Accounting in UAE: Five Bad Habits Small Business Owners Should Break in 2022

Adopting robust internal practices makes companies agile enough to stay a step ahead. However, the lack of effective internal controls and practices create inefficiencies, giving constant headaches to business owners. In 2022, businesses can ensure their internal controls are robust with the help of accounting firms in Dubai.

Maintaining properly organised books of accounts can make a significant difference to the way a business operates. Well maintained books will prevent you from spending more time looking for specific transactions and invoices. More importantly, clean books will enable you to focus on key aspects such as business growth, employee experience and customer success. To achieve this, you need to avoid certain bad habits that are given below:

1. Mixing Business and Personal Affairs

Small business owners often fail to draw a boundary between their personal life and company affairs. To maintain a clean book, such companies should avoid dipping their personal pens in their own company’s ink. To stop mixing personal and business affairs, accounting firms in Dubai advise you to keep a separate bank account for all business transactions. Keeping the personal and business accounts separate will prevent confusion and make business bookkeeping hassle-free.

2. Delaying Bank Reconciliations

You need to view payments against the banking ledger to ensure that the company’s transactions have been recorded properly. This process is commonly termed bank reconciliation and it’s a time-consuming process. Even though you may feel the process to be repetitive, bank reconciliation is a vital task essential to keep the financial statements up to date. Delaying bank reconciliations can create an array of problems that may seriously hinder your ability to make significant business decisions.

3. Failing to Attach Invoices and Receipts to Transactions

Forgetting to attach invoices to each transaction is a bad habit that small businesses still struggle to avoid even in 2022. You must implement robust systems in place to make the process of attaching invoices easier. Having the invoice at your ready disposal will give you all the necessary details about a particular transaction. Moreover, attaching it to the relevant transaction will streamline the process, placing all the relevant data in one place.

4. Not Implementing Automation Tools

Turning to automation is vital for businesses as relying on memory to get things done have become a thing of the past. You should automate a wide range of accounting and bookkeeping functions in your company including the generation of recurring invoices, invoice reminders, setting up rules for bank reconciliation and invoice uploading. Business owners must critically analyse the way their business is operating and identify the areas where automation is required. Automation is all about working smarter and not working harder. Accounting firms in Dubai can help entrepreneurs to identify the areas in their business that need to be automated.

5. Start Customising Chartered Accounts

The use of template profit and loss statements that are not customised to your specific requirements must be abandoned. This bad habit is commonly manifested in the general expenses account used by business owners as a dumping ground for random expenses. Such accounts are not helpful to you and will appear to be cumbersome when you prepare your company’s tax returns.

If business owners are unsure which category an expense belongs to, they must create a new account. You can also split out different revenue streams into separate accounts on the company’s profit and loss statement. When you group all your revenue into a single line, it will be tough for someone to get a true insight into your company’s financial position. The separation of different streams of revenue will make the company’s gross profit margin more accurate and create a much clearer picture.

Consult with the Best Accounting & Bookkeeping Firms in Dubai

In conclusion, the operations of almost all businesses depend on robust accounting & bookkeeping strategies. In view of this significance, accounting & bookkeeping should always get the top place on your company’s overall agenda. Accounting and bookkeeping is one area of business that warrants constant attention and respect and that’s why it’s advisable to outsource it to accounting firms in Dubai such as Jitendra Chartered Accountants (JCA).

JCA is one of the leading accounting & bookkeeping firms in Dubai with over 20 years of experience. We have a team of highly qualified accounting and tax professionals who can help you develop robust business strategies. JCA has helped thousands of startups and small businesses to create effective accounting strategies. JCA’s accounting services in Dubai also cover allied services such as audit, VAT compliance, ICV certification assistance, corporate finance, ESR, UBO & AML-CFT compliance etc.