Year-End Accounting Services in UAE

As the financial year draws to a close, every big and small organization starts wrapping up the pending things to make their transition to the next year as smooth as possible

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Be it the UAE or any other part of the world, perhaps year-end is the busiest time for businesses in UAE. With heavier traffic and sales, tons of payroll tasks, and so many other accounting-related to-dos, businesses have too much on their plate during the last couple of months of the year. If you’re like most business owners, you’re probably juggling end-of-year accounting procedures as well. We are sure you are one of those smart and organized business persons who prepare a year-end accounting checklist to wrap up their year so they don’t have to scramble in the end. Certainly, this helps you accomplish your year-end processes without a hitch while saving you from missing out on something important but do you think you can bite off more than you can chew?! And top of it all, do you have a dedicated financial team that is skilled enough to handle the year-end accounting of your business? If your answers are “NO” then this is the right time to get in touch with one of the best audit and accounting firms in Dubai, UAE – Adam Global and leave all your year-end accounting worries to the experts in the field. Because year-end closing is a very crucial and complicated activity for a company and you know the consequences of wrong or inadequate entries in the system. Even a tiny error or mistake in the preparation of accounting year-end procedures can cost huge to the organization. Also, it can affect the accuracy of the company’s financial statements which eventually can invite a penalty from the law.

Financial year in UAE

The accounting period is fiscal or financial year-end which simply means the completion of any one-year or 12-month accounting period other than a general calendar year of an accounting period is what we know as year-end. The accounting period is not necessarily the calendar year worldwide. For instance, in India fiscal or financial year is the time period from 1st April to 31st March. In UAE, the financial year begins from January 1st and ends on December 31st. Usually, companies are required to present the report at the end of the year for its whole year business activities regardless of the country they are situated in. Before the accounting year ends the businesses are bound to close all their temporary accounts and carry forward the accounts that are permanent in nature for all good reasons. And one of them is to avoid any confusion and complications in the accounts to be generated in the subsequent year.

Year-End Accounting: Introduction

Year-end can creep up really quickly! But before the clock shows those four zeroes on December 31, you need to see whether your accounting books are showing the numbers correctly. To ensure your books of accounts are organized, up-to-date, and ready to move into a new year you have to square away several accounting tasks. This is what year-end accounting is. The name itself clarifies that year-end accounting is the accounting procedure done at the end of the year. The companies close their accounts for the respective financial year, carry forward the balances of the previous year, and open accounts for the next year. A flawless year-end accounting is paramount to ensure a smooth and successful shift to the new year. This is not something you can do in a rush. The best and easiest way to strike off the accounting to-dos of your year-end accounting checklist on or before time is to appoint an external year-end accounting specialist in UAE. During year-end, you’ll prepare your accounts and financial records for review. These include, but are not limited to:

Balance Sheet
Profit/Loss Statement
Director’s Report
Auditor’s Report (if required)

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Year-End Accounting: Objective

The year-end accounts closure process involves closing all of the temporary accounts for the current fiscal year. The permanent accounts continue as usual and remain open always. Practised at the end of the year, year-end closure of accounts in UAE is integral to businesses to determine business’s holding financially and operatively by closing out business from the previous year, carrying forward balances from the previous year, and opening posting accounts for the upcoming year. The purpose behind the year-end closure of accounts is to generate a company’s financial statements. Being accountable to its shareholders and stakeholders, a company has to be transparent in its business activities and year-end closure of accounts allows them to present a fair and true picture of its current position in the market at the end of the term by generating financial statements from the going year. Also, a company is required to abide by the law of the land and pay various taxes which necessitate the filing of financial reports and documentation with government organizations. And it’s a year-end accounting process that helps companies produce such relevant reports.

Year-End Accounting: Importance

Year-end is a period of urgency and stress for most busy finance managers, business owners, and accounting professionals across the globe and we know the reason is – the tedious and complex procedures performed to close the accounts for the previous year. Let’s take a look at the various reasons why year-end accounting is so imperative to any organization:

Helps in financial reports generation

The year-end accounting procedures facilitate the documentation of the financial activity of businesses for a fiscal year by providing inputs that are crucial to the preparation of financial reports.

Study business finances

The financial reports prepared at the end of the financial year assist in reviewing the actual financial status of the company.

Finetunes the financial statements

Year-end closure of accounts helps spot and rectify errors from the previous year and run financial statements thus it is an essential activity to get ready for taxation.

Facilitates reconciliation of bank statements

The year-end accounting procedures play a pivotal role in the reconciliation of the bank statements. The process helps businesses spot any mistakes or loopholes in the bank accounts.

Provides important business insights

The reports developed as a result of year-end accounting provide valuable business insights which aid management in bringing to light the overall performance of the company while bringing forth the strengths and weaknesses of the establishment.

Closely monitors income & expenditure

End-of-the-year accounting process allows the company to record the income and expenses of the business.

Ascertains tax liability

The year-end accounting helps in ascertaining the tax liability of the firm for the previous financial year.

Navigate business and help them grow

To land smoothly into the next year with a perfect year-end account, allow Adam Global to navigate you through the complex procedures of year-end accounting in the UAE.

The year-end accounting procedures facilitate the documentation of the financial activity of businesses for a fiscal year by providing inputs that are crucial to the preparation of financial reports.

To land smoothly into the next year with a perfect year-end account, allow Adam Global to navigate you through the complex procedures of year-end accounting in the UAE.

FAQ

Can a company change its financial year in UAE?

Implementing Regulations and Memorandum and Articles of Association states that a DMCC entity may request for change of its financial year. DMCC Authority holds the right to demand additional documents at any stage of the process.

How to prepare year-end statements in UAE?

It’s the lifeline of your business, your financial statements that play a major role in the compilation of your year-end statements. These are the transactions you record in your accounting books. While preparing your year-end you should have an income statement, cash flow statement and balance sheet handy. Apart from that you also need to collect past due invoices, take an accurate count of the materials and supplies you have on hand (if your business has inventory), organize business receipts, reconcile your bank accounts and credit cards and review both your accounts receivable & accounts payable to wrap up your accounts for the current year. In addition, ask your accountant what information they need from you for the closure of the year-end accounts and prepare for the upcoming year and tax season. And last but not least, do not forget to back up all your important accounting information from this year and previous years particularly if you are not using any accounting software.

Should I use accounting software for my small business?

What would you prefer turning pages for hours to access some critical information or strike just some keys? Big or small, businesses can’t do without accounting. They give you a fair idea of where your business stands financially while making tax season less of a burden on your enterprise. Furthermore, statements allow you to see past and present finances that enables you to forecast your business’s financial future and plan for the next year. And if you think accounting is just the entries of transactions that can be done using pen and paper then you sure are living under the rock. As a business grows, its accounting needs turn more complex often requiring a custom enterprise resource planning (ERP) system. Accounting software not only provides the necessary documents for your accountant in the blink of an eye but also reduces the chances of errors. Not only that but if you are using the latest accounting software you may reap endless benefits from keeping track of accounts receivable and accounts payable to getting a clear picture of the business’s profitability to enjoying a relaxed taxation period.

Could you suggest the best account software for my small business in the UAE?

Accounting is way beyond recording figures in a paper ledger. You won’t know until you use all-encompassing accounting software. But here’s the rub. Today internet is bursting at the seams with tons of accounting software with varying capabilities and price tags for any type of business which makes the selection of one specific software that can cater to all your accounting requirements a daunting task. In order to choose the most suitable one for your organisation, all you need to do is decide your budget and discuss with your accountant what set of features they require from accounting software to serve the organisational needs in the best possible way.
Most companies in UAE are using SAP ERP and Zoho Books for their accounting solutions. Tally ERP 9, Sage Intacct, Wave, Xero, Microsoft Dynamics GP, QuickBooks, FreshBooks are some other popular accounting software in UAE that comes with a complete set of features to make your accounting tasks an easy breeze. If you ask us to put in our two cents on which one is the best for you, we suggest that while choosing your accounting software do not follow other organisations or individuals because every business has different needs and not every person knows what you know. To nail the best one, analyse and discuss your business’s accounting requirements with your accounts team.

What are temporary accounts in businesses for the year-end closure of accounts in UAE?

Temporary accounts are income statement accounts generated to interpret the accounting activity during an accounting period. For example, the revenues account records the number of revenues earned during an accounting period – not during the term of the company. Besides revenues, expenses, gains, and losses are some of the temporary accounts – essentially any account that the income statement accommodates. Additionally, the income summary account, which is an account used to summarize temporary account balances before shifting the net balance elsewhere, is also a temporary account.
Unlike permanent accounts, temporary accounts accumulate balances for a single financial year and are then closed or reset as the fiscal year ends so the beginning of the subsequent year will have no carried forward balance, to begin with. Closing of temporary accounts is necessary to prevent their existing balances from being mixed with the balances of the next accounting period. Therefore, revenue, expense, and withdrawal accounts always start with zero balance at the start of the new financial year because they are always closed at the end of the previous year. The purpose of doing so is to show the profits that were produced and the accounting activity of individual periods. This concept is in line with the matching principle that requires a company to match expenses with related revenues in order to report a company’s profitability during a specified time interval.

What are permanent accounts in businesses for year-end closure of accounts in UAE?

Permanent accounts are balance sheet accounts that records the business transaction which goes beyond an accounting period such as asset, liability, and equity accounts. For example, a vehicle account is a fixed asset account that is recorded on the balance. The vehicle will provide advantages for the organization in future years, so it is considered a permanent account. Permanent accounts accumulate balances on an ongoing basis through many fiscal years.

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