Every organization required information to go about its business. The better the data can be found out about the company, the better the management's decisions will be. This information will help the company know the company's current financial statures, assist in developing a budget, and prepare a plan of action for the company's future.
The Middle East has become a breeding ground for Business, both national and international, which has led to considerable demand for Accounting and Bookkeeping services in the country. This is why it is recommended that every Business should take the assistance of a Reputed Chartered Accountancy firm so that the development of the company is not hindered.
What does one mean by Accounting Services?
For any company to function, it needs to analyze all the information generated by the company. This is where Accounting comes into play. Accounting is a functioning in which all the data of the company is accumulated, summarized and analyzed. The data analysis provides various insights that can be used in making a decision for the company's future. This is why the accounting function is so essential and is considered the lifeblood of a company.
The Accounting function may sound like a straightforward and easy function which it may be at the start of the Business, but as the Business grows, the Accounting and Bookkeeping of the company will grow more complex. Accounting is one of the functions of a business that cannot be disregarded. It forms the basis of almost all the decisions taken by the management of a business.
The accounting function can be a very repetitive function, but any business management cannot be overlooked. This function is so necessary for a business that it has been dubbed as the language of companies. A keen and learned accountant can find out any information about the company, which makes the accounting function very important.
What are the Documents to be prepared during the Accounting Process?
Whenever the accounting function is performed, then the. As a result, there are mainly three different types of report which are prepared. These are:
- Income Statement
- Profit and Loss Statement
- Balance Sheet
Each of these statements provides in-depth information about the business's work and assists the management in taking decisions for the future of the Business.
The Income Statement provides an insight into the total income of the Business in a particular time frame. This time frame may be a business quarter, a financial year or any other duration as decided by the management.
The Profit and Loss Statement, also sometimes known as Cash flow Statement, provides the information that if the Business is on the correct path of growth. Suppose the profit of the Business turns out to be less than the losses incurred by the Business. In that case, the management must do a further analysis of all the functions so that the Business regains the momentum before it is too late for the Business and the Business has to shut down. This is the reason a business needs to create, maintain and improve the cash flow of the business, which will, in turn, streamline the business processes and will also increase the profits of the company.
A Balance Sheet provides a comprehensive picture of the company as it lists all the assets and liabilities and their present worth. It also provides the shareholder's equity and also shows the total investments made by the investors. The balance sheet, when used alongside the different financial reports, provides a complete financial picture of the Business and also helps the management in finding out the various financial ratios.
The statements as mentioned above or documents of the company are very necessary for both the management and the investors of the company, both present and future investors. This is why the importance of these three company statements cannot be more stressed.
People often get confused and proclaim that the Bookkeeping and Accounting function are one and the same. This cannot be further than the truth.
What is Bookkeeping, and how is it different from Accounting?
Bookkeeping is a function which keeps track and record all the transactions of a business. It is a bookkeeper’s job to provide all the important transactional information and data of a business to the accountant. Bookkeeping mays sound or feel very similar to accounting, but they both have their own differences.
One of the significant differences is that in bookkeeping, all the business's financial transactions are recorded by the bookkeeper. These transactions are then presented to the accountant, who will further analyze the data. The job of a bookkeeper is only to maintain a record of the transactions of the Business, whereas the analysis part is done later during the accounting process.
The job of a bookkeeper may sound very simple and easy right now. Still, the bookkeeper has tremendous pressure as it forms the basis of all the accounting activities of the company, and by extension, I responsible for all the decisions made by the management.
Why should a business avail Accounting and Bookkeeping Services?
Bookkeeping and Accounting services are very important for every business and should be followed by the management to the letter. Bookkeeping and Accounting may be elaborate and time-taking, but they also form the basis of all the management's decisions. It will assist the management not only in taking the decisions for a better future of the company but will also help in streamlining all the activities of the Business.
Some of the benefits of a Professional Bookkeeper for a business are as follows:
- An expert bookkeeper will record and maintain all the transactions o the Business in a way that is compliant with the rules and regulations of the jurisdiction.
- It will provide assistance to the accountant and will also help collect the required information.
- It will also help future investors as all the transactions would have been recorded by the business management.
To know more advantages of Bookkeeping for a business, please refer to our blog. Why should you hire a professional Bookkeeper for your company?
The next step after the Bookkeeping function is the Accounting Function. The various advantages of the accounting function for a business are:
- One of the most significant advantages of Accounting is that they help in the preparation of the various financial statements, which help the management in understanding the present financial situation of the Business.
- These financial statements also help the management make a decision for the future of the Business and help the management keep the company on the right path.
- A business needs to deal with matters of taxes at some time, and the Accounting Function helps a business to prepare and maintain all the necessary reports which will be used to assess and file taxes.
There are many more advantages of availing the Accounting Function for a business. To know more about the advantages of the accounting functions, refer to our previously published blog, Why is Accounting necessary for the Business?
What are Accounting Standards?
Businesses need to follow the rules and regulations which have been set by the jurisdiction or will have to face huge penalties. In the United Arab Emirates, businesses need to follow IFRS or International Financial Reporting Standards.
These are standards for Accounting Standards that need to be followed by each and every company in the UAE. The IFRS has been issued by IASB or the International Accounting Standard Board and has been ratified by the IFRS Foundation. The IFRS slows for the easy understanding of the Business's financial statements if the Accountant changes or the accounting reports are analyzed in a different jurisdiction.
The IFRS provides a sense of consistency as about 90 countries in the world use the International Financial Reporting Standards for their accounting requirements. For more details on the accounting standards to be used by private businesses, refer to our blog Accounting Standards for Private Companies in the UAE.
What is Outsourcing Accounting, and how can it benefit your Business?
There can be instances when it is not possible for a company to keep an in-house accounting department. This may be due to the financial constraints of a business or due to any other reason. In such a situation, it is recommended that the company should outsource its accounting function to a third party.
In this process, all the accounting functions of the company are outsourced to a third party. This helps in freeing up the company's human resources and will also allow the management to focus on the company's growth and development properly. Outsourcing the accounts of the company to a third party will also help the company to follow all the compliance requirements of the jurisdiction. It will also reduce the costs and time incurred in the accounting process.
Availing outsourced accounting services can be very beneficial to a company. Some of the benefits of outsourcing the accounting process are as follow:
- It will play a huge part in reducing the costs of the Business and will also allow the management to focus on the business processes properly.
- As the accounting function of the company is being handled by a third party, the management can be assured that all the accounting processes will be handled by expert professionals who will use all the expertise to conduct the task at hand.
- As the management will not have to conduct accounting for the company and will be free of the burden, the management will have the time as well as the resources to focus on the various aspects of the Business, which will, in turn, increase the productivity of the company.
To know more about the benefits of outsourcing the accounting functions, refer to our blog Outsourced Accounting: How can it Benefit your Business?
There can be situations in which the company may only require accounting assistance only in certain business aspects. In such a case, instead of opting for or outsourcing the accounting services, the company can avail the Accounting Supervision Services.
If a company avails Accounting Supervision Services, then the management can be assured that no detail about the company is missed during the accounting process. The experts at JAXA Chartered Accountants will supervise all the accounting requirements of the Business. They will guide the accounting department of the company to conduct the process in a proper manner.
There are various advantages which be availed by a company by utilizing the Accounting Supervision Services. These advantages include:
- Accounting supervision services will allow the management to understand if any fraud or any other activity is happening in the company.
- It will help the Business to address all the compliance issues and will also assist the company in being more profitable.
To know more about Accounting Supervision Services, you can go through our Accounting Supervision Services page.
How can a Business find the right Accounting and Bookkeeping Services in the UAE?
As proper Bookkeeping and Accounting are very important in making any future decisions of the company it is crucial that the company avails such services from a reputed firm which will fulfil all the necessary requirements of the company and will also provide the best services possible.
Before availing the services from any of the Accounting and Bookkeeping firms, the management should do research as to which firm will be able to provide the best possible services to the Business. The management also keeps in to account the cost of availing the services and also if the firm provides any other services to the company. Also, the services should be sector or industry-specific so that the Business is able to avail of the best possible services.
The management also needs to keep in mind that Bookkeeping services are different from accounting services. There are many firms in the market that only provide one of these services, but many of the firms also provide both of the services together. A firm should try to avail services from such a firm as bot the services are provided by the same company, which will result in seamless transfer of data between the two functions.
In order to select the correct Bookkeeping and Accounting firm for the company, the management needs to keep in mind certain key characteristics such as:
- Look at the qualifications of the firm. The firm should be equipped with the necessary qualifications, and to check this, the management should conduct background checks. They can also ask around and look at the reviews of the services of the firm.
- The costs of the services availed affect the organization in a major way. Many start-up businesses may not be able to spend so much on the services. The management should look into the firms which provide the best possible services within acceptable costs.
- The firm should be updated with the latest changes in the business environment and should be able to use the latest technologies such as Accounting Software, Cloud Accounting, etc.
To know more about choosing the best accounting and bookkeeping firm for your Business, Refer to our blog titled How to select an Accounting firm in the UAE?