Outsourced accounting means hiring an outside firm, a third party (that does not belong to your company) to manage the finance and accounting functions of your business. These accountants provide huge services to the organizations related to their finance such as account receivable and payable, tax, management accounting, financial reports, payroll, bookkeeping, following up debtors, and many other services related to accounts. As per Federal Law no. 2 of 2015, companies in the UAE are supposed to maintain accounting records and books for a minimum of the past 5 years. All small and large businesses in the United Arab Emirates need expert accountants in order to maintain the accounting records of their business to comply with the rules and regulations of IFRS (International Financial Reporting Standards). The UAE allows businesses to outsource accounting services as per the Ministerial Decision no. 100 of 2020. This method allows businesses to focus more on their goals and operations.
Requirements of Accounting
The Federal Law no. 2 of 2015 encloses the requirements for the maintenance of accounting records of a business;
- The head or parent office of a business is required to maintain accounting books for a minimum of the past five years and on every financial year-end including the books of accounts of all the branches.
- According to the regulations given by the Ministerial Decision, the companies shall save the electronic copies of all the records and the documents.
- Businesses should always follow the rules and regulations of the International Accounting Standards and Practices in the process of maintaining annual and periodical accounts for an accurate presentation of all the profits and losses experienced by the business.
Services to be Outsourced
Following are some accounting services in the UAE that can be hired;
- Preparing accounts chart
- Year-end or month-end closing
- Value-added bookkeeping
- Allocation of account entries
- Making entries for bank details
- Recording depreciation and similar entries
- Dealing payments of employees
- Making reports for government
- Verification and recording invoices from supply agents
- Recording receipts of the clients
- Making bills for sold goods and services
Advantages of Outsourced Accounting
No matter if you are running a small business or large business, outsourcing accounting services will only benefit your business. Following is how outsourced accounting helps you and your business;
- It is very important to know how your business is gaining you profits or losses. Choosing a separate group of accountants can help you to generate profitable cost control measures and make the business earn profit in this way. It helps you in predicting revenues and costs for the future with respect to financial regulations. It also keeps you from hiring more employees without the need.
- Positive and negative cash flow management is also a major task that can be handled by outsourced accountants. They can help you in managing the overall cash flow and also in solving problems related to it even before they occur. Outsourced accountants can generate ways for positive cash flow and also check for negative cash flow in advance.
- Even minor mistakes in the filing and preparation of taxes can lead to penalties. Outsourced accountants keep checking for updates on tax regulations in the country and understand the policies better. In this way, outsourced accountants can help your business avoid penalties.
- Outsourced accountants take the burden of bookkeeping and accounting and let you focus on the management of the business. They provide bookkeeping services which is the record of all the financial transactions including payments, receipts, sales, purchases, etc.
- Outsourced accountants can be excellent advisors for your business. They can make effective strategic plans for the growth and development of your business with the bare minimum loss.
- Majorly, outsourced accountants save a lot of your time which you can invest in other business tasks. For instance, the process of hiring employees and different individuals for your accounting department can be a lengthy and tiring task with no guarantee that these employees will do their best. Choosing an accounting firm keeps you from hiring individual accountants from time to time.
You should know : Role of Finance and Accounting in Business
Is Hiring an Accounting Firm Costly?
Most people assume that hiring individual accountants is less costly than hiring an accounting firm but it is a wrong assumption. Hiring an outside firm for your accounting work is extremely cost-effective since it does not include employee insurance, training and hiring costs, vacations, sick leaves, retirements, etc.
Choose FAR Consulting Middle East
When it comes to accounting outsourcing in UAE, it is very important to choose the best firm because it is directly related to the growth and development of your business. FAR Consulting Middle East has the best and most qualified accountants that will not only handle the accounts of your business but also help you through the journey of growth. Our services are accurate, on time, and outstanding. Contact us now.