exported outside UAE are eligible for refunds too.
VAT refund is applicable only if a business or individual has more tax on purchases than the output tax collected. Even tourists visiting UAE can claim a refund on the VAT paid during the trip.
VAT Consultants Dubai
Introduction of Excise & VAT taxes added newer responsibilities for businesses. Tax Consultancy is leading Service Tax Consultants in Dubai having assisted various businesses in top-notch tax consultancy services in UAE.
Bookkeeping is the process of keeping track of all your money coming in and out and flows within your business. Having a chronological record of all the transactions like credit/debit transactions, a record of the assets/liabilities held by your business, and reports of income, expenses, and sales all come under bookkeeping services.
Bookkeeping essentially helps in keeping all financial dealing records in a better way so that anyone requiring to access or audit the accounts will have a clear view of the same. Tax consulting firms usually provide bookkeeping services to companies to help them with their financials. So here are some tips to help your company do it the right way –
Using the Correct Accounting System
Any good business uses one of the two accounting methods commonly used. These are the cash based or accrual-based. The core difference between the two is the timing of transactions. When aggregated over time, the results obtained from both methods are approximately the same.
In cash-based accounting, revenue is recorded when cash is obtained from the customers and expenses are recorded when any of the cash is paid to the suppliers and employees. In the accrual-based method, the revenue is recorded when the company earns something and the expenses are recorded when the company consumes something.
Cash-based accounting is only possible if your company has no more than $5 million in sales per year. It is easy to account for transactions with this method as there are no complex accounting transactions involved. However, the random timing of cash receipts can show a report where the results fluctuate between high and low profits.
Accrual method is used by larger companies as it is required for tax reporting when the sales exceed $5 million. Accrual basis also helps in auditing a company’s financial statement. But unless a statement of cash flow is included in the financial statement, this approach doesn’t reveal the ability of the company to generate cash. Choose your accounting method depending upon the size of your company.
Maintaining daily financial records
One of the most important things to do with regards to your company’s financials is keeping a daily record of all your transactions. This will help you constantly analyze your company’s financial situation. Proper records help further accounting methods as well as audits.
Pay bills on time
This is one of the cardinal rules of maintaining a financial balance in your firm. Pay all your monthly bills on time so that you will not be charged with late charges.
Collecting your Bank statement
Although it might seem trivial, this is also another basic tip with big rewards. Collecting and keeping your Bank statement with other monthly records will help you track all your cost and expenses.
Choose a reliable bookkeeping organization
Availing the services of a bookkeeping service provider will help you keep up with your company’s financial situations and monetary needs on a daily basis. Also, outsourcing bookkeeping services will leave you with more time to do much more for your company’s primary business. Contact your tax consultancy in Dubai for more information on bookkeeping services today.
Every country has their own taxes. It is a mandatory financial charge imposed upon a taxpayer individual or any legal entity by the government in order to fund the government. Recently UAE introduced the Value Added Tax (VAT) on the 1st of January 2018. According to the law, a 5 per cent tax is levied upon the majority of transactions in goods and services with a few exemptions.
With the introduction of the new law, companies and other legal entities are approaching tax consultancies in Dubai for VAT-related enquired and services. Their expert tax consultants can help your firm file for VAT periodically and in compliance with the laws and avoid all kinds of VAT penalties. Here is a list of things you need to follow to avoid VAT penalization –
Registering for VAT
According to the new laws in place, it is mandated that every company offering taxable goods or services with annual revenue of AED 367,000 or above must register for VAT. For companies whose supplies and imports exceed AED 187,500 per annum, it is optional to register but not mandatory.
VAT registrations are regulated by the Federal Tax Authority (FTA) and have stated that any business failing to register within the prescribed time period will be considered as non-compliance of the VAT laws and will be levied penalties as severe as AED20,000. Further, the unregistered companies will be required to stop all their sales and business transactions until they receive their tax registration certificate(TRC) from the FTA.
For all the companies operating in Dubai, it is advisable that the maintain a complete record of all their transactions. For businesses with annual turnover in the range of AED 367,000 and above, it is required as per the law to maintain a record of all financial transactions including income, costs and all other VAT associated charges.
The FTA will inspect a copy of these records in Arabic to ascertain whether the company is following the compliances or not. Even if a business is generating an annual revenue that is exempted from VAT, it is best to maintain a record as it is the only piece of evidence to that could clear an inspection from the FTA.
VAT laws require every business to essentially play the role of a tax collecting agent on the behalf of the government of UAE. The VAT on goods and services are initially purchased from the customers when they buy or avail service from the company.
Any failure in collecting this VAT can result in a penalty that is five times the amount of VAT imposed on them which was payable in the first place. For all items subject to the tax, it is highly recommended levy the VAT to maintain tax compliance.
Filing VAT returns
Filing VAT returns depends upon the company’s annual turnover. For businesses with a turnover above AED 150 million, VAT returns must be filed monthly. Your tax consultant can help you file it within the specified timeframe to avoid any possible fines. Most other businesses can file VAT returns quarterly.
Understanding reverse charges
This is the amount of VAT an individual would have paid on goods and services if they were purchased in the UAE. This is applied to goods that are imported from outside the GCC. Even though the business is not required to pay VAT on the import, the buyer will have to report the VAT transaction under the reverse charge mechanism.
The buyer has to report the input VAT on the purchased goods as well as normal output VAT on their sales when filing the returns for that particular quarter.
Understand zero-rated supplies
As an entrepreneur, you must be aware of the zero-rated suppliers. A zero-rated supplier supplies goods that are still taxable but at a rate of zero per cent. So, your company is still required to report and record these supplies.
It is mandatory for the tax invoice to be issued within 14 days from the date of supply. The invoice must include the name, address, and tax-registration of the supplier. Particulars like quantity of the goods supplied, the rate of tax and amount payable must be provided in this invoice and in the local currency. (Dirham)
Contact your tax consultant in Dubai today for VAT-related queries, advice, and services.
Bookkeeping is a real challenge for all types of business. From recording the economic activities of the company to summarizing the business transactions in an orderly manner all in which aid the survival of the organizational. Whether it is a start-up, small business or an established firm the main priority is always the growth of the organization. Therefore, focussing on the business growth and trying to manage money at the same time becomes too complicated, especially if a business has many different moving parts.
As a Business owner or a manager, one has three options for
Accounting and Bookkeeping:
• Do it yourself
• Hire an inside accountant
• Outsource an accounting and bookkeeping consultants
Each of the above options have different pros & cons, but outsourcing your bookkeeping process has been proven to be the most effective and efficient solution. Trusting a third party to handle this process gives the assurance that your finances are in safe hands. This is because when you hire bookkeeping & accounting firm in Dubai, they keep your financial activates as their top priority. However, it is not applicable to ensure the same results if the owner or the manager tried doing it by his own, because of the constant changes in the business that requires more attention.
To get a clear idea of why outsourcing your finances to bookkeeping professionals in Dubai is the best option, have a look at the below reasons –
• It Frees Up Your Time –
Time is the most valuable resource for anyone! As a business owner you have to create more time for the organization and your team to gain an instant competitive advantage. Therefore, it is better to assign financial and accounting tasks to consultants who are already experienced and can help you maintain the business requirements.
• Saves Your Money –
Instead of hiring a dedicated employee for this purpose, outsourcing the bookkeeping service will greatly help in cutting the costs. This is because, by outsourcing your bookkeeping, you only have to pay for exactly what is being done.
• Minimizing The Peril of Mistakes –
As you are assigning the work to the bookkeeping & accounting consultants with great experience, you can be assured that the errors are lessened or eradicated altogether. Experts know their way around & stay up-to-date with the information within their industry and from the Federal Tax Authority in UAE. As a result, they guarantee to follow the best practices that benefit their clients.
• Boosts Cash Flow –
A good bookkeeper helps you in staying updated about the cash spending habits & suggests beneficial ways to cut down the cost. You can easily make the necessary financial adjustments with their assistance. All to improve the cash flow within the organization.
At the end, it’s essential to recognize that to flourish your company and to survive the UAE new VAT law it is important to hire and use the service from a bookkeeping firm in Dubai. Therefore, it’s time to make the difference and choose the best accounting and tax consultancy provider to give your business the best opportunity to unlock new growth potentials.
The term “Zero-rated supplies” in UAE refers to any taxable supply on which VAT is zero charged. Moreover taxation charged here is based on the nature of supply, despite the goods or services stocked or specified goods or services enlisted under zero rated list.
In general, total export of goods and services in UAE is considered as zero rated supplies, however certain conditions are applicable for a supply to be qualified as zero-rated in UAE executive regulations.
Which service or goods are zero-rated for VAT in UAE?
The following categories of goods & supplies are zero rated in UAE. But as mentioned above, supplies & services need to meet all conditions mentioned in UAE executive regulations:
1. Any direct/indirect export of goods & services outside enforcing States
2. Telecommunications Services that’s exported
3. Global transportation service for Passengers and Goods
4. Stock or import of investment precious metals (gold, silver and platinum with purity of 99% or more) which is tradable in global bullion markets
5. Residential buildings designed for commercial residence including hostels for college students or school pupils, armed forces and police, orphanage, nursing home, and rest homes
6. Buildings used by charitable trusts
7. Education services
8. Healthcare services
What is the difference b/w Zero rate and Exempt supplies?
It’s an obvious question, since conclusion of both zero-rated supplies and exempt supplies are same, but difference is in the process of claiming input tax credit (ITC). If you purchase goods or services noted as zero-rated supplies, you can claim paid VAT as ITC and set-off against your output liabilities. But for exempt supplies, claiming ITC on VAT paid on your purchases is not applicable. Also, you’ll be needed to report the details of zero rated supplies and exempt supplies separately in VAT Return.
To conclude, if you have any doubt regarding VAT policies in UAE, better to consult any trusted vat consultants in Dubai for more clarifications, since it’s important for businesses to know about the zero-rated supplies in detail along with the difference between zero-rated and exempt supplies as VAT charge rules are bit-different in each of these cases. It will also be helpful for the organizations in making accurate claims of ITC and VAT returns.