Your bookkeeper will save your money

How your bookkeeper will save your money?

Looking for new ways to save money in your business for more growth? Have you thought of hiring a bookkeeper for your business? Do you know how much money a good bookkeeper can save you? Although you might feel like the idea of hiring a bookkeeper is quite expensive, hear us out first because we will tell you how you can find affordable bookkeeping service in UAE at the end of the blog post. So let’s start.

In the initial days of your business operation, you may have taken the majority of bookkeeping and accounting duties on yourself. But as your company grows, hiring a financial professional to take care of all your accounting records becomes more critical to the success of your organization. Professional bookkeepers facilitate smooth financial management and efficient operation of your business, and can also save you considerable sums of money.

Professionalism

While it’s fairly self-evident, it’s worth reiterating that hiring a bookkeeper means your finances are managed by a professional. Regardless of how educated you are, it’s a safe bet that a professional bookkeeper will manage and keep track of your finances better than you can personally.

Yes, you’re paying for the privilege, but consider the fact that you’re shelling out money for accurate, well-organized, and cost-effective records of your company’s money. In a sense, you’re not only paying for accuracy, but for the peace of mind and expediency that a professional bookkeeper provides.

Ultimately, the expense is more than just worthwhile. Keep in mind that if you did your own bookkeeping, any mistakes could potentially have serious immediate and long-term financial consequences for your company. The time it takes to find, correct, and redo errors may put an additional significant divot in your company’s finances.

Makes Managing Your Profit Margin Simple

If you are a small business, you might work with very low-profit margins. This is why you need to find ways to increase your margins. And a bookkeeping service will help you do just that.

A professional bookkeeper like Crevaty will help you keep track of your margins and offer you useful insights on ways you can leverage your low-profit margins for substantial returns. Managing your monthly transactions, a bookkeeper will make sure all your payrolls are handled well, VAT payments are taken care of and all your bills are paid on time.

Also, outscoring accounting department will save significant amount of money comparing to own (in house) accountant. 

Cutting Down on Responsibilities

When you started your small business, you probably take care of the total operational responsibilities for the business. As your business grows, operational responsibilities increase, sometimes exponentially, and may quickly reach the point where running the business simply can no longer be a one-person job.

Hiring a professional bookkeeper frees you up to attend more to the central responsibility of managing and growing your business. Reducing the number of stressful tasks that use up your attention on a daily basis helps you function more efficiently in your role as owner and manager, and should ultimately result in increasing the financial fortunes of your company by a margin much more than the cost of the services of a professional bookkeeper.

Reduce the Stress of Taxes (VAT)

We all know the panic that comes with the tax deadline, and it’s not a pleasant experience unless you have everything well-managed. You can avoid this tax deadline stress altogether when you have a bookkeeper because he or she will effectively manage expenses, salaries, write-offs, and budgets timely-thus saving you money on taxes, plus the hassle.

Keep control of your financial data

Not many small businesses can afford their own accountant. But if you are using online accounting software to manage your financials, your bookkeeper will easily be able to collaborate with your online accountant to ensure you better control of your financial data.

Instead of the business owner researching accounting rules, learning how to use software, and putting together their own financial reports, bookkeepers handle all of this for them. That saves time, money, effort, and energy and reduces the risks of small errors that can completely throw off the information. Most of the software’s like Xero, Quick Books, Zoho and many others are giving very well sophisticated flatforms with minimum cost. 

Reduce mistakes and errors

A bookkeeper will simply be an extra pair of eyes watching your cash flow so you can ensure your money is running smoothly in the business.

Having someone else to check your numbers will help you keep your cash flow seamless while reducing costs that can occur due to mistakes and errors. 

A bookkeeper will save you money significantly. So, all you need now is to find an excellent and affordable bookkeeper in UAE for your business.

Lucky for you Crevaty has a reputation for just that. – High-quality bookkeeping service in UAE for an affordable price. Contact us today.

Conditions to claim input VAT in UAE

Things that you need to know before claiming input tax

It is possible to recover all input tax based on invoices? No.

This article we provide an overview of conditions to claim input Tax in UAE. VAT is an indirect tax govern by public (Government) which is imposed on goods and services at each stage. You need to fulfill certain conditions when you recover VAT as input tax.

Tax paid on the procurement’s / expenses is referred to as input tax. Unless otherwise specifically mentioned under the Decree Law UAE, the credit of such input tax shall be available to the registered person subject to fulfillment of prescribed conditions.

If you are not registered for VAT, you are not able to reclaim VAT on goods or services.

If you are registered for VAT, the general rule is VAT can be reclaimed on goods and services bought by the business to make standard, or zero – rated supply. Below conditions should be met,

  1. Recipient must be a registered person for VAT under UAE federal Tax Law.
  2. The recipient obtains and also keeps the tax invoice as specified in Executive regulation on Federal Decree-Law.
  3. The goods or services must have been acquired for an eligible purpose and used or intended to consume for make taxable product. (Exempt supply businesses cannot recover input tax, personnel expenses cannot recover input tax, entertainment expenses cannot recover input tax)
  4. The amount of VAT which the recipient seeks to recover must have been paid in whole and part, or have been intended to be paid. (Time frame to claim input tax)

Let us go into detail to understand on item 2,3 and 4 sated above. Item 1, is simple.

1. Registered person

The Taxable Person issued with a TRN (tax registered number)  by FTA considered as registered person or Registrant If someone need to verify person/business is registered for VAT, they can log in to  https://tax.gov.ae/ and enter the TRN and verify. This option is available to public to any TRN.

2. Tax Invoice

A Tax Invoice shall contain specified particulars in order to qualify as recoverable input tax invoice. Below is the content of full tax invoice as per the Article 59 of the Executive Regulations with regards to tax invoices.

  • The words “Tax Invoice” clearly displayed on the invoice.
  • The name, address, and Tax Registration Number of the Registrant making the supply.
  • The name, address, and Tax Registration Number of the Recipient where he is a Registrant.
  • A sequential Tax Invoice number or a unique number which enables identification of the Tax Invoice and the order of the Tax Invoice in any sequence of invoices.
  • The date of issuing the Tax Invoice.
  • The date of supply if different from the date the Tax Invoice was issued.
  • A description of the Goods or Services supplied.
  • For each Good or Service, the unit price, the quantity or volume supplied, the rate of Tax and the amount payable expressed in AED.
  • The amount of any discount offered.
  • The gross amount payable expressed in AED.
  • The Tax amount payable expressed in AED together with the rate of exchange applied where the currency is converted from a currency other than the UAE dirham.
  • Where the invoice relates to a supply under which the Recipient of Goods or Recipient of Services is required to account for Tax, a statement that the Recipient is required to account for Tax, and a reference to the relevant provision of the Decree-Law.

3. Eligible purpose

Every business has certain common business expenses which are incurred on a day to day basis. All are not qualified claim input tax.

The expenses on which input VAT recovery is blocked can be categorized as per below.

  • Entertainment expenses
  • Motor vehicle used for personal purpose
  • Expenses incurred on exempt suppliers
  • Some employee related payments

We can briefly explain these categories as follow,

Entertainment expenses

VAT incurred on any costs which are used for a genuine business purpose, or which are incidental to a business purpose e.g. food and drink provided during a business meeting, shall be recoverable (subject to normal VAT recovery rules). However, where the hospitality provided becomes an end in itself and could be construed as the purpose for attending an event, such costs will be considered to be entertainment in nature and the VAT incurred shall not be recoverable. The type of entertainment expense which is not allowed for input VAT recovery include hospitality (Examples: Accommodation, food and drinks) which in not provide in normal course of meeting, access to shows or events, trips provided for the purpose of pleasure or entertainment. To understand more on the concept, FTA has issued guideline through public clarification. You can refer the same though this link – https://tax.gov.ae/-/media/Files/FTA/links/Public-Clarification/05-VAT-Entertainment-Services.pdf

Motor vehicle used for personal purpose

In general, a person registered under VAT is allowed to recover VAT incurred on the purchase, lease or rental of a motor vehicle which is used for their business activities. However, Motor vehicle is used for the personal use of person in the company, it cannot be claimed VAT on expenses relating to motor vehicles and fuel expenses.

Here, a ‘motor vehicle’ is any road vehicle which is designed or adapted for the conveyance of no more than 10 people, including the driver. ‘Motor vehicle’ does not include a truck, forklift, hoist or other similar vehicles. This rule ensures that the VAT incurred on essentially commercial vehicles is not blocked due to incidental private use.

A motor vehicle will not be treated as being available for private use if it is within any of the following categories,

  • A taxi licensed by a competent authority
  • A motor vehicle registered and used as an emergency vehicle, including by the police, fire brigade, paramedics, or similar emergency services
  • A vehicle which is used in a vehicle rental business where it is rented to a customer

Expenses incurred on exempt supply

Some of the selected supplies in the sectors categorized as exempt supply under UAE VAT law and treat as outside the scope of VAT. Examples of some financial Services, Sale or rent of residential buildings following the first supply, supply of bare lands, local passenger transport services etc. In such cases, input related exempt supply will not be able to recover. This area is complex and need to review case to case where most of the cases it will come under mixed supply and need special tax recovery calculations.

Some employee related payments

VAT paid on employees related expenses will not be recoverable by the business where the goods and services are purchased to be used by employees for no charge to them and for their personal benefits.

Above rules are not applicable following situation,

  • Where the employer has a legal obligation to provide those goods or services to the employees under and applicable UAE Labor low.
  • Where it is a contractual obligation or documented policy of the employer to provide those goods or services to employees, to enable them to perform their duty, and where it can be proven to be normal business practice to do so in the course of employment.

Example – VAT paid on Medical insurance on behalf of staff and their dependence need to evaluate accordingly. Not all the cases can claim full input tax on the same.

4. Time Frame to claim input tax

Input tax must be recovered in the first tax period in which two conditions are satisfied,

  • The tax invoice is received
  • An intention to make the payment of consideration of the supply before the expiration of six months after the agreed date of payment is formed

Upon receipt of a tax invoice, you can recover input tax only when an intention to make the payment within a prescribed period is formed. Hence, planned payment period is very important before you claim any input tax. Where a taxable person fails to make the payment of consideration before the expiration of six months after the agreed date of payment, the taxable person should reduce the input tax in the VAT Return of the tax period following the expiry of the six-month period. However, once the payment is made, the taxable person will again be entitled to recover the input tax.

For an example, if a company receive a tax invoice for AED 10,500 on 30th May 2020 and agreed to pay within 30 days. Hence payment due date is 30th June 2020 and the company claim its input tax of AED 500 during the tax period of 01st of April 2020 to 30th June 2020. However, if company fail to make the payments until 30th December, 2020 then the eligibility of claimed input tax of AED 500 is invalid. Hence, adjustments need to made after the 30Th December, 2020 in the tax return to reduced AED 500 in the input tax. Again, once the company made the payment in later period, it is allowed to claim input tax again after the payment.

Due to the time frame of input tax claim, companies must review age payable list with the due dates/ agreed payment dates with suppliers to closely review the eligibility of input tax claimed in earlier periods. FTA clarify time frame to claim input tax under the public clarification and please refer the same through the link https://tax.gov.ae/-/media/Files/FTA/links/Public-Clarification/Time-frame-for-recovering-Input-Tax.pdf

Conclusion

VAT registered companies are responsible for VAT. They are eligible to set off their output VAT (Sales) with Input VAT (Expense). Companies cannot claim all input VAT and need to evaluate the eligibility on the same.

Hope this will help you to get understating on conditions to claim input tax in UAE. If you need help, please contact us through www.crevaty.com

Internal Audit – is more than what you think

The severity of the current global economic downturn has left organizations around the world searching for ways to contain costs, improve efficiencies, maintain customer satisfaction levels and protect their balance sheets. This unprecedented economic crisis has been nothing short of an urgent call to action for more robust risk management practices in global organizations of every size and industry.

In retrospect, the role of the internal audit (IA) function may have been somewhat ignored in the economic storm. As organizations struggle, we see more of them recognizing that IA is positioned to play a critical role in helping to manage the change that must come. These organizations are looking to IA to provide assurances that existing and emerging risks are identified, monitored and managed so that they can move forward with confidence in executing their business model. This issue explores how IA can contribute to organizations as they recover from the crisis and what management and boards should expect of IA going forward.

However, let’s begin with what exactly is an IA.

Take a fresh look at the role of IA

The role of an IA is to provide independent assurance that an organization’s risk management, governance and internal control processes are operating effectively.

When done right, an IA will answer to questions like whether you have any gaps in your company policies and procedures, does you company meeting compliance goals, comply with laws and regulations and much more. Plus, it will provide you with useful insight into your organization’s culture, policies, procedures and more.

The process involves the board of directors or the board of trustees, the accounting officer or the audit committee. And the evaluation and reporting will be done to the highest level in the organization.

Let’s have a look at why IA are essential for an organization.

Why IA are essential for an organization?

Increase in productivity 

The goal of IA is to add value and improve the operations of the company. Thus, it will help with strategic objectives achievements in an organization helping you with risk management, control, and other governance processes with its highly disciplined approach to evaluation. 

Confidence to stakeholders

One of the main benefits of IA for a company is the confidence it can bring to your stakeholders. Internal auditors report to the highest management of the organization on significant risks that they have evaluated with necessary improvements to improve the situation thus the administration and the boards can take necessary actions to ensure the company is being managed effectively on behalf of all stakeholders. 

Detection of frauds

Another important benefit of IA is it helps you uncover evidence of waste, fraud and abuse. Here you will have to be strategic of how frequent you need to do IA in each of your departments, as every department is different in nature. For example, manufacturing will need daily audits as for HR annual audits is sufficient.

Quality control

IA also play a crucial role in combining assurance and consulting. Here it helps with informing the management how effective the system, processes and procedures of the company are in keeping company goal achievement on track. And it also provides advice on room for improvements to attain better efficiency.

Good corporate governance

IA are also crucial in ensuring compliance with government laws and regulations, evaluating the internal controls such as corporate governance and accounting process.

When your internal control isn’t working as intended…

Internal controls are essential to manage business operations and to ensure the accuracy of your financial records. Yet many companies struggle with maintaining an effective internal control system. 

Top reasons for internal controls to fail

There can be many reasons for your internal controls to not to work. Here are the top 4 reasons for companies’ internal controls to fail.

01. Deliberate circumvention

Internal controls put limits for individual employees on what they can do. However, they can go around these limits through loopholes in your internal control system like by teaming up with other employees. To give you an example, your two employees can make fake cheques easily if one is allowed to enter cheques to the system and the other have clearance to print the cheques.

02. Incorrect judgement

Incorrect judgement on your employees’ character, skill set, competencies and loyalty to the company is one of the main reasons for internal control systems to fail. Here the main issue is management’s inability to assess employees’ character right and assign the right task for the right employee.

03. Failures to train employees

This is one of the most common reasons for company internal controls to fail. Lack of knowledge in their duties, limitations, the consequences if they overcome these limits, general practices on how to uphold internal controls can massively affect the internal management system negatively. 

04. Management override

Control overrides are a common practice among organizations. And it is essential for the organization to carry out operations in certain circumstances – Like in an instance where you need to approve an invoice for AED 6000 when the person responsible for approving invoices over AED 5000 is on vacation, the other person may decide to skip certain steps in the process to approve the invoice. Although in this situation, it doesn’t affect the organization severely, it certainly affects the consistency of the internal control process.

How to assess internal control to optimize the internal control process?

Assess the control environment – Evaluating employee credentials related to performing controls is one of the best steps that you can take to optimize your internal control system. Here it would be best if you made sure employees have received adequate training and education to ensure their capability to maintain an effective control system.

Investigate control activities – The effective control system can translate to easily implementable policies and procedures. Here key control activities such as performance reviews, physical controls, informational processing controls, and segregation of duties should be taken in to account. 

Examine accounting information system – Efficiency of your accounting information system affect massively to the efficiency of your internal control system. Thus, checking the operational efficiency in data entry, record generation and report generation and reviewing the speed and efficiency is essential.

Evaluate the quality – Monitoring your internal control system when it’s absolutely necessary or for an audit is not enough to maintain an effective internal control system Thus; it’s important to put processes in place to encourage the management to monitor the system continuously. 

Rethink, revise and revalidate

Risk assessments are not static processes, they must be revised and revalidated to ensure they are relevant in a changing business environment. 

Risk assessment is the core of every IA function. A comprehensive risk assessment process will identify the organization’s existing and emerging risks, and help determine how these risks are controlled and where gaps exist within the operations of the business.

If you don’t know where to start your internal auditing process, our experienced internal auditors at Crevaty is here to help you. Get in touch with us today for more details.

Cloud Accounting – The best way to future-proof your business accounting

Every industry changes with time- so is accounting. It is a widely-held opinion among the world’s leading accounting commentators that the future of accounting is online. Today accounting sector is evolving vigorously than ever before- specially due to the advancement in technology and internet. Since we all are well aware of the state of the accounting sector at present, let’s have a look at how the future of accounting is going to be like with cloud accounting.  Among other cloud solutions, Xero is our best recommendation. Let us look in to detail how Xero can bring the change you need.

More businesses go online

It’s evident that more and more businesses are embracing digital technology to manage their business operations. If you have buried your head in the sand about online accounting then it’s probably time you came up for air. When you are looking for a digital solution to handle your accounting you can’t go wrong with Xero as the platform enables you to digitalize your entire accounting process delivering many benefits.

Anytime anywhere access

Specially with the Covid-19 pandemic, businesses have understood the importance of giving their teams the opportunity to work location independently. Offering ultimate location independent accounting solutions with cutting edge features to enable accountants, bookkeepers and teams to collaborate, anytime anywhere, Xero will introduce an operational flexibility of next level.

People becoming time-poor every day

Every day people are getting busier thus becomes more impatience to get done everything fast. Therefore, businesses will have to find new ways to speed up their accounting processes while keeping the costs to the minimum. Using an effective accounting system like Xero will ensure fast accounting processes from generating invoices to creating reports.

Need of simplified payment process to get paid faster

Speeding up your payment process will significantly affect your cash flow. Enabling you to improve the speed of your cash flow in ways you never thought was possible before, Xero comes with features to such as instant invoice generation, online payment and quick payment reminders and more.

Consumers seek more and more cost-effective but high-performance business partners

Everyday businesses are looking for ways to achieve high performance at low costs. Xero is one of the state-of-the-art accounting platforms that enable you to do just that. Automating many of your accounting functions, the system lets you get done more work in lesser time with a smaller workforce while speeding up everything.  With unbelievable functions and features, the platform delivers you transformative accounting solutions, that redefine how you’ve been doing accounting and bookkeeping in your business.

Xero | High-efficient accounting system of the future

With over years of experience and close to two million of client base from around the globe, Xero is the future of accounting. Introducing the accounting of future, today for businesses with incredible features such as invoicing, payroll, bank connections, bank reconciliations, inventory, quotes etc. the system will handle all your accounting functions from A -Z saving you time, money, hassle and headache.

Conclusion

With advancement of the technology, evolution of business landscape and customer expectations, how you’ve been doing accounting for the last 5 years won’t work soon. When it won’t, your business has to be ready to go with the flow strengthening your business accounting processes than ever before.

As experienced accountants in U.A.E. our recommendation is to embrace the change now to future proof the accounting of your business and to save time, money and hassle. If you are interested, Crevaty is happy to guide you on how your organization can adopt to Xero. Contact us today for more information.

Why SMEs look for Service outsourcing in Dubai?

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Service outsourcing is catching fame like wildfire around the globe among small businesses. With this, small business owners get the ability to have their own accounting department or an IT department without having to invest a small fortune. Many small business owners are fond of outsourcing services due to its multitude of benefits. In this article we share are a few of the reason why SME’s tends to outsource some aspects of their business operations. 

What is service outsourcing? 

To put in simple words, the practice of having a particular job function done outside a company without having an employee or a team handle them is known as service outsourcing. Below are the benefits of service outsourcing. 

Save your money With outsourcing, you will be able to create entire new departments in your business without having to hire any employees. Thus saving you the money you will otherwise have to spend on employee salaries, allowances, workspaces and other operational resources. 

Reduce risks 

Hiring new employees can be a huge risk especially when you are starting in business. During this stage, team expansion should be done strategically and wisely. When you outsource your operations, you get to have a team for yourself that is not your own. Which reduces financial risks in a great deal. 

Make everything simple 

In small businesses often business owners lack business and operational knowledge and skills although they are expert in their industry. This might make it difficult for them to supervise other business aspect of the business such as accounting and supply chain, even if they hire employees to handle such operations. However by outsourcing what you don’t know you are always ensured a reliable service. 

Competitive advantage 

When you are handling everything in-house, all those expenses in managing inhouse employees passed down to the end consumer. With the costs saved with outsourcing, you will get a better competitor advantage in the market place. 

Experts’ expertise for a lower cost 

In early-stage on businesses, it’s difficult for business owners to afford well-experienced professionals for their company. But when you are outsourcing services, you get the opportunity to get the best expertise for your business from highly experienced professionals for a fraction of the price if they were to hire as in-house employees. 

Release you from employee obligations 

Managing an in-house staff is a huge responsibility and a lot of work. From payroll management, leave approvals, other compensations to employee privileges to be in compliance with the law, the list goes on and on. But once you outsource your services, you never have to deal with any of these ever. 

Save you the hassle 

When your team gets bigger, you need bigger spaces, better technology upgrades, and more resources, which piles up to the business challenges you already have. None of these requires with outsourcing which lessen the stuff that you need to invest yourself in. 

Enable you to start projects quickly 

Many small businesses have very tight budgets and this might hinder their ability to go conquer new business opportunities and start new projects. Complexity in operations and risk involved in can also add up to this. With the outsourcing options, the business gets the agility to start new projects at any time as it reduces the risk in a great deal. 

Service outsourcing can bring your business many benefits, only if you choose a reputable service outsourcing partner in U.A.E. like Cravety.