Being one of the major contributors to the economy, do SMEs give much importance to their business accounting?
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It's quite a well-known fact that about 94% of all businesses in the UAE are SMEs. As per the Ministry of Economy estimates in December 2019, SMEs contribute about 52% of the UAE's non-oil GDP. As it's evident, this sector plays a crucial role in the advancement of the economy and the employment of human resources. The survival of SMEs and startups is imperative to any country to help combat employment issues, increase growth rate, and contribute effectively to making the economy competitive in the global market. If you own a small business or a startup, you would've come across many myths surrounding it. You may have even faced several problems in your entrepreneurial journey or committed mistakes that could have impacted your business. One such myth or a mistake thinking is that small businesses and startups don't need accounting. How far is it true? We'll find out. Every business becomes transparent with the introduction of VAT in the UAE. However, a significant percentage of them do not avail of automated solutions for VAT-related responsibilities.
VAT and SMEs in the UAE
Numerous businesses perform accounting-related tasks manually. There are many accounting-related assumptions that people believe in. One of them is that automated accounting solutions are expensive for large enterprises. Hence, this acts as a hindrance to accepting change. What most businesses do not realize is that such a perception may be stopping them from investing in a solution that promises accuracy and saves them from any incident of penalties. Errors in financial statements can significantly change the business image and result in inaccurate financial decisions. Hence, the resistance to change may result in mistakes in filing VAT returns, attracting fines from the FTA. Manual work on excel spreadsheets tends to be extremely time-consuming with no guarantee of error-free VAT reporting and filing. Not to forget, the pressure and the workload that comes with it can shift the entrepreneur's focus away from the core business operations. If you are a VAT registered business, you will have to maintain proper financial records according to the FTA requirements. All the records must be prepared with accuracy to avoid any penalties.
Why is accounting important for SMEs?
Bookkeeping and accounting are important for all companies, especially SMEs and startups, to monitor the financial performance of the business. Recording financial transactions, allocating, and planning their resources by budgeting, creating profit-generating policies, and more form some core elements of why accounting is necessary for small businesses. Whether you have registered your business for VAT or not, you need to consider streamlining your accounting. With a cloud-based accounting platform, it's possible to reduce the amount of administration required. It eliminates the reliance on manual tasks and excels spreadsheets for accounting along with providing tax invoicing solutions. Neglecting the maintenance of books of accounts impacts the business adversely in terms of affecting financial management, cash flow crisis, incorrect financial decisions, inaccuracy in VAT returns filing, and more. Hence, updated accounting records are beneficial to the smooth functioning of the business. Updated and comprehensive bookkeeping is a necessity in today's competitive market to ensure business survival. The stakeholders need to know the financial status of your business, which they can get by referring to your financial statement. It's necessary to invest in the right accounting system to ensure error-free reporting. This will help in fulfilling tax obligations and making strategic decisions about investment and growth. Proper accounting records act as a reliable source, which helps in securing loans. The simplest way to ensure updated records is to get a secure, reliable, and transparent accounting application that complies with VAT laws. We've come across many businesses that do not consider accounting as their priority. Whether it's adopting a new strategy or re-evaluating pricing, some entrepreneurs do not recognize the role of accounting and bookkeeping in decision-making. A clear understanding of financials goes a long way in ensuring the success of any business and help in cash management.
The present situation of SMEs
The Coronavirus pandemic has had a great impact on the business operations of many SMEs. Many of them had to shift their operations online to cater to their customers in the digital arena. This growing competition in the online sphere and the limited visit of customers to the offline stores has resulted in a struggle for SMEs. The digital transformation of the world is forcing businesses to reconsider their way of extending products and services. From taking immediate steps to deal with Covid-19 and adapting to remote working, to finding ways for surviving a crisis - the SMEs had to learn it all. Although the markets have opened up, businesses are still trying to adjust to the current situation. The UAE government and the relevant authorities also had introduced several incentives to support this sector in many ways and protect them from the disruption caused by the pandemic.
Why should you hire us for accounting?
There are certain things you must consider before you decide who to hire for your business bookkeeping. As a UAE business, you will have the option of hiring an accountant, doing bookkeeping on your own, hiring a freelancer, or outsourcing it to an accounting company. Financial matters are delicate and require qualified professionals to handle them. You can choose a cloud accounting application that comes with tax invoicing software to take care of all your accounting and VAT needs. Catering mostly to the service industry, our accounting platform brings the bookkeeping experts and AI in a team to do your business accounting through our app. From a consultancy firm to a marketing agency, we have experience in all the major industries and are equipped with the right tools to assist your business. Being an online application (mobile and web-based), you will get mobile access to review and examine all your reports on your device whenever you want. With free accounting and VAT consultation, we make sure your business is on track to making the right decisions. As the SMEs and startups were looking for tech-based solutions for their business during the lockdown, many of them approached us for their business accounting. Being a remote work friendly team, we could easily adapt to the ongoing situation and continue extending our services to our new and existing clients. Without any doubt, it's clear that the future is based on technology that joins hands with human intelligence to transform the customer experience. If you would like to know more about how we cater to SMEs and startups, get in touch with us on +971 4 342 5577 or info@mcledger.co
