Some tips from the Professional Accounting Services in UAE

Failure isn’t bad: Some tips from the Professional Accounting Services in UAE

Whether you are a newbie in the business world or are a seasoned entrepreneur, money management can be quite some trouble if you choose the wrong bookkeepers. But with the talented accounting services in UAE, fear not – one single financial misstep is not the end of the world! In fact, they are your learning steps and will keep you safe from costlier and bigger mistakes in the future.

Financial mistakes are more common than you think. You don’t hear much about them because nobody talks about it openly. Here we discuss with you some of the common problems that we see our clients suffer from and how you can overcome them for a successfully thriving business.

Cash Flow and Under-Capitalization

An operating capital is essential for the smooth functioning of a company. Even if you are worth millions, all it takes is one high paying client to delay the bills a bit, and voila – you are struggling to make ends meet. To avoid this risk, be smart in the estimate stages. Conserve extra funds for the tough hours to keep under capitalization at bay.

All your eggs in a single basket

Another factor for under capitalization is depending too much on one single client. Don’t be dependent on a single client for all your revenue – diversify clients, take up one or two little paying stable income sources and start searching for your next client before the current contract ends. You could also use a good accounting services in UAE to help you keep updated on the pending invoices and accounts receivable.

Numbers, Numbers Everywhere

Poor accounting can be a major issue in any business. Inaccuracies in your accounts means that you could get caught in legal ramifications. If you get reported for producing false reports that are inaccurate or didn’t pay enough taxes due to wrong calculations, you might suffer big time. If paying attention to numbers is not your cup of tea, or if you really don’t know advanced accounting or if you don’t have the time cross check the invoices, you’d be better off with hiring a professional accounting services in UAE.

Expanding Too Fast

It can be tempting to expand your business quickly. Within a month, you might be probably planning for five new branches with two additional departments. But you should note that expanding as soon as you can afford it is a recipe for disaster! Plan well, calculate thoroughly and carefully trade steps to slowly expand your territories.

When you see that your companies’ finances are strained, it is necessary to look the roots of the issues that have grown from deep within. With the right information and help, you can greatly improve your odds of successfully taking big steps forward with great success! With SGYCA, you get all the needed expertise in one single team with lots of insights, experience and skills. Check us out now to keep your business problem free!

With Thank & Regards,

Saji George Yohannan,

SGY Chartered Accountants,

Office 304,Khalid Al Attar Building,

Khalid Bin Al Waleed Road,

Dubai.

www.sgyca.com

sajigeorge@sgyca.com

saji_10000@yahoo.co.in

Contact: +971 55 7397058 , +971 52 2977534.

How do you read the balance sheet of a company?

Accounting Services in UAE

A balance sheet, also known as a "statement of financial position," reveals a company's assets, liabilities and owners' equity (net worth). The balance sheet, together with the income statement and cash flow statement, make up the cornerstone of any company's financial statements. If you are a shareholder of a company, it is important that you understand how the balance sheet is structured, how to analyze it, and how to read it.

The balance sheet is divided into two parts that, based on the following equation, must equal each other or balance each other out. The main formula behind balance sheets is:

Assets = Liabilities + Shareholders' Equity

This means that assets, or the means used to operate the company, are balanced by a company's financial obligations, along with the equity investment brought into the company and its retained earnings.

Assets are what a company uses to operate its business, while its liabilities and equity are two sources that support these assets. Owners' equity, referred to as shareholders' equity in a publicly traded company, is the amount of money initially invested into the company plus any retained earnings and it represents a source of funding for the business.

It is important to note that a balance sheet is a snapshot of the company's financial position at a single point in time.

SEE: Complete Guide To Corporate Finance, What Is A Cash Flow Statement? and Understanding The Income Statement

Know the Types of Assets

Current Assets

Current assets have a life span of one year or less, meaning they can be converted easily into cash. Such assets classes include cash and cash equivalents, accounts receivable, and inventory. Cash, the most fundamental of current assets, also includes non-restricted bank accounts and checks. Cash equivalents are very safe assets that can be readily converted into cash; U.S. Treasuries are one such example. Accounts receivables consist of the short-term obligations owed to the company by its clients. Companies often sell products or services to customers on credit; these obligations are held in the current assets account until they are paid off by the clients.

Lastly, inventory represents the raw materials, work-in-progress goods, and the company's finished goods. Depending on the company, the exact makeup of the inventory account will differ. For example, a manufacturing firm will carry a large amount of raw materials, while a retail firm caries none. The make-up of a retailer's inventory typically consists of goods purchased from manufacturers and wholesalers.

Non-Current Assets

Non-current assets are assets that are not turned into cash easily, are expected to be turned into cash within a year, and/or have a lifespan of more than a year. They can refer to tangible assets such as machinery, computers, buildings, and land. Non-current assets also can be intangible assets such as goodwill, patents or copyright. While these assets are not physical in nature, they are often the resources that can make or break a company - the value of a brand name, for instance, should not be underestimated.

Depreciation is calculated and deducted from most of these assets, which represents the economic cost of the asset over its useful life.

Learn the Different Liabilities

On the other side of the balance sheet are the liabilities. These are the financial obligations a company owes to outside parties. Like assets, they can be both current and long-term. Long-term liabilities are debts and other non-debt financial obligations, which are due after a period of at least one year from the date of the balance sheet. Current liabilities are the company's liabilities that will come due, or must be paid, within one year. This includes both shorter-term borrowings, such as accounts payables, along with the current portion of longer-term borrowing, such as the latest interest payment on a 10-year loan.

Shareholders' Equity

Shareholders' equity is the initial amount of money invested into a business. If, at the end of the fiscal year, a company decides to reinvest its net earnings into the company (after taxes), these retained earnings will be transferred from the income statement onto the balance sheet and into the shareholder's equity account. This account represents a company's total net worth. In order for the balance sheet to balance, total assets on one side have to equal total liabilities plus shareholders' equity on the other.

Read the Balance Sheet

Below is an example of a balance sheet

As you can see from the balance sheet above, it is broken into two areas. Assets are on the top, and below them are the company's liabilities and shareholders' equity. It is also clear that this balance sheet is in balance where the value of the assets equals the combined value of the liabilities and shareholders' equity. Another interesting aspect of the balance sheet is how it is organized. The assets and liabilities sections of the balance sheet are organized by how current the account is. So for the asset side, the accounts are classified typically from most liquid to least liquid. For the liabilities side, the accounts are organized from short to long-term borrowings and other obligations.

With Thank & Regards,

Saji George Yohannan,

SGY Chartered Accountants,

Office 304,Khalid Al Attar Building, Khalid Bin Al Waleed Road, Dubai.

Accounting services in UAE | SGY Chartered Accountants, Dubai

www.sgyca.com

sajigeorge@sgyca.com

saji_10000@yahoo.co.in

Contact: +971 55 7397058 , +971 52 2977534.28 Views