A business can never be imagined without money. In the very definition of business, it is stated that it is any activity that is done with the objective of earning profit in monetary terms. When money is vital for any business, then it is a no-brainer to keep a proper track of its inflow and outflow. This tracking of money is known as accounting, and every company strives to maintain a proper accounting record. Accountants are hired, either full-time or on a contractual basis to constantly keep a check on the inflow and outflow patterns of the finances.
There are various advantages of having a sound accounting system for a company.
Monitoring the Money Movement
With proper accounting records, it is easier to track down where your money is going. This can help in keeping the spending in check and make you more accountable. If you are not monitoring the money, then it can be the case that you’re spending too much in one area and neglecting the other major aspects. By maintaining proper accounting records, it is possible to manage the expenses in a better way and spare money for the areas where it needs to be put-in the most.
The Time of Taxes
Payment of taxes is an integral part of the smooth running of any business. Any company in the country needs to be ready for the tax period. In UAE if you are not maintaining the accounting records of the business, all the things will be completely hay-way at the time of paying taxes. One might owe a lot of taxes, but he/ she might not be able to claim any tax savings due to the absence of financial records. Proper accounting records are of the utmost importance when it is time to pay taxes for any company.
- There are various types of tax period under UAE VAT regulations and vat registrant comes under one of these tax periods.
- The information regarding this is available for respective vat registrant in their VAT Registration Certificate/TRN Certificate and also on FTA Portal.
- When you receive your VAT Registration Certificate on FTA Portal, one should look for the applicable tax periods. As compliance of the VAT Return and Payment of VAT is based on this Tax Period.
- First tax period of the companies registered under UAE VAT could be ranging from a solitary month to five months and succeeding tax period would be either monthly or quarterly.
Giving the Standpoint
A company that is unaware of the financial picture because of accounting instability is called as an unorganized company. Finance is the parent element of any company, so an entrepreneur should know much about the money-matters as possible. Accounting and Bookkeeping has a big role to play in this whole scenario. Make sure to keep accounting records in the safest houses as it will help the company to stay organized, and the owner will be aware about the status of the company. It will also give an idea about what needs to be done to achieve the set goals.
Checking the Credibility for Loans
Borrowing money from banks and other financial institutions is part and parcel for any company. The lending institutions are always concerned with the repaying capacity of the company, and they can have an idea of the credibility of the firm by having a look at the accounting statement. If proper accounts are not maintained, then you will face a lot of difficulty in arranging for funds at the time of need.
The Concluding Part
Accounting is an integral part of any company, and it needs to be done just as attentively as any other job of a company.
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