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Tips To Maintain Company Financial Accounts

Maintain Company Financial Accounts

Accounting and bookkeeping play a basic and significant role in the progress of any company, big or small. Maintaining the company’s financial transactions correctly is the main aim of accounting.

Ever since the implementation of the VAT, in the United Arab Emirates, it is mandatory to maintain a financial account and bookkeeping. The Federal Tax Authority also mandates companies to maintain accurate financial transactions.

The Companies Act, 2013 states that a company’s book of accounts is said to be properly maintained when it satisfies the following conditions:

  • Books are maintained according to the double-entry system and the accrual basis of accounting.
  • Books giving a true and fair account of the transactions along with the documents explaining the same.

The double entry system: This means that every transaction makes a difference in at least two different accounts. If one account has the amount entered as the debit, then the other account should have the amount entered as a credit.

The accrual basis of accounting: It is the opposite of the cash-based system of accounting. Here the profits are recorded when they are earned, not when the cash is received. As such, the expenditure is recorded when incurred, not when it is paid for.

Over time, Dubai has become a favored destination of the investors, especially after the Dubai 2020 Expo plan. All types of companies like the free zone companies, the limited liability and the branch of foreign companies, etc., are required to undergo regular auditing.

The financial year in the UAE normally starts from January 1st to December 31st but companies are free to select their own financial years.

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The account books of a company are the sole basis on which the financial statements are prepared for the company’s annual return filing. Since introduction of the VAT, the filing return is to be submitted at regular intervals to the concerned authorities; the duration for which is 3 months per year.

The main intentions behind filing returns are to explain to the Federal Tax Authorities the summary of the VAT.  The Audit firm/Tax consultant in the UAE provides services to companies relating to the various VAT procedures like the VAT return filing, VAT registration, etc.

Trade license renewal in UAE, approval of bank loans or availing credit facilities requires the audited company statements among the many authorities.

One could say that the basic function of auditing would be to help identify the actual financial position of the company. By approaching companysetup.ae, you can easily manage and maintain your entire company’s financial accounts.

To Speak with our Experienced Business Consultants for further information and assistance, call us at +971582595164. Send a WhatsApp Message for Chat Query on +971 582595164 or email us at info@companysetup.ae.

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