How Accounting Firms in Dubai Help UAE E-commerce Companies?
One can view the rapid and surprising growth of e-commerce business in Dubai with astonishment. The sector was poised for growth due to high digital penetration and consumers with huge spending power but the COVID-19 pandemic led to a huge and sudden spurt in the sector’s growth. Surveys indicate that the consumers who shunned the brick & mortar business forms are likely to spend more money on online shopping.
The chances for the pandemic to abate are fewer and therefore the e-commerce sector likely to get stronger. However, the process of accounting for e-commerce firms comes with certain unique challenges. Maintaining books of accounts in the UAE are mandatory for the mainland companies as per the UAE Commercial Companies law and free zones regulations. In this background, it is worthwhile to know how the accounting and bookkeeping services in Dubai can help e-commerce companies.
What is Unique about Accounting for E-commerce Businesses in Dubai?
The key feature that differentiates the e-commerce business and the traditional brick& mortar companies are the way goods are being sold. In the traditional business, the transactions take place across a counter, and in the online landscape, it happens through different channels, which often confuse even the sellers. However, even the mode of transaction is different the accounting process should be the same for all the companies, be it online or physical.
To elicit this challenge, let’s bring in the analogy of self-driving cars. We all know that the way the traditional cars and the automated vehicles operate is different as the latter operate without human contact. However, both the normal cars and the driverless cars have to follow the same transport rules and regulations and this creates fresh challenges. In the same way, accounting for e-commerce has to comply with the same accounting rules of tracking, recording, reconciling, and reporting transactions just like the brick & mortar businesses. In situations such as this, the reputed accounting firms in Dubai, UAE come to the rescue of the e-commerce sellers by providing reliable professional assistance.
Challenges of Transaction, Inventory Checks, and Data
One of the biggest challenges that daunt the e-commerce business owners is the difficulties in getting access to data about transactions, inventory, and the costs of the goods sold. This becomes the e-commerce sales take place through multiple channels of action which are sometimes not even seen by the sellers. This is in contrast to the brick & mortar business where the transactions happen across a counter or checkpoint at the retail store.
In the e-commerce business, the orders for products are placed online and the payment is done at the website’s checkout point. The product then undergoes the process of packaging and gets shipped and delivered to the customer. The packaging and delivery will be done by either the supplier or the manufacturer. In some cases, it will be done by e-commerce giants like Amazon.ae or Noon.com if the seller has a contract with them.
The inventory management becomes a tough process here as the same bunch of goods could be located at different points during the distribution. The transaction data will be recorded by the software and add changes to the virtual inventory but the data could be retrieved only from the back-end of the selling platform.
Challenges Faced by E-commerce Companies Regarding UAE VAT
The E-commerce sector (electronic sales and purchases) comes under the standard 5% VAT in the UAE. As per this, the sales and purchase of goods through e-commerce sites are considered as domestic sales and is charged under 5% VAT. Further, the purchase of goods and services from outside the UAE is also subject to the standard VAT rate.
Also read: Procedure for Filing VAT Returns in Dubai
The companies often face difficulty in accounting for the VAT on specific sales that are subject to the standard rate. Since foreign transactions are also involved, the sellers often lose clarity. However, outsourcing the services to the best accounting firms in Dubai could bring efficiency to the accounting process.
Why Choose Jitendra Chartered Accountants?
The e-commerce sector is currently one of the most promising business sectors in the UAE compared to the traditional retail sector. However, due to its unique way of selling and distribution, the companies may find the many aspects of the sector confusing and challenging.
Since maintaining books of accounts in the UAE is mandatory, the companies often struggle with e-commerce accounting. This situation demands the need to outsource professional accounting & bookkeeping firms in Dubai, UAE. Jitendra Chartered Accountants (JCA) is one of the most reputed accounting firms in Dubai with years of experience in helping out thousands of clients from a variety of industries. JCA’s highly qualified Chartered Accountants assist the businesses with all the requirements of accounting & bookkeeping services in Dubai.
JCA provides high-quality financial recommendations to the companies thereby helping them setting robust business goals. JCA is a one-stop-shop for all the services including accounting, auditing, VAT filing, etc. and is committed to bolstering the financial growth of the companies by providing top-notch business solutions