Different Types of Bookkeeping

Are you an entrepreneur that runs a small business? Well, there are several businesses out there that fail to afford proper accounting functions. Even if businesses opt for outsourcing accounting or building an in-house accounting team, either way, it is vital. All in all, it is the life of businesses.

Why Is Accounting Important?

Accounting verifies and analyses if your firm is making a profit or not. Alongside, it indicates all the key metrics like cash flow, the value of company liability, assets, etc.

Professionals in this field/accountants let you know about which are the areas where your organisation is making money. Despite knowing accounting/bookkeeping is the topmost vital function of business, many Small businesses skip this.

While the reason differs from company to company, many don’t wish to dedicate themselves to delving into the nuances of lengthy accounting procedures. However, having accounting teams does not matter. What matters is, entrepreneurs must have strong knowledge about it. This article is created to help entrepreneurs get the basic knowledge about the accounting aspects. The fundamentals start with the different types of Bookkeeping/accounting. Let’s begin.

  • Financial Accounting

Financial Accounting is the most important and common accounting process. Usually, companies expect accounting firms to take up financial accounting for tracking their financial transactions. Accountants in this field generate financial reports by using certain procedures as per local/globally accepted accounting standards.

Financial accountants keep a record and track all the current finances of your firm. Alongside, they also track all the incomings, liabilities, outgoings, and the number of funds moving through the company. These reports created by financial accountants are utilised externally by valuable investors and shareholders.

The financial statements of an organization involve the cash flow statement, profit and loss account, balance sheet, and the statement of change in equity. Ideally, every company has its software and accounting approaches to maintain its accounts. However, you can reach out to the experts dealing in bookkeeping in Dubai for hassle-free approaches.

  • Management Accounting

Management accounting is quite similar to financial accounting. Here, the accountants track the financial state of the company to make reports. The only difference is, the reports must be used internally only. Management accountants offer all the financial details needed by managers to make robust business decisions.

Management accountants use statistical techniques and tools for presenting data. This assists them in decision-making. However, accounting does not involve figures. This type of accounting is more into making predictions, interpreting trends, considering all the non-financial aspects of business, and the qualitative aspects of the business.

  • Tax Accounting

As the name explains, tax accounting involves the accurate determination of the tax liabilities of a company. In other terms, it states why and how much should organisations pay. Considering the UAE, there is only one form of tax. This is the Value Added Tax (VAT) levied at a rate of 5%.

Tax accountants deal with complicated and consistently fluctuating tax legislation. These accountants keep a track of all transactions that might create an impact on the amount of tax that the organisation pays. It also states how much tax is due.

Outsourcing to the experts dealing with bookkeeping in Dubai will help you maintain your company records under the UAE VAT law. The VAT law of UAE asks tax registrants to keep records for 5 years after the termination of one tax period.

  • Forensic Accounting

Accountants dealing with Forensics accounting can also be known as financial detectives. This is because they analyse and calculate the financial evidence to identify fraud or scams.

This approach can be compared with forensic scientists with the help of scientific methods for solving crimes. For instance, if a case goes to court, forensic accountants may translate their analysed outcomes into a language or terms that are perceivable by the jury or judge. Large organisations often hold in-house forensic accounting teams that help to identify frauds. However, for SMEs, the best way to solve the problem is to rely on accounting firms.

Conclusion

Knowing the distinct types of Bookkeeping will provide you with the strength to start your business. However, with Accountant Dubai, you can rest assured that all your accounting chores are done right. They are one of the best agencies in the town that caters to all your accounting needs.

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