The time-intensive task needs day-to-day recordkeeping and other activities, including bank reconciliation, budgeting, payroll management, invoicing, tax submission, etc. So, naturally, they make mistakes and pay heavily for them in their haste to complete the tasks.

Thus, most prefer hiring professional bookkeeping services Dubai to stay on top of the books and create accurate and error-free records, invoices, and reports. However, as a business owner, you must be aware of the common Accounting and bookkeeping mistakes that can affect your finances and how to avoid them. Let us help you understand them.

IMPROPER RECORD KEEPING WITH THE HELP OF BOOKKEEPING SERVICES IN DUBAI

Not having an organized system for recording transactions is the biggest blow to the business. Thus, business owners must build a recordkeeping system that stores financial information securely. It must provide access to designated members of the management, who can retrieve the files when needed. The files must be organized with clear titles and authorization rights.

The old entries in the books must be archived chronologically with proper categorization. In addition, the data must be backed up to stay safe in case of loss or theft. To avoid the problem of inefficiency, entrepreneurs in Dubai must get cloud-based accounting software that allows them to have a day-to-day accounting and bookkeeping process in place. It correctly records every transaction and keeps the books up to date.     

MISSED ENTRIES IN ACCOUNTING AND BOOKKEEPING

Even one missed transaction can make a lot of difference to the books. Unfortunately, it is a common mistake when you are doing the books yourself or have given the responsibility to an amateur. Forgetting about paper bills or petty cash transactions is one of the common mistakes.

The person in charge of accounting and Bookkeeping may need to record a small business expense, such as a coffee supply for the office, or find a bill that needs to be recorded. Thus, it is essential to have a dedicated professional bookkeeping service in Dubai working on recording every transaction without fail.

INCORRECT CLASSIFICATION IN YOUR ACCOUNTING AND BOOKKEEPING 

Untrained people handling the books can enter incorrect details into accounts payable and accounts receivables. It transforms income into expenditure or vice versa by interchanging the entries and creating a mess that can lead to errors in calculating the financial health of the business and paying taxes.

Only a professional bookkeeping service in Dubai can ensure that such errors do not occur as they are experienced and expert in Bookkeeping and have been doing the job for years. Therefore, hiring a professional bookkeeping service in Dubai from the same industry aids in getting the best results.

More and more companies in Dubai are trying to attract more money from abroad, in particular from Russia and other places which are facing war and conflict. The tin-top dictators are very wary and do not want their books to be played with. Thus those companies that are on top of their accounting are more easily trusted, and they tend to get ahead quicker. 

LACK OF CASH MANAGEMENT IN YOUR ACCOUNTING AND BOOKKEEPING

When unprofessional people manage finances, they need to be more proficient at tracking the incomings and outgoings. It leads to overspending and disorganization. There is no analysis of the financial reports or identification of problem areas that are causing losses. The lack of skills leads to cash deficits and uninformed financial decisions that lead to debts and even bankruptcy. Many small and medium-sized companies tend to go under not because they offer a product or service that is lacking but because they are not up to date with their finances and are not keeping their money accounted for. The money we do not have track of is money lost to us. 

Conversely, professional bookkeeping services in Dubai are responsible for maintaining a positive cash flow for the business in Dubai. They give the business owner cost-cutting ideas and keep expenses within the defined budget. They also offer advice on improving sales to make the business profitable. Their input aids the business owner in identifying opportunities and steering clear of threats.

DUPLICATE OR INCORRECT ENTRIES WHILE ACCOUNTING AND BOOKKEEPING

Manual entries while accounting and Bookkeeping can lead to entering the same transaction twice by mistake or entering the wrong number due to a typing error or gap in recording information. It can be a serious problem, affecting the entire calculation and the balance sheet.

To avoid this problem, the business owner in Dubai should reconcile bank accounts. It helps identify the miscalculations and errors in recording transactions while accounting and Bookkeeping. It must be done monthly or weekly, depending on the nature and needs of the business. It is particularly true if you are trying to attract investors to pour money into your venture. The most important thing that people are going to want to see are your books. 

NOT RECONCILING BANK ACCOUNTS

Entrepreneurs in Dubai who do not invest in hiring a bookkeeping service in Dubai end up ignoring the reconciliation of bank accounts. However, it is one of the biggest mistakes as they must remember to separate the business and personal accounts. Thus, bank reconciliation is essential as it helps eliminate accounting and bookkeeping errors.

Bank reconciliation helps in identifying fraud and embezzlement. It is also helpful in finding out any delays in getting the receivables. Accounting and Bookkeeping professionals are involved in regular bank reconciliation to keep the financials in check.

NOT PREPARING FOR THE TAX SEASON WHILE ACCOUNTING AND BOOKKEEPING

Entrepreneurs are absorbed in so much work that it becomes challenging to track the latest tax regulations in Dubai, which can lead to penalties. They may need to be made aware of the deductions their business can claim and can overpay taxes, which can become a significant expense for the company. Also, they may need all the proof to claim the deductions and can lose money unnecessarily.

Thus, preparing for the tax season is vital to properly recording all the deductible business expenses. In addition, the latest state laws must be considered while calculating the Dubai-based business's taxes. Hiring a professional bookkeeping service in Dubai also helps prepare all the financial reports for submission and tax planning.

Signs of Discrepancies in Your Accounting and Bookkeeping

1. Account payables receivables reports don't match the amount you need to pay or owe from others: Accounts payable and receivable are a vital part of any business, and both play an essential role in the number of assets and liabilities you possess. If these amounts are not recorded and calculated accurately, you can see a difference in your estimation or the vendor payment amounts. Regular reconciliation for accounts receivable and payable processes will help avoid future chaos.
2. Suspense account: A suspense account is an account that has all your suspicious entries. These entries need analysis and proper classification. If your accounting and bookkeeping records are accurate, you will not find this account.
3. Your accounting and bookkeeping records indicate you are earning a profit. At the same time, bank statements reflect a different picture:  You do not have any funds in your bank account or cash that matches the profit reflected in the profit and loss account. In papers, your business is doing well and earning high profits while barely making ends meet or not even reaching the break-even point.
4. Invoices on payables report which has been paid: You encounter an amount to be paid to your vendor in your payable report that you are confident has been paid off earlier, but for some reason, it is not waived off from the books. Paying your vendor twice for the same product or service is not something that anyone wants to do, and even if your vendor is kind enough to remind you that your dues are clear, it is not right for your reputation and can be a base for future disagreement.
5. You have a huge amount in general expense accounts: General expenses are indirect, meaning they do not contribute to the direct production or service. It could be rent, insurance, consulting expenses, or office supplies, and having a large amount in this account is not a good sign.

CONCLUSION

Whether a small business or a large one, they all need a proficient bookkeeping service in Dubai to keep the finances in control and well-managed. It can help in averting several accounting and bookkeeping blunders and puts the company on the path to success.  If we do not keep our finances in check, then one day we are going to be over our heads in debt and unable to account for large sums of money. Thus a business is only as good as its accountant.