Do you own an SME? Or do you wanna start a company from scratch? Well, the one basic truth here is that you will definitely need accounting throughout the whole ride. And today we’re gonna take a quick dive into accounting for SMEs. From financial management to the growth of your business, accounting is crucial! So, we’re gonna take a quick look at the basics like why you need it, how to manage it, and who can do it for you. Let’s dive in, shall we?
Why Is Accounting for SMEs Important?
The most important thing that accounting for SMEs provides is tracking income and expenses. It is very crucial to know where your company’s money comes from and goes to. This also improves the management of cash flow so you don’t find yourself low on liquidity. Moreover, accounting ensures that you are compliant with tax laws and regulations as well as filing on time. And finally this leads to making better decisions based on the analysis of financial reports. This leads to building credibility with investors and outside parties as well as shareholders.
What Does Accounting for Small Businesses Involve
There are several things that accounting includes. But before you check them out, make sure you know the basic accounting steps that every company should use. But if you already know that, here’s more of what accounting should include:
- Bookkeeping: This accurately records all your company’s transactions. You can learn more about it all here.
- Financial Statements: To make sure your accounting is all correct, you should prepare the 3 financial statements: balance sheets, income statements, and cash flow.
- Tax Compliance: Proper accounting will make your corporate tax and VAT management much easier.
- Budgeting & Forecasting: Accounting for SMEs includes budgeting and planning for your company’s financial future.
- Payroll Management: Although this is usually the HR specialty, small businesses don’t have the resources to have a whole department. Hence, accounting can take care of salaries, benefits, and such.
As for the methods of accounting for SMEs, it’s either cash or accrual. Cash accounting records transactions when money is received or paid. Meanwhile, accrual accounting records the transaction regardless of when the actual payment happens.
Accounting for SMEs Definitely Requires Software Programs!
You see, the use of accounting software makes the whole process simpler and less prone to errors. So, here are some of the most popular programs that can work for you, and you can choose based on your preferences.
- QuickBooks: It’s a user-friendly and cloud-based program. So if you feel like you need a relatively simple program that is equally effective, this is it.
- Xero: If you’re looking to automate the process, Xero is a pretty good option.
- Zoho Books: If the accounting for SMEs is on a budget, Zoho Books is the most cost-effective for small businesses.
- Tally: This is one of the more popular choices in the UAE, and it’s great if you need to work on your VAT compliance.
So… Should You Keep it In-House or Outsource?
Well, if you don’t mind investing money in good accounting software and accountants who have the skillset, you can keep it in-house. The upside of in-house accounting for SMEs is that it allows management better control. However, if you’re looking for a cost-effective solution that provides experience and saves you time, outsourcing is the answer.
Luckily for you, we already rounded up the best accounting services in Dubai for you! But to make your life even easier, Noraal is right here and ready to help you. At Noraal, we take extreme care when it comes to your financial needs. In addition to accounting, we have a range of services to help your SME grow and succeed! So, what are you waiting for? Contact us today for a consultation. We’ll handle the details from there while you focus on what matters: your success!