A Step-by-Step Guide to Setting Up Accounting Systems for Startup

• Choose the Right Accounting Software
• Set Up Your Chart of Accounts
• Establish Financial Processes
• Track Income and Expenses
• Monitor Cash Flow
• Prepare Financial Statements
• Seek Professional Advice

Accounting Methods:

The accounting method depends on the business’s size, financial situation, and requirements. Mainly two types of accounting methods are used: 

Cash Accounting: It is a straightforward method of recording financial transactions based on when cash is received or paid out. It is simple and commonly used by small businesses. For example, income is recorded when received, and expenses are recorded when paid. However, this method provides a limited view of a business’s financial status, making it unsuitable for larger enterprises.

Accrual Accounting: It is a method of recording financial transactions based on when they occur, regardless of when cash is exchanged. The accrual method of accounting in the UAE is widely used to align revenues with expenses, offering a more accurate financial depiction. This method benefits larger companies due to its comprehensive view of economic activities.

Importance of Accounting & Bookkeeping:

Managing the financial aspects of a new business is very important for its growth. It is essential for companies to understand these steps for establishing a solid foundation and ensuring smooth operations:

Expense Tracking: When a new business starts, expenses are essential for its completion. It’s important to keep a record of all expenses, whether physically or electronically. You must also have all documents ready to claim the costs when filing your tax returns.

Sales Forecast: To accurately estimate how much money you’ll need to keep your business running in the first 90 days, you’ll need to forecast how much revenue your company will produce. The greater the revenue, the less you’ll have to raise funds from your resources.

Bank Account: In the starting phase of any business, people forget to open a separate bank account for business-related expenditures, which may lead to difficulty while preparing income and expense accounts.

Identify Your Suppliers: It is essential to list your suppliers and their details along with purchase and payment records. It helps to maintain good relations with them and keeps balances in their accounts, which they are ready to know at any time.

Tax Compliance: Each country has its tax laws. It is essential to understand these laws carefully from the beginning. Failure to comply may lead to fines, penalties, and damage to the organization’s reputation.

Why Outsource Bookkeeping and Accounting:

Outsourcing your accounting and bookkeeping to a professional firm is a fundamental step for business growth. The team of professionals keeps your business terms and works with integrity and confidentiality. Outsourcing is commonly used to save the cost of hiring and training a new accounting department. A team of professionals in your organization will help you carry out all the work on time with their skills and trained staff.

The important thing about outsourcing or global sourcing is that it becomes a robust process for leveraging talent, improving productivity, and reducing work cycles and tax return filing.

There are things to keep in mind before choosing an outsourced accounting firm in the UAE that ensures reliability:

• Detailed research
• Reliability & privacy
• Cost & accessibility
• Reviews of the company from various sources

For Hire an Expert:

BRISK helps handle and manage books and accounts for startups, which could be a lengthy and time-consuming task for business owners. BRISK experts help you in many ways:

• Assisting in setting up accounting that is customized for the needs and nature of your company
• Assisting in managing your significant expenses
• Informing you about the various schemes set up by the government to facilitate the start of your new business
• Applying all of the tax benefits available to startups to help you strategically plan your taxes
• Providing daily updates with compliance leads to preventing excessive fines and penalties