Accounting – CPA Audit Firm in Dubai https://capitalplusauditing.ae Sat, 06 Apr 2024 07:20:18 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.2 https://capitalplusauditing.ae/wp-content/uploads/2022/06/Favicon.png Accounting – CPA Audit Firm in Dubai https://capitalplusauditing.ae 32 32 8 major differences between Bookkeeping and Accounting https://capitalplusauditing.ae/bookkeeping-and-accounting-explained/ https://capitalplusauditing.ae/bookkeeping-and-accounting-explained/#respond Fri, 11 Nov 2022 17:54:00 +0000 https://capitalplusauditing.ae/?p=809

Bookkeeping and Accounting are two poles apart important functions for every entrepreneur and business organization. In simple words, bookkeeping is keeping records of financial transactions of a business whereas accounting is the system of recording and summarizing business and financial transactions and analyzing, interpreting, classifying, verifying, summarizing, and reporting the financial data. Bookkeeping and accounting may appear the same or confusing to the untrained personnel. This is because both bookkeeping and accounting deals with financial data, require basic accounting knowledge, and classify, interpret, summarize and generate reports for businesses using the financial transactions. But, both of these processes are natively different and have their own couple of benefits.

Here we summarize 8 major differences between bookkeeping and accounting to help you better understand both of these functions.

accounting papers and equipments

Bookkeeping

1. What is Bookkeeping?

Bookkeeping is an activity or occupation mainly related to organizing and keeping records on a regular basis of the financial transactions of the business.

2. Objective

The main objective of bookkeeping is to keep the proper records of all financial transactions of the business.

3. Skills Required

There is no particular skill set required for a Bookkeeping job. But it may depend on the company policy and HR.

4. Analysis

The analysis is not included in the bookkeeping process.

5. Types

There are basically two types of bookkeeping

  • Single-entry bookkeeping
  • Souble-entry bookkeeping

6. Decision Making

The Management of the business can not take a decision solely based on the data provided by bookkeeping.

7. Preparation of Financial Statements

Financial statements of businesses are not prepared by bookkeeper as a part of this process.

8. Bookkeepers and Accountants

Bookkeepers should have the necessary knowledge about financial affairs and be accurate in their work. Bookkeepers’ job is usually supervised by an accountant.
Laptop and calculator used for accounting

Accounting

1. What is Accounting?

Accounting also known as accountancy, is the process of recording, financial transactions along with sorting, retrieving, summarizing, interpreting, and presenting the results in various reports. Accounting is also a profession dedicated to carrying out those tasks.

2. Objective

The main objective of accounting is to measure the financial situation of the business or organization and further communicate the data to the relevant authorities. The accounting department also makes preparations for a company’s budgets and plans loan proposals.

3. Skills Required

Accounting requires specific skill set due to its complex and analytical nature, some of the required skills are:

  • Accounting Practices Knowledge
  • Expertise in Accounting Software
  • Can Prepare Financial Statements
  • General Business Practices Knowledge
  • Data analyzing ability
  • Critical Thinking Skills
  • Organizational Accounting Skills
  • Time Management Skills

4. Analysis

The accountant uses information gathered by the bookkeeper to analyze and interpret the data and then compiles it into reports and discusses it with the higher authorities

5. Types

There are nine most common types of accounting, which are:

  • Auditing
  • Tax accounting
  • Financial accounting
  • Managerial accounting
  • Forensic accounting
  • Public accounting
  • Cost accounting
  • Governmental accounting
  • Accounting information systems

6. Decision Making

The management of the businesses or companies can take critical business decisions depending on the data provided by the accountants.

7. Preparation of Financial Statements

Financial statements are prepared by the accountant during the accounting process.

8. Bookkeepers and Accountants

The title of Certified Public Accountant (CPA) is given to accountants with sufficient education and experience.

We believe that Bookkeeping and accounting are a vital part of every business and organization. Capital Plus Auditing of Accounts (CPA) has been offering the best services in this domain in Dubai for over 5 years now and has served several clients. We have a team of certified and professional accountants who provide the best services in the region. Our accountants and bookkeepers are updated with the new market trends and are skilled to work on technologies and emerging tools. By outsourcing your accounting and bookkeeping job to us, you can save almost 40% of your cost and work burden and you can concentrate more on your core business functions.

If you need any kind of accounting and bookkeeping service, feel free to contact us or write to us. We will respond to you within 24 hours.

]]> https://capitalplusauditing.ae/bookkeeping-and-accounting-explained/feed/ 0 What are Audit and Assurance? Its Importance for Business in the UAE https://capitalplusauditing.ae/what-is-audit-and-assurance-guide/ https://capitalplusauditing.ae/what-is-audit-and-assurance-guide/#respond Tue, 18 Oct 2022 05:01:22 +0000 https://capitalplusauditing.ae/?p=2582

What is Audit and Assurance?

The concepts of both auditing and assurance involve the evaluation of finances. They confirm that the accounting records being kept and presented in the audit process are accurate and compliant with the standard, rules and regulations prescribed by regulatory bodies. An audit is a procedure for verifying accounting records by GAAP. Audits are governed by the law in most countries and are usually carried out by licensed and certified auditors.

what is audit and assurance

Table of Contents

What is an Audit?

The purpose of an audit is to review and assess information or documents systematically. An audit can take many forms, but financial audits are usually used in professional services. According to the financial reporting framework, it provides reasonable assurance, but not absolute assurance, of the accuracy and completeness of the financial statements. An audit is a process of going over the bookkeeping of a company to check the accuracy of its reports. Essentially, auditing means being careful about all the statements and figures you are reporting in a company and about anything misleading happening in your financials. It also requires ensuring everything is ethically presented, fairly presented, and accurate. This includes making sure financial reports follow the principles and standards of accounting. If a company is not correctly following the law and company policies, the audit will find out. Internal auditors, external auditors, and independent auditors all conduct audits.

What is assurance?

Assurance is the process of analysing the accounts and estimating them with certainty

In addition, the audit will make sure financial records correspond to accounting standards. As well, it ensures that the accounting document is accurate. Assurance is measuring and specifying processes, procedures, etc. A large component of assurance is ascertaining the accuracy of a company’s financial statements. This activity is undertaken for the sake of preventing the misuse of funds or the perpetration of fraud. Quality assurance on the company’s financial reports confirms they comply with relevant accounting standards and is consistent with relevant accounting principles. Such rigorous quality assurance enables our company’s managers to observe and carefully examine processes, procedures, and systems, assuring that they yield a quality result.

Investors must trust the success of businesses and processes of producing credible information. It will be easier for people to make decisions or develop policies if they have reliable information or operational processes to rely on. People lose confidence in this situation when there is a lack of reliability or a high uncertainty about data and the operational processes to which the data is applied.

Key Differences between Audit and Assurance:

Assurance and Audit differ in the following ways:

  • The most basic difference between an audit and assurance is that an audit examines an organization’s books, the people in the company, and the evidence it may have, while assurance is a review of an organization’s processes and practices to know that the books and evidence are showing the true and fair view of the company.
  • An audit may take place during the financial year, while assurance may take place multiple times within a year. The scope of audit encompasses both financial statements and internal control systems, while that of assurance covers only internal control systems.
  • During an audit, the auditor seeks to make thorough conclusions about the financial statements of a business or individual with any available financial data. They seek to make what is called a positive conclusion. Most firms that do assurance reviews work to provide a negative conclusion, or limited assurance, meaning they find no evidence of misrepresentation.
  • In an audit, the auditor makes an opinion on whether or not financial statements fairly represent to readers what they should be. On other hand, assurance provides recommendations to management on how to improve internal controls based on their findings during the process of assessment.
  • The assurance follows the audit.
  • An audit is performed by either an internal or external auditor, whereas assurance is performed by an audit firm.
what is audit and assurance

What Types of Audit Are Available?

1. Internal Audits

Auditing involves an independent third party conducting the audit – for example, an independent firm like one with certified public accountants. After the audit, a report will be shared with shareholders and stakeholders who aren’t on the team. While the specifics of an audit vary, the general benefit of an external audit is the impartiality and objectivity of the audit team. This makes the audit process and findings more credible to shareholders and external stakeholders.

2. External Audits

Auditing involves an independent third party conducting the audit – for example, an independent firm like one with certified public accountants. After the audit, a report will be shared with shareholders and stakeholders who aren’t on the team. While the specifics of an audit vary, the general benefit of an external audit is the impartiality and objectivity of the audit team. This makes the audit process and findings more credible to shareholders and external stakeholders.

3. Financial Statement Audits

When auditing a company’s financial statements, independent auditors need to report if they align with the appropriate standards.
To do this, they must complete the following three tasks

  • Assess the risks of any sort of dishonesty – intentional or unintentional.
  • Assure adequate evidence has been found on whether misstatements exist.
  • Form a qualified opinion on the financial statements or conclude that an opinion cannot be given.

4. Performance Audits

Many objectives can be evaluated through performance audits. An entity may request or require a performance audit for any of the following:

  • Results and effectiveness of the program
  • Controls within the organization
  • Certain requirements must be met
  • Analyses of prospective

5. Operational Audits

Operational audits analyze an organization’s activities about predetermined goals and will analyze processes, procedures, and systems. The goal of an operational audit is to measure effectiveness, efficiency, and productivity. Potential benefits of an operational audit include uncovering opportunities for improvement and developing plans for corrective actions.

6. Compliance Audits

A compliance audit occurs when an entity is evaluated for adherence to a government’s rules, standards, and requirements.

Types of Assurance Services:

Financial Assurance Services:

The internal assurance services a CPA firm provides usually involve financial projections, due diligence on the transaction involving another company, and reports on the financial condition of an individual. CPAs who work in an assurance department of a financial services company often rely on data in assessing a financial matter but they might also establish the validity of data by providing context, explaining the data’s meaning, or making data directly relevant. At times, when considering financial measurements in an examination of a company’s records, insufficient data has been used to measure one specific aspect of its finances.

Non-Financial Assurance Services:

Some assurance services are not directly related to money. For instance, assurance firms such as CPA firms can provide help with data security, performance claims, quality control, and environmental performance. With many non-financial assurance services, there are several firms involved in providing them and so not only the CPAs. Security auditing is one of those non-financial assurance services and in the area of data security, there are also information security consultancies.

Importance of Audit & Assurance Services for Business in UAE:

Auditing and assurance are not just about counting things. These numbers tell a story. Reflecting on what has been done and looking to what is to come. Audit and assurance at Deloitte are all about demonstrating how things are and exploring what’s needed to make them better.

The auditing and assurance aspect shows where you are, and gives guidance for your next step. The audits and assurances show what needs to happen for your next plan to have a chance of succeeding. All of our research provides information about what, how, and why changes are made, so you are always in the know.

1. To achieve accurate financial statements

Businesses with fewer than 50 employees don’t have a large team of accountants to ensure that they keep accurate books of accounts. A small business audit ensures that the company’s books of accounts are accurate and comply with international accounting standards.

2. In Making Better Decisions

A company’s management will be able to make better decisions if its financial statements are accurate

3. To reduce the risk of fraud

Auditors in UAE I can tell you where your company’s weaknesses lie.

4. Audit Helps to Build Trust

You can build trust among the company’s partners, investors, lenders, authorities, and other stakeholders by reviewing the financial statements periodically.

5. Verification of Statutory Compliances

The auditor will ensure that the company is compliant with commercial and export regulations, like those related to Value Added Tax (VAT), Ultimate Beneficial Owners (UBO) or Economic Substance Regulations (ESR)

]]> https://capitalplusauditing.ae/what-is-audit-and-assurance-guide/feed/ 0 Helpful Guide: How to setup a business in Dubai in 2024? https://capitalplusauditing.ae/how-to-setup-a-business-in-dubai/ https://capitalplusauditing.ae/how-to-setup-a-business-in-dubai/#respond Sat, 15 Oct 2022 05:41:28 +0000 https://capitalplusauditing.ae/?p=2489

Setting up a Business in Dubai

Setting up a business in Dubai is an excellent option for those who want to enjoy the benefits of running their own company without the usual tax and regulatory complications. Since there are no restrictions on international trade, it offers plenty of opportunities for entrepreneurs from across the world. Dubai is a dream place for people wishing to set up a business. It has established itself as the preeminent global location for fast-growth businesses throughout the world.

Before starting your own business in Dubai, you must get acquainted with the right procedures and requirements first. This involves the different legal aspects of starting a business in Dubai as well as the requirements concerning business setup and registration.

How to Setup a Business in Dubai?

Do you want to know how to setup a business in Dubai? What will the process be like and what legal hurdles do you need to overcome before you can start a company in Dubai? This article aims to answer all of these questions and more as we’re going to break down the entire business setup process in Dubai, UAE into simple steps that anyone could follow.

Table of Contents

Benefits of settings business in Dubai:

Dubai is one of the seven UAE emirates and a major business hub around the world. International investments and trade are increasing as a result of the numerous benefits of opening a company in Dubai including;
  • Ease of Business Setup
  • Recruit Expatriate Employees
  • Lowest Corporate tax
  • Over 30 Free Zones
  • Technological Advancements
  • Advantageous Geographical Location
  • Top-Notch Infrastructure
  • Comfortable and Quality Life
  • Easy Visa Obtaining Process
  • Exceptional Government Support.
How to setup a business in Dubai

What you need to know before setting up:

Before we answer how to setup a business in dubai, here are a few things you need to know about Business types in Dubai.

Economic Zones: Free Zones vs Offshore vs Mainland

It is up to you whether you want to work onshore or offshore, as there are different zones for different types of businesses.

Free Zone

Free zone trade areas are the areas of a country where goods and services are unrestricted to trade. They’re also called free trade zones or free zone authorities. There is no taxation in free trade zones, preferential customs duty rates, and there is 100% exemption from import and export taxes. Due to the emphasis on privacy, free zones are especially popular to enjoy privacy and secrecy. absolute ownership means that corporate information, such as what types of shareholders it has, will never be publicly released.
A total of 30 free zones operate in Dubai, each focused on a specific industry category and offering licenses to companies within those industries.

Offshore

There is no legal and business regime for offshore companies on the UAE mainland or in the UAE free zones. Furthermore, offshore companies are not subject to VAT (Value-Added-Tax) in UAE as they are deemed to be outside of UAE without a resident status.

What are the advantages of Offshore Incorporation?

Lots of people go with offshore incorporation for all the benefits it offers, such as tax exemptions, asset protection, privacy, and economic advantages. Another great perk is that because it is incorporated in a jurisdiction separate from its owner, it is considered its separate legal entity and won’t put the owner in legal trouble.

Mainland

A mainland company can run without any restriction within UAE and internationally. The UAE has a regulatory framework that allows mainland companies to operate within free zones, offshore, and within the UAE. Non-UAE nationals, however, can only own 49% of a company established by them; to incorporate a company, the company must hold half of the capital, and the rest must be held by a local sponsor. Additionally, the company must have an office space and obtain official government approval.

Types of License

You’ll need to choose a zone and determine the kind of license that is required. There are 4 primary sorts of licenses you can apply for;

Commercial license

Business owners typically need two types of licenses for their businesses: a commercial license and either an industrial or commercial trade license…As a commercial license holder, you can trade, import, and export goods, as well as sell certain services in, outside, and within the UAE. One of the reasons the commercial license is so popular in Dubai is it’s incredibly strategic position – surrounded by vast markets including Africa, Asia, Europe, and the Middle East.

Industrial license

Due to rapid expansion in the corporate sector, it has become necessary to have a license to start a new business in the United Arab Emirates. The United Arab Emirates provides licenses for such professions as manufacturing, import and export, housekeeping, and freelance work. This license can be issued in Dubai to companies that turn raw materials and natural resources into finished goods. Raw materials or semi-manufactured materials can start the process manually or mechanically.

Professional license

Those in the business of providing service, producing arts and crafts, and doing professional work, are required to get a professional license. These services include medical and surgical, cosmetic, and repair services.

Tourism license

The tourism industry is a significant factor in the U.A.E.’s economy, drawing in not just local investors, but international ones as well. The U.A.E. is the only country in the world in which this sector is on the rise. It allows you to start up a travel company that can do business within the country as well as abroad.

Sponsorship

The ability to establish an organization with 100% foreign ownership without the necessity for a UAE national as a partner or sponsor is one of the key advantages of incorporating it in a free zone.

Dubai free-zone company setup process

When setting up a business, free zones are particularly more popular with foreign entrepreneurs and for good reason – they offer 0% corporation and personal tax, 100% company ownership, 100% repatriation of capital and profits, and no currency restrictions. To set up your business in the free zone, follow these 7 steps:

1.Choose the business activity and license type

To start your business and obtain a license, it is essential to determine the type of business you will run. In total, there are over 2,100 business activities to choose from within the areas of industrial, commercial, professional, and tourism. The DED website has the complete list.

2. Select the right Free Zone

I have previously mentioned that there are over 30 free zones in Dubai to choose from. The nature of your business may determine which free zone you select. Ideally, you will set up in the same industry sector, or else you will likely not see many of the same clientele.

3. Pick Trade Name & Office Space

If you are planning to open a business in the UAE, choosing your business name should be simple because of the UAE’s strict naming guidelines. Anything that is seen as offending or defamatory or connects to a political organization, for instance, is forbidden. If you choose to name your company after a person, it is necessary to prove that this person is an owner of the company by showing his full name with initials (no abbreviations). Trying to choose a name for your business? Working with a naming expert can help. This can spare you the time and trouble of deviating from the convention.

4.Apply for initial approval

Apply for initial approval so that you can move forward with the next steps for your license. Your business may require a few basic documents, depending on its nature, which can be provided online, in person, or via a third party (for example, a lawyer).
  • Licensing and registration form for business
  • A copy of your passport or ID card
  • Get a copy of your Visa or residence permit
  • Articles of incorporation
  • Study of the project’s feasibility
Please contact one of our specialists who will work with you on your application to make sure it’s done properly.

5.Open a corporate bank account

As soon as you’ve been approved and received all the necessary documents, you can open a corporate bank account with a bank in the UAE. Banks like HSBC, Citibank, Barclays, Abu Dhabi Commercial Bank, Commercial Bank of Dubai, etc., are among these.

6.Set up your office location

Dubai is the only place in the Middle East that requires companies to have a physical address. Setting up your company in a free trade zone can make things easier for you, especially when finding an office space.

7.Apply for final approval

Prepare all your documents, addresses, and legal information to present to the licensing authority for their approval. In some circumstances, you may also have to apply for additional approvals from other authorities. Required information and documentation are as follows;
  • Copies of both your receipt of the file and all previously submitted documents.
  • The lease agreement provided by the Real Estate Regulatory Agency is set.
  • A duly attested service agent contract can only be granted to civil establishments and companies 100% owned by non-GCC nationals in the UAE.
  • Approval from other authorities that the law requires is crucial.
Finally, you’ll need to pay for the license through various approved payment channels – and your business is ready to run.
Conclusion

Setting up a company or business in Dubai is not a difficult task if you know what the exact process is. There are legal processes which you have to complete and Boom! you are the owner of a new business in Dubai. If you are still confuse about how to setup a business in Dubai or If you don’t want to go through all this process, you can hire a Certified Accounting Firm in Dubai. It can help you start your business in Dubai without any hassle.

]]> https://capitalplusauditing.ae/how-to-setup-a-business-in-dubai/feed/ 0 Complete Introduction to Corporate Tax in UAE starting from June 2024 https://capitalplusauditing.ae/corporate-tax-in-uae/ https://capitalplusauditing.ae/corporate-tax-in-uae/#respond Sat, 08 Oct 2022 06:36:10 +0000 https://capitalplusauditing.ae/?p=2379

Brief Introduction to Corporate Tax in UAE

The Ministry of Finance made a big announcement on January 31, 2022, that a federal corporate tax (CT) will be implemented in UAE starting from the financial year of June 2023. The United Arab Emirates is a world-leading global business hub, this move has further strengthened its position as a leading business hub, and it will also help in achieving strategic objectives of development and transformation.

The United Arab Emirates has made several changes throughout the past few years to streamline its tax system and align with best tax practices that are being followed around the globe. These initiatives helped UAE diversify its state revenues. Value Added Tax (VAT) was implemented in January 2018, and then economic substance regulations (ESR) in April 2019.

This announcement has yet again reshaped the tax landscape of the region and created a buzz in the business and tax professionals’ communities. UAE is going to be the 4rth Gulf Country to Implement the Corporate Tax System (CT).

As per the Ministry of Finance UAE, “the corporate tax system has been designed to incorporate best practices globally and minimize the compliance burden on businesses”
Although, businesses are given one and a half year to prepare for this new tax system . It is crucial to understand the whole concept of the Corporate Tax System in UAE (CT). Here we’ve covered almost everything related to CT that will help you understand the system and prepare your business.

Table of Contents

What is Corporate Tax?

A Corporate Tax, also known as corporation tax or company tax, is a form of direct tax that applies to the net taxable income of the companies.

Corporate tax rates vary from country to country, some countries have very low corporate tax rates, called “tax havens” while some countries have very high corporate tax rates. This is a source of revenue for the state, this helps the state accelerate the various development objectives
corporate tax rate in uae

Corporate Tax in UAE

The UAE’s authorities have announced the implementation of a Corporate Tax System (CT) effective from the financial year June 2023, it is a direct tax that will be imposed on net taxable income or profits of the businesses and corporations.

It will be applied to all of the UAE businesses except the companies involved in the extraction of natural resources (because they are subjected to the Emirate Level Corporate Taxation System already).

The Corporate Tax (CT) will only be imposed on Individuals and Foreign Companies if they conduct trade or business in the UAE on regular basis.

UAE’s Corporate Tax will be applied to all kinds of profits and net taxable incomes reported in financial statements that were prepared in accordance with acceptable standards internationally.

taxes in dubai

Main objectives of the implementation of the Corporate Tax in United Arab Emirates:

Traditionally, Gulf countries including UAE were tax-free or zero-tax countries as they have funded their governments’ needs from oil revenue but the landscape is changing rapidly, UAE and other Gulf countries are diversifying their revenue sources and decreasing their dependence on Oil.

The new Corporate Tax (CT) will help UAE diversify its revenue and decrease dependence on Oil, the money collected from the taxes will be utilized in the strategic development objectives and economic transformation
uae corporate tax services

Corporate Tax Implementation Date in UAE

The announcement was made on January 31 2022 but it will become effective starting from the financial year 2023. All of those businesses which have an accounting reference dating back to December 31, will become subject to Corporate Tax (CT) from 1st January 2024.
rolling-cashflow-forecast

Which businesses are liable to pay corporate tax in UAE?

All of the businesses in the UAE will be subjected to paying corporate tax if their net income or profits are taxable. Companies that are involved in the extraction of natural resources will be exempted from Corporate Tax because they will remain subject to Emirate-level taxation.

What is the Corporate Tax Rate in UAE?

The Corporate Tax will not be imposed on those businesses that have net income or profits up to AED 375,000, the Tax rate is 0%. Businesses having profits above AED 375,000, will be imposed 9% of Corporate Tax on their net income/profits.

The announcement does not clearly specify the tax rate for multi-national companies having profits but experts suggest they will be subjected to 15%.

Corporate Tax on Individuals:

Based on the details given by Ministry and authorities, the individuals will only be subject to Corporate Tax (CT) if they conduct business in UAE under a commercial license. However, the Corporate Tax will not be applied to the following income streams:
  • Salaries & other employment incomes
  • Real estate investments by individuals in a personal capacity.
  • Interests of any other income from saving schemes or bank deposits.

Corporate Tax on Free Zones:

All of the businesses established in Free Zones will be subject to Corporate Tax but they will continue to enjoy tax incentives that are currently being offered to Free Zones as long as they comply with the requirements i.e., no business with mainland companies.

Corporate Tax on Holding Companies

In general, Corporate Tax (CT) will be applied to holding companies but under certain conditions, their income will be tax exempted.

Holding companies may benefit from Free Zones incentives if they conduct business only with overseas entities.

Corporate Tax on Offshore Companies

The UAE has special regulations for offshore companies, they can set up in specialized economic free zones. (Ras Al Khaimah Economic Zone (RAKEZ) and Jebel Ali Free Zone (JAFZ).

The announcement and details from the Ministry do not specify if they will be subject to Corporate Tax but experts suggest that they will be treated in line with the general Free Zone entities.

Transfer Pricing

Businesses established in UAE will need to comply with the rules and regulations of transfer pricing set according to the OECF Transfer Pricing Guidelines.

Withholding Tax

No withholding tax will be applicable on any kind of domestic and cross-border payments

Administration

The authorities are yet to give any details regarding the administration of the Corporate Tax but it is expected that Corporate Tax returns will be filed electronically like VAT and ESR filings.
No clear information has been given about the supporting documents or requirements. However, based on the practices in other countries, the following documents may be required:

  • Financial statements.
  • Taxable income calculations
  • Schedules and worksheets of Tax depreciation.
  • Transfer Pricing documentation.
  • Related party transaction details.
  • Movement of provisions

UAE Corporate Tax in comparison with other countries:

The Corporate Tax rate in UAE is 9% which is the lowest in comparison with other top-tier countries around the globe, according to a survey the average statutory corporate tax rate is 23.54% worldwide. The lowest rate of corporate tax is in Asia, which is 19.62% and the highest rate of corporate tax is in Africa, which is 27.97%.

According to these stats, the Corporate Tax rate in UAE is the lowest in comparison to other countries worldwide
]]> https://capitalplusauditing.ae/corporate-tax-in-uae/feed/ 0 What is Cashflow Forecasting? 4 Best Practices of Cashflow Forecasting https://capitalplusauditing.ae/what-is-cashflow-forecasting-4-best-practices-of-cashflow-forecasting/ https://capitalplusauditing.ae/what-is-cashflow-forecasting-4-best-practices-of-cashflow-forecasting/#respond Sun, 02 Oct 2022 11:00:00 +0000 https://capitalplusauditing.ae/?p=782

The importance of Cashflow forecasting practices and liquidity risk management is highlighted after the COVID-19 pandemic. With major disturbances in the global supply chains, Cashflow forecasting and cash management have become the top priority for treasurers as well as executives.

What is Cashflow Forecasting

Cash flow forecasting, also known as cash forecasting is the way of estimating the flow of cash in and out of a business over a specific period of time. Cashflow forecasting helps companies make decisions about activities like funding, investment, and capital expenditure. It also forecasts future cash positions based on income and expenses, earns returns on any cash surpluses they may have in the most efficient manner possible, and avoid cash shortages.

Cashflow forecasting can be implemented for different time ranges. A short-term cashflow forecasting may cover 30 days and can be used to recognize any cash needs or identify excessive cash from the current need.

A medium-term cashflow forecasting might cover between one month and one year duration, while a long-term forecast may cover between one year and five years onwards or even longer, depending on the business nature.

Most business owners and treasurers know, that cash flow forecasting is a vital part of their business’s liquidity risk management process. Unfortunately, cashflow forecasting sometimes got a bad reputation because of its execution time and the questionable insights it usually produces.

To improve the reliability and help you reduce the time required for your forecasts, we’ve set 4 best practices of the cashflow forecasting.

Data-driven-cashflow-forecasting

1. Adopt a Data-Driven Cashflow Forecasting Process

Maybe we are the first to realize that being “data-driven” is a bit of a misconception in today’s business world. But it’s very difficult to improve cashflow forecasting and liquidity management without using your actual transaction data.

It is needed to understand, that a data-driven cashflow forecasting process is not creating accurate reports and cashflow forecasting, it is about influencing your data to better understand your business.

Many finance holders in companies often spend a lot of time collecting and manipulating their data to achieve a perfectly accurate forecast. In reality, 100% accuracy is absolutely difficult to achieve and it is not mandatory that a less accurate report would provide the same output with less work.

So to become more data-driven, you need to focus on finding ways to get useful insights from your data rather than trying to build an accurate forecast possible.

13-week-cashflow-period

2. Use a 13-Week Cashflow Forecasting Period

In General, the further into the future the cashflow forecast looks, the less data is available to make an accurate projection of your cash position. Due to this, most data-driven cash handlers use 13-week cashflow forecasts because mostly there is massive data for short-term accuracy and huge future visibility to enable strategic decision making.

  • A 13-week cashflow forecast is ideal because:
  • It provides ideal visibility to determine liquidity risk. Usually there is enough data to provide a correct view of the weeks ahead, 13-week cashflow forecast helps you identify and plan for cash shortages before they become urgent. For example, by using 13-week cashflow forecast, you can identify a potential cash shortage several months before it would occur, providing sufficient time for your team to review intercompany lending or arrange bank funding options.
  • It helps you in managing cashflow without long-term planning. Longer-term planning such as expense reduction or revenue increases may extend years into the future. By using a 13-week cashflow forecast you can plan for cash requirements on a medium-term basis without disturbing those plans. For example, with a 13-week cashflow forecast, you plan for short-term investments or debt repayments without affecting annual budgeting
  • It is also suitable for investors and banks. Because the 13-week time period provides sufficent data to be accurate, it is a key measure of good financial control from an investors or bank’s perspective. So, depending on the ownership structure, relationships, debts, or investment capacity of your company, using a 13-week cashflow forecast could help to illustrate your business’s financial health.
cash-flow-data-collection

3. Automate the Cashflow Data Collection

Many companies and businesses use excel sheets to manage their cashflow forecasting process. But while excel sheets are a tool few cash handlers could operate without, cashflow forecasting automation can help businesses to better build a data-driven cashflow forecasting process.

At First, since worksheet-based cashflow forecasting involves, you collecting and transforming by hand, there are more chances for human error. This results in, the second guess for cash handlers what their cashflow forecasts are telling them and of course need more time for confirmation about the accuracy of data.

It is observed that many businesses who use spreadsheets spend 80% of their time building their reports. As a result, they got very little time to analyze them in order to learn about their business.

Cashflow forecasting automation can solve these two problems. As cashflow automation gets data directly from your banking systems or ERP, it decreases the workload needed to build a forecast and removes the opportunity for errors.

As a result, it provides you with enough time for analysis and more confidence that your findings and data from the analysis are reliable.

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4. Use a Rolling Cashflow Forecast

It is found in the survey that rolling cashflow forecasts improve the accuracy of forecasted and budgeted revenue roughly by 14% when compared to the static forecasting and budgeting process that are used in many organizations. More importantly, It is the fact that rolling cashflow forecasts provide businesses with greater agility — It is seen in surveys that financial performance is increased by 20-30% on average.

For example, if the demand for a certain product suddenly decreases, a static forecast would prevent you to accommodate and adjust those changes until the next cashflow forecasting period. As a result, you can face a harder time understanding how lost revenue can affect your ability to pay suppliers.

On the other hand, a rolling cashflow forecast, would provide you with more accurate view of your cash, which makes it easier for you to optimize the timing of any spending you had planned or financing you may need to cover your expenses.

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]]> https://capitalplusauditing.ae/what-is-cashflow-forecasting-4-best-practices-of-cashflow-forecasting/feed/ 0 What is Outsourced Accounting? Hiring In-House VS Outsourcing https://capitalplusauditing.ae/what-is-outsourced-accounting-hiring-in-house-vs-outsourcing/ https://capitalplusauditing.ae/what-is-outsourced-accounting-hiring-in-house-vs-outsourcing/#respond Tue, 01 Mar 2022 14:51:27 +0000 https://capitalplusauditing.ae/?p=658

In recent times Outsourced Accounting become much more commercial for businesses to outsource their Accounting and Bookkeeping. As Outsourced Accounting offers multiple benefits, it’s becoming more common for businesses and teams to work remotely. Hiring in-house or outsourcing has a mass impact on your organization’s performance, expenses, and culture. In this article, we will discuss what the outsourced accounting service is, what are the Pros and Cons, and the difference between In-House Hiring VS Outsourcing.

In recent times Outsourced Accounting become much more commercial for businesses to outsource their Accounting and Bookkeeping. As Outsourced Accounting offers multiple benefits, it’s becoming more common for businesses and teams to work remotely. Hiring in-house or outsourcing has a mass impact on your organization’s performance, expenses, and culture. In this article, we will discuss what the outsourced accounting service is, what are the Pros and Cons, and the difference between In-House Hiring VS Outsourcing.

What is Outsourced Accounting?

Outsourced accounting is when a company/business hires a third party to accomplish the organization’s accounting function and finance function which is outside of their company. An outsourced accountant handles all the business’s finance functions, including; payroll, financial reports, bookkeeping, tax, accounts payable, management accounting, following up debtors, accounts receivable, and other accounts-related services.

In several cases, outsourcing is called subcontracting. In a wider sense, Outsourced bookkeeping is sometimes called Business Process Outsourcing (BPO), which means that an external company provides all of a business function or part of business functions. The more specific term used is Finance and Accounting Outsourcing (FAO).

Why Should You Outsource Accounting Services?

Being a manager or business owner for your company can sometimes imply that you are the one taking care of everything. Being responsible and reliable for your company’s success and making sure everything happens according to your indications, is a tough job. But there is one area, that should be the same for all the businesses and companies, something that can be done without any creative input, which is Accounting.

Financing, Budgeting, data analysis, and compliance can make or break your business, especially for a new startup. Mistakes in paying taxes or tracking cash flow can be disastrous to your business and should not be left to chance.

When it comes to the financing function of your business, there are several options to consider: You can either hire an internal accountant or bookkeeper to handle daily work or outsource your accounting and bookkeeping to a professional certified public accounting firm, (CPA) firm.

Pros of Hiring In-House Vs Outsourcing

Hiring in-house and outsourcing, both have many benefits that aid in various business needs and functions. Below are some of the most valuable pros of each hiring option.

Outsourced accounting vs in house accounting

Pros of Hiring In-House

  • It’s convenient and easier for in-house employees to cooperate during strategic projects that require extra input from people within your organization.
  • Employees quickly learn and adapt your company’s culture which helps them understand your business model, also reduces miscommunications and errors. Your employees may also be more accepting as compared to contractors.
  • In-house employees can work extra hours according to company needs. Most in-house employees accept that they will sometimes need to work late to assist their team. Whereas contractors, are paid for a fixed number of hours and you need to make plans in advance to let them work extra.
  • You have full control over the In-house employees who you work with. The hiring of personnel lets you find someone with all the technical skills you want plus a personality that best fits with your team.
Outsource-accounting-pros

Pros of Outsourcing

  • Outsourcing is more economic than in-house According to one survey, 62% of companies got 10% to 25% savings when they outsource their work and the remaining 38% of companies got savings above 40%.
  • You can save time by outsourcing because third-party companies require very little management from your team. Reputable firms have well-managed systems that ensure that you will get on-time, high-quality work without your constant contact with your outsourced team.
  • It is easy to change the support level that you’re paying for, as your needs fluctuate. It enhances quality assurance and cost-effectiveness during your slow and busy periods since you’re not overworking a fixed team of employees.
  • You have access to diverse knowledge because contractors are some of the most skilled employees having diverse professional experiences. This benefit can be achieved when you outsource to professional services.
  • Overall, outsourcing is a cost-effective solution for retrieving talent when required. Meanwhile, in-house hiring can be a better way to retain collaborative talent.

Cons of Hiring In-House Vs Outsourcing

Besides the benefits of hiring in-house and outsourcing, there are certain drawbacks to each as well. You need to consider these factors when choosing which option is better for you.

Cons of Hiring In-House

  • Hiring In-House is more expensive than outsourcing. As a manager or executive member, you are responsible for employee benefits and tools (computers, desks, etc), recruiting and training, and other costs that make in-house employees more expensive than hourly wages when
  • For small businesses that need help in business processes such as admin support, marketing, and HR, you may not have enough work to justify the full-time employee cost.
  • When employees leave, you are kept struggling to find other competitive employees. One month or two weeks prior notice isn’t enough time to find and train a new employee, so other members of your team have to take an extra workload of the missing person.
  • Outsourced employees are often not included in your company’s main communication which can lead to important information not being shared with them and a general gap between them and other team members in your company.
  • Language and Culture differences may cause miscommunications if you outsource your work to other countries. This occasionally happens if your in-house and outsourced team does not have a strong familiarity with the other’s culture.
  • Outsourcing key jobs of your business can be risky because, if an employee you’re dependent on is no longer able or willing to generate the same output, then you can face a challenging situation. To reduce this risk, work with established and professional companies as compared to independent contractors.
  • You need to calculate the costs against the communication challenges that may come with outsourcing your work.
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How to Decide Whether You Should Outsource or Hire In–House

Ask yourself these questions when you are trying to decide whether you select Hire In-House vs outsourcing your business function or not:

1) Does the process directly relate to your business’s core activities?

You can get benefits by focusing on your core business activities and outsourcing the rest:
  • It helps you to make an environment where everyone is focused on work and achieving the same goals.
  • It reduces the time that you spend on business functions that don’t generate revenue directly.
  • It is a cost-effective way to enhance your team’s

2) Do you have the time to hire, train and manage additional employees?

Hiring and managing in-house employees needs an investment of significant time. Before hiring employees, consider your executive team has the time to manage additional employees.

Below are some signs by which you can measure that your business doesn’t have the capacity for additional employees:

  • You do not have a manager who has sufficient knowledge and time to effectively guide employees about projects that fall outside of your core business.
  • Your company is struggling to cope with your existing HR needs.
  • It is challenging for you to find reasonable talent to utilize in non-core areas of your business.
  • One of the biggest benefits of outsourcing your work to a professional services firm is that they will take full responsibility for finding, training, and managing the people who will work on your account. This helps your managers to focus on empowering your team.

3) What are the complete costs of outsourcing vs hiring in-house?

When you’re comparing the cost of outsourcing vs hiring in-house, hourly wages are often ambiguous because they are only one part of the total costs. You need to keep in mind the additional expenses including:

  • Benefits
  • Perks such as bonuses
  • Taxes
  • Materials (computer, desk, software, etc.)
  • Management time
  • Training
  • Recruiting

Answering these three questions will help you in determining business functions which you should keep in-house and which you should outsource.

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