Professional Accounting & Bookkeeping Tips for Startups in the UAE
The need for having efficient accounting solutions is highly critical for startups just like other big companies in the UAE. This is because it’s important for Startups to think big and have the vision to grow big and for that entrepreneurs should start thinking right from day one. However, in truth, many startups in the UAE have a single-entry system of bookkeeping and struggle with cash management issues and fails to keep complete books of accounts, mixes personal affairs with business, no track of the withdrawals which make their growth prospects muted. And hence banks keep distances from SMEs when it comes to finances. Implementing efficient accounting processes by availing the services of reputed accounting firms in Dubai & UAE would help startups tackle the grave issue of cash burn. A faster rate of cash burn is considered as the prime cause that leads to the early demise of many startups.
A recent survey by Sage Consulting has attributed a lack of knowledge about accounting and poor cash management as the two major reasons that contribute to the failure rate of startups in the UAE. The survey found that an alarming number of startups have been struggling to effectively execute the processes of cash flow, reporting of expenses and billing and invoicing. This is where the services of efficient accounting firms in Dubai & UAE become crucial to the sustainable growth of startups.
How Startups Could Avoid Challenges in Maintaining Accounting Records in UAE?
Every Startup needs to have proper knowledge about the accounting processes and should hire the services of efficient accounting & Bookkeeping firms in UAE right from the inception of the business. Startups need to undertake the following steps to keep the accounting challenges at bay:
1. Maintain Proper Records
Every successful startup story is centred on the premise of an innovative idea that could offer disruptive solutions. However, an idea alone could not take them ahead in the journey to sustainable growth. It is imperative for startup entrepreneurs to record every transaction right from the go. The Chartered Accountants in the UAE recommend startups to follow the double-entry bookkeeping system, which requires both the credit and debit sides to be maintained. Maintaining proper records would be helpful for startups at the time of funding.
2. Open Startup-friendly Bank Account
Startups and small businesses in the UAE have been struggling with opening a bank account. Banks consider startups and small businesses as ‘not bankable’ apart from the tough regulatory requirements and high minimum balance requirements. Yet, in recent years some banks have come up with many startup-friendly solutions. Opening a corporate bank account could ensure the startups easier dealing with creditors and debtors.
3. Make Proper Financial Statements
Balance sheet and Profit& loss statement, also known as the Financial Statements, is one of the most vital requirements for the decision making that any company needs to keep, irrespective of its size. The Chartered accountants in the UAE advise Startups to create a balance sheet showing net worth as on particular date and a profit & loss statement that shows the company’s revenues and expenses over a specific time, generally a year.
4. Prepare Accurate Invoices
Sending accurate invoices to customers on time is critical for the long-lasting growth of startups. More customers mean more invoices to be sent and this makes the process challenging. Accountants in the UAE startups should ensure that a copy of every transaction is properly kept which would enable the company to maintain good accounting records. Maintaining invoices contribute to the sustainable growth of the business in the long-run.
5. Invest in Proper Accounting Software
Digitalization has been transforming the accounting & bookkeeping process in the UAE. Startups need to ensure that the accounting service they have hired is using the latest accounting software. Automation of the accounting process helps in easy data storage and makes the entire process quick. Availing the services of an accounting firm that uses the automated system will help the companies focus on their core competencies.
6. Hire Services of Startup-friendly Accounting Firms in the UAE
Most of the startups in their initial phases would be lacking in resources. Appointing internal accounting staff would be feasible for big businesses but not for startups. Startups that struggle with resources would have a tough time dealing with employees with limited skillsets and less experience. Accounting firms recommend that startups should outsource accounting and bookkeeping services in Dubai & UAE instead of spending money on internal accounting staff.
Accounting & Bookkeeping Services for Startups in the UAE
Jitendra Chartered Accountants (JCA) is a prominent name among the elite accounting firms in Dubai, UAE. JCA’s team of highly qualified chartered accountants helps the UAE-based startups address the challenges of cash flow management, planning, and forecasting of budgets, etc. Outsourcing the accounting services to JCA would help startup entrepreneurs smoothly deal with the requirements of maintaining proper accounting records as per the UAE law. JCA’s accountants would ensure that the company has maintained proper invoices, profit & loss statements, etc. that would have a positive bearing on the startup’s sustainable growth in the long-run.