4 Reasons Businesses Must Prioritize Bookkeeping Now More Than Ever
Not many entrepreneurs realize the important role played by bookkeeping in providing financial advantages that can help propel their businesses towards greater heights. Having an organized financial records system is an essential aspect in any business, especially if you want to generate concrete strategies that can ensure profitability. This financial procedure is just as important, maybe even more crucial, as running the company on a daily basis, especially for start-up enterprises that still work on a limited budget. This is why organisations must consider bookkeeping a top business priority. Here are the reasons why proper bookkeeping should be implemented in your company now: 1. It helps you strategize well for your business Devising a concrete business plan become much easier if you have a reliable bookkeeping system, especially as it allows you to predict future expenses and returns. It can help you find out things on the financial aspect of your company, which can in turn, help you to arrive at informed decisions that involve your accounts. Basically, bookkeeping gives you the ability to fix errors or inconsistencies that can put a dampen on your financial planning. Of course, make sure you trust competent bookkeepers. You will put the future of your business in the hands of these people, so you have to guarantee that they are knowledgeable when it comes to this field. 2. It can help you forecast and analyses data As we have mentioned earlier, data recorded by bookkeepers are vital in making forecasts, specifically because they give a coherent analysis of your expenditure, returns, as well as profits. Bookkeeping breaks down all data in a logical manner, giving you a clear image of your financial positioning that can widely affect your decision-making for the company. Without bookkeeping, you won’t be able to learn the company’s cash flow, as well know which aspect of the business you should focus on or cut back your budget on. 3. It can give accurate and transparent financial reporting One factor integral in any business expansion are the financial statements entrepreneurs present to people they wish to win their trust over. These could be the authorities, auditors, banks (if they wish to obtain loans), and investors. And how can these businesses present coherent financial statements that provide utmost transparency? With the help of bookkeepers, no less. Bookkeepers generally track all expenses, income, and the overall budget, giving business owners confidence that transparency across all their accounts is achieved. 4. It greatly helps with VAT requirements The UAE government is strict when it comes to the country’s tax laws and regulations. Business owners must comply with these requirements implemented by the Federal Tax Authority (FTA). And when it comes to financial records, the authorities have absolutely no tolerance for negligence related to bookkeeping violations. If you fail to follow, or even so much as delay compliance of these rules, the penalties could be severe. This is the reason UAE companies must have a solid bookkeeping in place to ensure each record is correct and up-to-date. It is important to have properly maintained and accurate records for at least five years. Why? There are several instances wherein the FTA will just ask for copies of the records. And if you fail to show any, expect to face those penalties. With a coherent bookkeeping system, it will become easy for you to keep track of due taxes as well as comply with the laws of the UAE. This system guarantees to keep your business safe from penalties.
Tax penalties that you can face if you don’t have bookkeeping system:
1. The failure of the person conducting Business to keep the required records and other information specified in Tax Procedures Law and the Tax Law
Penalty: AED 10,000 for the first time. AED 20,000 for each repeat violation.
2. Failure to submit the required records in Arabic when requested by the Authority.
Penalty: AED 20,000
3. The failure of the Registrant to inform the Authority of any circumstance that requires the amendment of the information pertaining to his tax record kept by Authority.
Penalty: AED5,000 for the first time. AED10,000 in case of repetition.
4. The submission of an incorrect Tax Return by the Registrant.
Penalty: AED1,000 for the first time. AED2,000 in case of repetition.
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