Why is financial literacy important for small business owners?

Why is Financial Literacy Important for Small Business Owners?

What is Financial Literacy?

Understanding the financials of your company is the foundation of financial literacy. It requires solid financial education, or knowledge of financial terminologies, ideas, concepts, practices, and assertions. All of the information helps in your understanding of the financial state of your business and the variables that affect profitability.

The Importance of Financial Literacy for Small Business Owners

You should more crucially be aware of where your money is coming from and going. Being financially literate enables you to make the correct choices for your business. Whether it’s about cash flow management, creating a business plan, hiring a new employee, or anything else, you’ll have a completely different perspective once you’re financially literate. You don’t have to be a college graduate to understand or excel at financial literacy. Even if you are from a non-accounting background, learning the basics can help you make informed decisions.

Let’s dive deep into the ways of how being financially literate can help you in business.

  • Managing your cash flow

Every company must have liquid assets (Cash or possessions that can be rapidly and readily converted into cash are considered liquid assets). While liquidity makes sure that businesses have enough cash to pay their bills, it can also give them a competitive edge when liquidity is limited throughout the economy.

Make sure you pay your suppliers on schedule and collect payments from your customers. This guarantees you have the appropriate amount of money on hand. You must seek out high-interest loans if you are unable to control your cash flows. The financial health and profitability of your business will be significantly impacted by these high-interest loans, but this damage can be minimized with the appropriate financial education.

  • Analyzing your Financial Statements  

Financially literate people can analyze their financial statements on their own. Financial statements depict the performance of the company over a period of time. They are usually made at the end of the annual year. The profit and loss statement shows the net profit or the loss of the business. 

By analyzing your profit and loss statement, you can accurately calculate the amount of tax. Besides the P&L statement, evaluating your balance sheet is also important as it helps you learn about the company’s financial health. You can find out the liabilities, assets, and capital of the company through your balance sheet. What’s more, you can estimate whether you can qualify for a loan and get an idea about the business’s creditors and debtors.

  • Handling taxes

Business owners have to deal with income tax, self-employment tax, and many more. If you have a thorough understanding of your tax situation, you can calculate how much you need to pay. If your tax situation is beyond your capabilities to complete, you can also hire a tax professional or accountant to handle your taxes for you. 

  • Make more informed decisions

For you to make crucial decisions, you need to have a grasp of the financials and what it means for you. When faced with a difficult business decision, you can confidently consider the financial implications before weighing your options and making the best choice for your business. 

Ways to increase your Financial Literacy

1. Use Debt the right way 

Many people think debt is bad, but that’s not necessarily true. If you look to expand your business by taking a business loan or other debt, there’s no harm in that. But if you use debt on unnecessary items, you will end up spiraling into more debt.

2. Build a habit of reading 

Reading books is one of the best ways to increase your financial literacy. You will understand the business terminologies and the ways experts analyze the finances of different companies. It will help you find the right ways to manage your cash flow and prepare your taxes the right way.

3. Stay up-to-date with the new technology

One of the best ways to increase your financial literacy is by understanding new technologies. The internet is an excellent way to stay up to date about various technologies. You can also use it to learn new financial literacy skills. 

4. Take advantage of Financial Education Resources

There are lots of free quality resources on the web such as videos, audios, podcasts, webinars, digital books, websites and blogs. Determine which method of learning about finance is right for you. These factors include your preferred learning style, budget, schedule, and transportation options. Once you’ve selected a method, it’s important to dedicate time in your routine to your financial education, as well as make connections with other professionals.

5. Know when to Outsource

Not every business owner can be a financial expert. If you’re struggling to take care of your business finances, consider hiring someone to help you take care of them. It’s tempting to think you’re saving money by doing it all yourself, but financial mistakes can lead to serious fees and fines. Kloudac can help you to manage your accounting and  finances and to support your crucial business decisions.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and the certification of Xero advisor from the world-leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  

Accounting and Bookkeeping are more convenient for SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software, and more. 

What are the major differences between in-house audits and external audits?

What are the major differences between in-house audits and external audits?

The goal of an audit is to determine if the information presented in a financial report accurately reflects an organization’s financial status at a given date. The auditor examines the organization’s financial report in accordance with the government’s auditing standards. Auditors use historical accounting data to forecast an organization’s future. An audit’s principal goal is to form an opinion about the data in a financial report.

Who typically organize, schedule, and perform in-house audits?

In-house auditors Internal Auditors are the ones who organize, schedule and perform in-house/internal audits.

An internal audit is the accounting procedure that assesses the performance of an organization’s internal controls. Simply, Internal auditors are internal employees who work for the company. An internal auditor’s goal is to add value and improve an organization’s operations while also ensuring that the organization follows government rules and regulations. Internal auditors collect all necessary information about how a company operates and use it to highlight where it is succeeding and where it might improve.

Who typically organize, schedule, and perform external audits?

An external audit is a third-party examination of a company’s financial accounts. An outside organization or an independent person does the external audit. An external audit is a valuable review of an organization’s accounting for both businesses and governments. In comparison to an internal audit, an external audit is less likely to encounter a conflict of interest. The role of an external auditor in evaluating a company’s finances is important.

What is the purpose of having both in-house and external audits?

An internal audit’s goal is to evaluate an organization’s performance on a regular basis and find areas for improvement in the future, whether the company is large or small. Internal audits are critical for businesses across a wide range of industries.

An external audit examines a company’s financial statements to ensure that they are accurate and complete. An external auditor may be hired by the organization to investigate fraud. It is an inspection carried out by a third-party accountant. This sort of audit is most typically used to obtain certification of an entity’s financial statements. Certain investors and lenders, as well as all publicly traded companies, demand this certification. 

Some major differences between in-house and external audits

Internal AuditExternal Audit
Look into firm business procedures and risksLook into financial records and render an opinion on the company’s financial statements
Single annual audit
Take place all yearAuditors will provide review services three times a year if the client is publicly traded
Not required to be CPAsMust be directed by a CPA
They are accountable to shareholdersThey are accountable to management
Must utilize specified formats for their audit views and management lettersCan deliver their conclusions in any report style
Management uses internal audit reportsStakeholders including investors, creditors, and lenders utilize external audit reports
Can offer staff guidance and other advisory servicesAuditors are restricted from assisting an audit client too closely

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software, and more.

How to develop and improve accounting systems

How to develop and improve accounting systems

Accounting systems help business owners measure business growth in terms of profitability. Good financial systems will also identify problems before they get out of hand. If you don’t know if your company has a strategy to develop, adopt and review accounting processes, now is the time to reconsider your accounting approach.

Using technology to optimize, automate, streamline and integrate as many steps of your company’s bookkeeping and accounting processes as possible will reduce your back-office burden immensely. Without a comprehensive accounting system, you’ll be operating your business in the financial dark and risk facing internal fraud, tax penalties, and possible failure.

Ways to develop, improve and optimize your accounting systems

1. Dedicated Business Accounts

Having a separate bank account keeps records distinct and will make life easier when it comes to tax time. Separating personal and business finances also protects your personal assets in the unfortunate case of bankruptcy. Most business checking accounts have higher fees than personal banking, so pay close attention to what you’ll owe.

2. Expense Management

You absolutely must have a system for managing employee expenses and reimbursing them. Your system should have processes in place for recording the expense (receipt tracking) and noting the purpose of the expense. If your employees do not have access to business credit or debit cards, you will also need to develop a standard process for expense reporting.

3. Accounts Payable / Receivable Management

Accounts receivable is your business’ lifeline for paying all of your bills on time or early. Without a thorough system for managing accounts payable, you risk your business’s reputation and the unnecessary expense of late fees and interest. Managing accounts receivable requires you to establish systems, policies, and procedures.

4. Automations to Consider

Business process automation can help you fulfill your business goals, but only if you use the right tools. Technology solutions have been developed to overcome almost every challenge. Look for scalable features and ongoing support, but don’t be afraid to make use of modern bookkeeping and accounting tools.

4.1 Select the Right Accounting Software

From the start, establish an accounting system for organizing receipts and other important records. Small/Medium businesses are most likely to use QuickBooks (43%). Other popular accounting software includes Xero, FreshBooks, Wave, and Sage. You can always consult a professional to get an understanding of which software would fit your business. You will be able to retrieve and review your income statements and balance sheets on a regular (monthly or quarterly) basis and always look at your business’s financial year as a whole with annual reports.

4.2 Data Management

Automated tools to retrieve data for you by way of optical character recognition (OCR), allowing you to automatically enter information into your accounting system are here.  It may sound futuristic, but it’s not! This technology is available today by way of tools such as QBO (QuickBooks Online)

4.3 Expense Management

Imagine a company that has the ability to memorize your company’s unique expense management policies and automatically determines which expenses need a manager’s review and which can get automatic approval. Save time and money by not having to create and authorize manual spreadsheets, speeding up the approval process, and eliminating duplicate data entry.

4.4 Invoice Management

Automated invoicing is huge! Eliminate mistakes and shave tons of time off your accounting team’s monthly tasks with solutions such as Intuit Payment Solutions, which automates billing, collections, and cash application.

4.5 Sales Tax Reporting

Finding the best tool for this type of automation depends on your business. Big penalties can be involved if you get sales tax wrong. Establish a proactive plan and system for accounting and keeping up with sales taxes.

4.6 Paperwork Management

Back up your data. Cloud accounting provides some protection, but you should have plans in place for potential outages. You should also scan paper documents to have digital backups in the event of an emergency in the office. Convert physical files into digital files. Reduce the time required to move a bill, invoice, or receipt into the system where the data is required using a tool like Receipt Bank.

5. Find High-quality Accounting Partners

As a business owner, you’ll need a little extra financial planning help or guidance, there are a few individuals you might want to consider enlisting:

●      Accountant. Accountants can advise at many different points, including your business structure, creating financial statements, obtaining necessary licenses and permits, and even writing a business plan.

●      Certified public accountant (CPA). In the case of an audit, a CPA is the only individual who can legally prepare an audited financial statement.

●      Bookkeeper. The bookkeeper manages the day-to-day records, regularly reconciling accounts, categorizing expenses, and managing accounts receivable/accounts payable.

●      Tax preparer. Your tax preparer fills out necessary forms and may file them on your behalf during tax season. Some will also set up your estimated tax payments.

●      Tax planner. These professionals help optimize your taxes before you file them, helping you learn ways to lower your tax burden.

KLOUDAC will help you design and establish smart and efficient bookkeeping and accounting processes that work for your business. We will save you time and money and provide you with the financial data you need to make strategic decisions. Partnering with Kloudac, your company will have access to a team of highly experienced, trained, and certified bookkeepers.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software, and more.

How to make better decisions and improve profitability

How to make better decisions and improve profitability

Every action you do and decision you make has an impact on a company’s profitability. As a result, you should have a greater knowledge of the decisions that you make. Here are 7 recommendations for increasing profitability:

There are four strategies to boost your company’s profitability.

There are four primary areas where profitability can be increased. 

  • Reduced expenses
  • Increased turnover
  • Increased production
  • Increased efficiency 

You can also diversify your business by entering new markets or developing new products or services.

Keep track of your expenses

Your profitability can be boosted by proper expense management. While most organizations can discover ways to minimize costs, it’s critical not to sacrifice the quality of your products and services.

Activity-based costing is a useful tool for determining the true cost of various company activities. It determines how much it costs to perform a certain business activity by allocating proportions of all expenditures – such as salaries, office space, and raw materials – to specific activities.

Examine your offer

Examine what you offer, who you sell it to, and how much you charge to determine if you can improve.

  • Pricing Factors to consider: Regularly reviewing your pricing. Changes in your market may allow you to boost your prices without risking your sales.
  • Determine who your best customers are: Your profitability is influenced by more than just your price list; the type of clients you sell to can also have a significant impact.

Think about the following possibilities:

  • Upselling – selling customers higher-priced items that contribute more to your bottom line.
  • Cross-selling – entails analyzing what customers buy and recommending comparable items.
  • diversification – Identifying a demand and generating new products and services to meet it.

Increase your purchasing power

Buying more effectively is one of the most obvious ways to boost your profits. It’s a good idea to check your supplier base on a regular basis to see if you can get the same raw materials at a lower cost or with greater efficiency. At the same time, make an effort to maintain a high level of quality.

Get the greatest price from your vendors

  • Identifying your major spending categories will reveal where you spend the most money.
  • To get a better price, consider using your status as a trusted client to negotiate long-term contracts or realistic annual minimum spending with your regular suppliers. Consider switching to a different supplier if you can’t find a better bargain.
  • Examine the number of vendors you work with. Purchasing from a large number of vendors can be inefficient because it takes more time and dilutes your purchasing power. Avoid putting all of your business with just one or two providers, as this could leave you susceptible if something goes wrong.

Reduce waste in the workplace

  • Reduce your energy costs by turning off all equipment while it is not in use
  • Remove unused phone lines or photocopiers that you are paying for

Broaden your customer base

Moving into new markets can completely reshape a company and, if done successfully, can greatly boost profits. Expansion into new markets, on the other hand, can be dangerous, and costly mistakes might be made.

Investigate

  • Research before you begin. Are you able to alter or adapt existing products or services to meet the needs of new markets? This can generate additional money at a low cost, which is great for increasing profits. 
  • Do you know who your potential new consumers are, why they’ll buy your product or service, when and how they’ll buy it, and how much they’ll pay?
  • You can also utilize social media to do research and solicit alternate perspectives, ideas, and comments from your customers.

New product and service development

It’s important to think about the viability of a new product or service before producing it for a new market. The following are some important questions to consider:

  • Do you have the necessary skills and expertise on staff, or will you need to hire them?
  • Do you have the commitment and resources to make the new endeavor a success?
  • Is it possible to reduce the risk?
  • Can you be certain that there will be a demand for the new product or service at a price that will allow you to profit?
  • Partnerships and joint ventures, rather than going alone, might give you more security in establishing yourself in a new or expanded industry.

 Increased output

  • Choosing the right key performance indicators (KPIs) for your company will help you set clear goals. They should reflect your objectives, be quantifiable and comparative, and allow for adjustments to keep you on track.
  • It’s beneficial to gain a sense of how similar companies address similar problems. Benchmarking can be as simple as comparing energy expenses between similar organizations or as complex as sharing data and analyzing production and stockholding habits with other companies you trust.
  • Benchmarking can generate new ideas and energy for making your firm more efficient by providing a different perspective.
  • When benchmarking, it’s a good idea to focus on areas that are similar to the KPIs you’ve already defined.

Checklist for Increasing Your Business’s Profitability

Improving the profitability of your company can help you cut expenses, enhance turnover and production, and plan for change and expansion.

The way you boost the profitability of your business will be determined by a variety of criteria, including the industry you work in, the size of your company, and its running costs. You could, however, consider the following choices:

  • Identifying areas in your firm that could be improved or made more effective
  • Evaluate your general business costs, such as overheads, how reduced deals with loyal customers affect your revenues, and how productive your employees are, as well as identify and reduce areas of business waste, such as electricity supply prices.
  • To increase your profit margins, use up-selling, cross-selling, and diversification tactics.
  • Identifying and limiting areas of expenditure via bargaining with your suppliers’
  • long-term contracts with suppliers to get a better bargain on products explore new opportunities in your industry and figure out where you could extend your market
  • Install monitoring systems and processes, such as benchmarking.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software, and more.

The ultimate financial guide to grow your startup

The ultimate financial guide to grow your startup

Do you want to start a business that will be financially stable? Are you trying to stay out of debt? And If you want to create your own business, you should do it yourself. But before that, you should be aware of a variety of growth strategies. Here’s a checklist to help you get started.

1. The importance of cash flow management 

  • Most businesses fail for a variety of reasons, but one of the most prevalent is running out of cash. 
  • You must be aware of the origins and destinations of each and every dollar. You are putting your business in a very risky situation if you do not keep track of your cash flow. 
  • When you run out of money, no matter how amazing your idea is, you are running into a problem. Make a budgeting plan and stick to it.

2. Track and monitor expenses

  • Expenses will come at you from all sides when you’re starting a new business. Because hiring a full-time bookkeeper is extremely expensive at first, instead, you can use accounting software to keep track of your finances. There are a number of certified and recognized accounting software such as Xero and Zoho books which you can use for this purpose. 
  • This will not only assist with cash flow management, but it will also make tax time much easier each year. 
  • You may need to hire a professional when your business grows, and your accounting becomes more complicated.

3. Limiting Fixed Expenses

  • Keeping your expenses minimal in the early phases of a firm is important to its success. Focus less on the size of the office, your office does not have to be huge in order to attract clients. 
  • Operate leanly so you may devote the majority of your wealth to expansion, which will allow you to implement any benefit you desire in the future. 
  • Too many entrepreneurs place too much emphasis on the wrong things, such as luxurious offices and expensive amenities, and overlook the fact that earning revenue should be their first priority.

4. Keep a positive attitude but be prepared for the worst

  • Maintain a positive attitude while expecting the worst.
  • When beginning a business, you never know what might happen, so it’s best to plan for the worse. Wait until your business can replace your major source of income before quitting your employment.
  • Maintain an emergency savings account for both personal and corporate funds. It’s impossible to be too prepared for difficulties. They do, unfortunately, happen, and they usually strike when you least expect it. You are responsible for your own retirement as an entrepreneur

5. Every minute is worth

  • Nothing is more valuable than your time in terms of money. You only receive so much of it each day, so keep that in mind as you plan your calendar and day-to-day responsibilities. 
  • Time (and money) is wasted every second you spend on something unrelated to your business.

6. Concentrate on acquiring new customers

  • You can’t run a business without customers. Once you realize how to gain consumers and scale, the more likely your firm is to succeed. 
  • Once you’ve identified the various acquisition channels, you may focus on optimizing them to reduce your expenditures.
  • Concentrate on the most profitable options because it’s hard to try every prospective acquisition channel at first, both in terms of time and money. You’ll have the financial capability to investigate other channels once you’ve effectively scaled those.

7. Ensure that you are compensated

  • You must pay yourself for your hard work and attention to your business. Make sure you pay yourself enough to live.
  • Allow yourself enough money to live comfortably while you concentrate on growing your company. It’s easier to keep focused on your business when you don’t have to worry about personal finances. 

8. Establish financial objectives

  • Break down your financial goals into manageable and verifiable segments.
  • Monthly or daily income objectives keep you on track and allow you to make the required modifications for continuous growth.
  • You can also set milestones along the way to keep track of your progress, giving you a lot of smaller goals to keep track of. Small accomplishments can provide you with the confidence you need to continue your business journey.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software, and more.

How to outsource bank reconciliation process

How to outsource bank reconciliation process

The process of checking the integrity of data between bank records and a company’s financial records is known as bank reconciliation. It starts with verifying a cash account’s balances in an entity’s accounting records to the information on a bank statement. As a result, it is a required process that can become tedious and time-consuming at times.

Why should you outsource the bank reconciliation process?

  • Do you find it difficult to reconcile your bank and credit card balances at the end of each month in Dubai, UAE? 
  • Is reconciling your bank and credit card statements getting more difficult, time-consuming, and complicated? 
  • Are you looking for a trustworthy and knowledgeable partner to manage your bank and credit card reconciliation? You’ve come to the right location if that’s the case.

Bank Reconciliation Process

This process consists of 4 steps as mentioned below. 

  1. Equate the Deposits

Highly experienced experts have the talent to equate the deposits properly on time.  

For example, the business records’ deposits should be matched with those in the bank statements, and the amounts should be compared thoroughly.

  1. Adjust the Bank Statements

You must keep an eye on your bank statements and balance the bank statements to the corrected balance. To cover up this process, you have to have a better understanding of the process and balance the statements on time. 

  1. Adjust the Cash Account

Adjusting the cash accounts is not an easy task. You must adjust the cash balances by adding interests or deducting monthly charges and overdraft fees. 

Accounting firms that have the necessary certifications have the knowledge and proper plan to help you adjust the cash accounts. 

  1. Equate the Balances

The reconciliation process will have to be repeated if the adjusted balances and the adjusted amounts are unequal. 

Therefore, it is wiser to communicate with an expert and equate these balances. 

It is always better to outsource the bank reconciliation process to an expert’s hand so that you do not have to tackle all your business work and also manage these processes. Outsourcing will help you to focus on your main objectives rather than setting yourself in trouble trying to balance all the tasks at once. 

Benefits of Outsourcing bank reconciliation process

  1. Ability to detect fraudulent activities

An organization’s distributed cheques can be matched with the amount reflected in bank statements using bank reconciliation outsourcing services. 

Their continuous re-evaluation, which is based on suitable sheets and procedures, aids in the detection of fraudulent actions such as payments made to illegal businesses, payments given to illegitimate employees or vendors, and unrevised sanctioned check amounts and data.

  1. Ability to find errors

Bank employees can make accounting errors such as transferring the wrong amount, recording the wrong amount on a check, entering the wrong amount in the wrong bank account, entering a duplicate transaction, or omitting an entry from a company’s bank statement. 

Outsourcing bank account reconciliation allows businesses to report inaccuracies to the bank, which then investigates the discrepancy and corrects the error.

  1. Ability to avoid overdrafts

Payments sent to employees and vendors, as well as payments received from customers, can take a long time to process. 

This primarily impacts businesses with extremely minimal cash on hand. 

Regularly outsourcing bank reconciliations can help businesses manage or defer payments, which can protect them from unpaid bills, company overdrafts, additional interest, and insufficient money.

Why should you choose KLOUDAC to outsource your bank reconciliation process?

KLOUDAC has a team of experts who are excellent at handling these processes. We are well experienced and can find quick and reliable solutions for our clients in no time. We have provided the best solutions over the past 15 years and KLOUDAC has proven experience in managing bank and credit card reconciliations which is why you should choose KLOUDAC.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software, and more.

Best Accounting packages for Businesses in Dubai

Best Accounting packages for Businesses in Dubai

Bookkeeping and accounting are central prerequisites for each business, small or medium. You can’t work without dependable, exact, and opportune monetary data. It is vital to screen your organization’s presentation, and fundamental so you can settle on suitable business choices. Our expert, completely qualified bookkeepers comprehend the significance of this, so they work energetically to ensure this imperative data is accessible when you really want it.

Our accounting services are organized into numerous packages. This gives a wide range of service optimization options, depending on how much money you want to invest.

Mentioned below are the types of Accounting Packages available from us:

1st Package:  Cloud Accounting

Generally utilized by small and medium businesses (SMEs). Monetary data can be seen from any place all over the world with access to internet. You can email, courier, or even normal mail the archives to us and our bookkeepers will update your books on the web. The electronic assortment is by a long shot the simplest, quickest, and most prudent strategy.

2nd Package: Onsite Accountant

If you require basically everything to be finished on your own premises, our bookkeeper will visit your office, gather the monetary data, and complete the bookkeeping. Companies of all sizes utilize this service on a regular basis.

3rd Package: Back office Financial Support

One of the broadly utilized choices is Back Office support. This is one of the most affordable packages out of all. And hence it has become famous. This can be customized according to your requirements. 

4th Package: Project Accounting

Many clients request project accounting services on a regular basis. Therefore, we have customized our packages according to the most demanded requests. An undertaking bookkeeper works explicitly on a given project for example review bookkeeping, bank reconciliation, financial data migration, and many more.

5th Package: Receivables and Payables Management

Accounts receivables and payables administration are widespread in large corporations. Tasks that are covered: 

  • 3-way check of purchase/sales invoices prior to recording them in the bookkeeping software
  • VAT compliance
  • To ensure that business cashflow is appropriately managed, pay supplier bills only when they are due and track customer receivables before due dates.
  • Overdue receivables are being pushed to debt collectors and then to the judicial system.
  • Management receives a report on the status of debtors and creditors.

6th Package: Account Reconciliations

Due to the large number of transactions, reconciliation is a prevalent difficulty in large businesses. Account reconciliation services are typically requested clients to provide the following coverage:

  • Reconciliation of bank and cash accounts
  • Reconciliation of stock
  • Reconciliation of debtors and/or creditors is appropriately managed.

7th Package: Accounting Review

Accounts are ready by the client’s in-house finance group and afterward checked on by our expert bookkeepers. We also use top accounting software to increase the accuracy of your finances, track changes, and enrich your business in no time. Our thorough audit of books guarantees that monetary information is precise, finished, and solid for direction.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.

Bookkeeping tasks for small and medium businesses

Bookkeeping tasks for small and medium businesses

What is Bookkeeping?

Bookkeeping is one of the most important attributes to learn if you want to run a successful business since it allows you to keep track of your money on a daily and long-term basis.

Bookkeeping Tasks

Bookkeeping tasks must be completed on a daily, weekly, and monthly basis. Making simple modifications to your routines to remain on top of weekly bookkeeping responsibilities may be as easy as devising a method that fits for your work style and schedule.

Weekly Bookkeeping Tasks

Bookkeeping duties offer the records and analysis required to comprehend a company’s financials.

1. Bills to Enter and Pay

Small company expenditures may rapidly mount up due to utilities, rent, and invoicing from vendors. Vendors appreciate immediate payment and staying on top of your bills is a certain way to maintain a good reputation and manage your money.

While many bills are due on a monthly basis, others may be due as soon as they are received. As a result, it’s critical to check invoices regularly for inaccuracies, note the due date, and arrange payment accordingly. Paying early not only avoids late fines, but it also allows you to take advantage of early payment discounts. 

It’s also easy to ensure that accounts have enough money when bills are recorded as a weekly bookkeeping activity.

Bill entry may be part of the everyday routine for larger firms.

2. Make your deposit

Small firms should make weekly contributions at the very least. Deposits can be done on a daily basis for firms that receive the majority of their payments in cash or paper checks. 

It’s important to make timely deposits in order to keep your cash on hand and your records up to date.

Mobile deposits may be sufficient to handle the inflow of paper checks and avoid a trip to the bank for firms that predominantly accept electronic payments.

3. Invoices should be sent

Consumers and clients paying on time are critical to cash flow. To help reduce the amount and frequency of late payments, create and submit invoices every week rather than at the end of the month. Include a due date and payment terms to ensure that customers know how and when to pay you; this will help if you have clients that are known for being late with payments.

4. Organize your transactions into categories

Knowing where your company’s money is going is essential to budgeting. Organizing each cost into categories is a good approach to keep track of your spending. The categories used are determined by the sort of small business and its requirements. The following are some examples of potential categories:

Payroll

Employee advantages

Utilities

Payments for rent or a mortgage

Insurance

Weekly transaction categorization will aid in maintaining accurate records and highlighting any problems or red flags; it is more convenient if you can maintain them daily.

5. Make Entries in the Journal

Any financial transaction done by a firm should be accompanied by a diary entry in the general journal. This keeps track of a company’s transactions in a chronological order.

In most cases, business journal entries use the double-entry accounting system, which includes balancing debits and credits across accounts. Assets, liabilities, shareholder’s equity, costs, and income are the five categories of accounting in this system.

6. Examine your inventory

Small firms that sell things must keep track of their inventory and register it. A weekly inventory assessment will help you figure out when extra goods are needed. Having up-to-date stock information is also essential for detecting theft and informing staff when an item is back in stock, so they don’t lose out on possible sales.

Certain components of inventory management should be done more regularly than once a week to maintain stock information up to date. For firms with larger sales volume or perishable commodities, tracking inventory receipt and sale should be daily bookkeeping activities. Inventory management software that links with your bookkeeping software can help keep things simple.

7. Produce Reports

Creating financial reports should be on a small business’s must-do list when it comes to bookkeeping. Some reports benefit from being conducted daily, weekly, while others might be run monthly.

Daily

Daily transactions for both customer and internal accounts should be maintained on a daily basis. Sales, costs, and payments are examples of such transactions. It will be important to keep track of transactions.

Records and files should be maintained daily. Receipts, invoices, and reports should be filed daily so that your documents are well organized. 

Weekly

Accounts Receivable: This report shows how much money a small business owes them, such as unpaid bills. Following up on late payments in a timely manner can be aided by keeping track of accounts receivable on a weekly basis.

Examining how much of each product you’re selling is essential for making short-term decisions.

Monthly

Cash Flow Statement: This document assesses a company’s cash flow management, which may be defined as its capacity to create cash to pay debts and meet operational expenditures. It’s beneficial.

Accounts Payable: This statement summarizes a company’s assets, liabilities, and equity in order to provide a snapshot of its financial position at a given point in time. A balance sheet may illustrate a company’s debt-to-asset ratio and net value at a glance.
The profit and loss statement:  indicates how much money a company has made after all expenditures have been deducted. Because many costs, such as electricity and rent, are paid monthly, a profit and loss statement prepared once a month will provide a more realistic view of a company’s bottom line.

8. Examine the timesheets

Small businesses with employees must incorporate payroll in their bookkeeping. Employee timesheets are checked once a week to keep track of their hours worked, which makes payroll calculations for compensation, tax deductions, and accrual of benefits like vacation and sick days much easier.

Payroll management software may be quite beneficial in this regard, and the majority of the major solutions link with popular accounting software like QuickBooks and Xero. There are even free payroll applications available to assist you with simple chores. The more processes you automate, the easier it will be to maintain track of your finances on a weekly basis. 

9. Bank Accounts Should Be Reconciled Daily and Weekly

Businesses may balance their bank accounts daily or weekly rather than waiting for a monthly bank statement. Businesses may compare their bank account balance to their book balance as often as they desire by simply connecting into an online bank interface. Weekly auditing allows organizations to quickly rectify any irregularities and discover fraud before it becomes a bigger problem.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.

UAE Corporate tax

UAE to launch first federal corporate tax of 9% from profits on business

UAE - Corporate Tax – Key Insights

The UAE Ministry of Finance announced on January 31 the implementation of a federal corporate tax regime with a standard rate of 9%, which will apply to eligible enterprises starting in June 1st,  2023.

The tax-free current system, which includes no personal income tax, has mostly been preserved. The Finance Ministry, on the other hand, stated that it was introducing a corporate tax to coordinate worldwide efforts to combat tax evasion and to meet challenges posed by the global economy’s digitalization.

Except for the “extraction of natural resources,” which will continue to be taxed at the emirate level, the new tax will be imposed on all enterprises and commercial operations in the country.

The United Arab Emirates has long marketed itself as a destination where international investors are encouraged, and income is tax-free. Low taxes and a business-friendly climate have helped to change the 50-year-old country over time.

Scope of UAE corporate tax regime

UAE Businesses are subject to pay corporate tax. Except for companies engaged in the extraction of natural resources such as oil and gas, all UAE enterprises will be subject to corporation tax.

According to the initial MoF guidelines, the UAE corporate tax regime would be residence-based, with the international income of UAE resident enterprises subject to taxation. Nonresidents would be taxed on business revenue earned in the UAE.

Under certain scenarios, which have yet to be stated in the law, the corporate tax base would exclude dividends and capital gains made by UAE enterprises.

Finally, under the UAE corporate tax structure, UAE withholding tax will not apply to any domestic or cross-border payments of any kind, including dividends, interest, and royalties.

When will the UAE's new corporate tax structure go into effect?

For financial years beginning on or after June 1, 2023, the new corporate tax structure will take effect.

Non-compliance will result in penalties, just like other taxes in the UAE. The penalty regime will be made public in the future.

Despite the fact that there is plenty of time to prepare, the evaluation, implementation, and post-implementation of corporate tax processes and procedures is a time-consuming and challenging task, depending on the size and operations of the organization. It’s best to start planning as soon as you can.

What Next?

Companies need to implement a proper Accounting System to record all their transactions Calculate their net profit in accordance with the international accounting standards (IFRS) Arrive their adjusted net profit to have their taxable net profit
What are financial reports?

What are financial reports?

What are financial reports?

Financial reporting is a common accounting practice in which financial statements are used to display a company’s financial information and performance over a certain period of time, usually annually or quarterly. 

In simple terms, a financial report is necessary for understanding how much money you have, where it comes from, and where it needs to go. 

Financial reporting enables managers to make informed business decisions based on the company’s financial health. 

Potential investors and banks will look at your company’s financial reports to see whether they want to invest or lend you money.

What is the reason for keeping organized financial records?

Financial reports are used by businesses to compile accounting data and provide information about their current financial situation. 

Many financial reports are accessible for public review, and they are used to forecast future profitability, industry position, and growth.

Financial reports are important since they fulfill several key objectives such as 

-tracking cash flow

-evaluating assets and liabilities

-analyzing shareholder equity

-measuring profitability

Types of Financial Reports

Balance Sheet

A balance sheet shows the assets, liabilities, and shareholders’ equity of a corporation at a specific point in time.

A simple look at the balance sheet will reveal total assets minus equity and liabilities. Balance sheets are often tracked quarterly, and data from balance sheets may be included in annual reports. 

Your present asset liquidity and debt coverage are also assessed in real time using balance sheets.

Example:

Balance sheet displays the total assets, liabilities, and equity of the organization.

Shown below is an example. 

Main use of the balance sheet is to indicate a company’s financial situation at a given moment in time. When the balance sheets for multiple consecutive periods are brought together, patterns in the various line items can be seen, this information becomes even more useful.

Income Statement

While a balance sheet examines current operations, an income statement examines them over a longer period of time. Some companies keep quarterly income statements and use them to track financial activities throughout the year.

The income statement shows sales, net income, expenses, and earnings per capital share when a firm issues stock on the stock exchange.

The income statement and the profit-and-loss statement are the same document for reporting earnings and losses.

Example:

Income statement displays the sales, revenue, expenses, and losses of the organization.

The income statement is used by research analysts to analyze year-over-year and quarter-over-quarter performance. One can determine if an organization’s efforts to lower the cost of deals benefited it in further growing benefits over time, or whether the administration worked out how to keep tabs on working expenses without sacrificing productivity.

Cash flow Statement

The cash flow statement is useful for determining how efficiently businesses earn cash to pay off debts. 

Cash flow documentation also includes how successfully organizations fund operations and investments, as well as the continuing activities that create income to cover costs. 

Understanding the efficiency of present procedures, spending activities, and income generation requires accurate cash flow statements.

Example:

Cash Flow statement shows the current operations, spending/ investing activities, and financing activities of the organization. Show below is an example statement of cash flow.

Cash flow statement is used to manage finances by tracking the cash flow for an organization. Cash Flow statements are extremely useful for the management to take informed decisions for regulating business operations.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.