When a person in business or entrepreneur sets up a company, the primary aim of the person is to generate profits for himself and the stakeholders. It is easier for a business entity to find out if it is gaining profits or is facing losses by maintaining the books of accounts of the company. These books of accounts can help the management not only in understanding the financial situation of the business but will also track the day to day expenses and transactions of the company.
Documents to be Maintained
The following records must be maintained by the management of the company at all times.
- Sales and Purchase invoices for the various goods and services
- Debit or Credit notes relating to the company
- Record of the supplies which are either zero-rated or are exempt from taxes
- Files of import and export of products and goods
- All the accounting books of the company
- All the records to be maintained by a taxable person
- Record of goods which are free or are utilized for private use
The companies in the United Arab Emirates must keep and maintain the financial books of the company for a minimum of five years. Managing the financial statements will also help in the audit of the companies and is a compulsory requirement for all the mainland companies in the United Arab Emirates.
Benefits of Maintaining Documents
Maintaining the record of the business will help us in many ways. It will help you understand the financial standing of your business and how can you enhance your profitability. Here are some of the benefits of maintaining the financial records of the company:
- Increase in the quality of the management of the business
- Perform an analysis of the performance of the business
- To find out and investigate the various frauds and accidents in the company
- Understand the future trends in the industry
- Performing the management of employment
Value Added Tax
With the relatively recent implementation of the Value Added Tax in the United Arab Emirates, there is a great need for maintaining the records of the transactions and finances of the company. These records will allow the management to keep a systematic record of the various financial operations of the business.
Books of accounts to be maintained for by the management of a company for the purpose of Value Added Tax are:
- Records of all transactions (import and export of goods and services)
- Tax invoices
- Credit notes
- Records of unusable products or services or the goods returned back
- Record of taxable goods
- Record of the input tax levied
- Statements with the record of any change or alteration of the order and the new taxes levied
- Record of the products and services which have been disposed of or are being used for non-business purposes.
- Records of the tax due after adjustments
The Federal Tax Authority (FTA), which is the authority in the matters of taxation, has the power to ask for additional documents which will include annual accounts, purchase books, general ledgers, etc. Each of these records must be maintained for a period of at least five years.
With technological advancements, there is now various financial software that performs the task of maintaining and managing the records of the company. This business software also checks for the compliance of the company under VAT and helps in focusing on the primary business activities.
There are many tools which will help accompany to collect and maintain and collect data from the company. These tools may be simple and easy to use such as MS-Excel, MS-Access, etc. or more complicated and productive tools such as SQL, Tableau, etc.
If you have just initiated a business or are looking to start one, then you must start maintaining your account books and also look into the various tools which can help enhance your business. If you require help in this matter, then you can look into the services offered by JAXA Chartered Accountants. JAXA will help you to maintain all the records of the company and also plan for the future of the business. For more details on the services provided, Contact Us. We will be glad to help.