Alchemist- An accounting and consulting firm for your assistance.

Guide to E-commerce Accounting in the UAE

global

The whole world is going through a major shift in the business sector. Because of the pandemic, many entrepreneurs are looking forward to building online ventures. There are many offline businesses that are shifting to online platforms to keep up with the current situation. Nevertheless, it carries both advantages and disadvantages for online ventures in Dubai.

Advantages include Less expense on infrastructure and avoiding miscellaneous expenses of staff members as many are working from home
Disadvantages include proper management of accounts for e-commerce. Many people handle accounts in Dubai, UAE by using MS excel and notepad. But it’s about time you update your e-commerce with these tricks that ensure the proper functioning of your e-commerce business.

Tips for managing e-commerce accounting in Dubai

Updating as per the digital age - It is time to modernize accounting techniques in Dubai by replacing MS Excel and Notepad with capable online softwares that offer a wide range of options for recording transactions, analysing them, and producing accurate financial statements. Having well-defined accounting software in Dubai, UAE not only records all information in a structured manner but also ensures that you can access any information with the click of a button.
Knowledge of accounting terminology - An entrepreneur's main goal should be to figure out how to expand the business. However, it will not harm the entrepreneur if he has some understanding of the basic terminologies of accounting in Dubai and keep himself updated on new laws that have been implemented in Dubai regarding accounting in e-commerce.
VAT information - A 5% VAT is levied on the majority of goods and services in Dubai. As a result, having a thorough understanding of VAT policies is essential. Furthermore, applying this knowledge to your product trading will benefit you greatly. Some products do not fall in that category, and prior knowledge of them is also required.
Constantly analysing your expenses - Without a doubt, e-commerce helps in minimizing the expenses that are spent in offline businesses by either establishing infrastructure, renovating offices, or miscellaneous expenses of your workforce. We frequently fall victim to this trap, believing that because of e-commerce, we no longer need to meet these expenses, and as a result, we begin overspending in areas that are not even necessary. As a result, it is highly recommended that you keep a constant eye on your expenses and try to reduce them if they aren't serving any purpose in the future.
Having a plan - Whether it's an online or offline project, we can't stress the importance of having a plan enough. Make sure to focus on the future, because if your business only considers daily requirements without focusing on long-term goals, you are on the verge of going bankrupt in the near future. So, having a plan is essential, as is keeping track of your daily expenses.
License requirements - Before establishing e-commerce websites in Dubai, it is mandatory for entrepreneurs to get a license. They must get a license from the Department of Economic Development; only after that will they be legally permitted to operate their e-commerce. It is illegal in Dubai to operate an e-commerce portal without a license.
Asking for help - Even in e-commerce, you can get online assistance from a certified accountant in Dubai who really can help you with everything from analysing expenses to generating financial statements. They will even guide you to move in a specific direction for more profits. However, be wary of fraudulent services and always seek out certified professionals in Dubai, UAE.

How is e-commerce accounting done?

E-commerce accounting in Dubai is becoming increasingly simple as technology advances.

The procedure is outlined below:

The first step is to purchase accounting software for your online business. There are numerous types of software readily available. Before investing in online accounting apps, you can start with a free version or a 30-day free trial.
We cannot deny the fact that having separate accounts solely for e-commerce purposes eliminates ambiguity about the source of cash flow.
Mention all of your sales, as well as the date and time. Recording all expenses, such as packaging and sales, as well as inventory management, allows your e-commerce to gain accurate insights into your company.
It's critical to know whether you'll be able to make it through another month if things worsen. So, having an appropriate budget will help you to survive in an unexpected situation such as a pandemic.
Softwares are efficient at calculating tax rates for each sale of a product, removing the stress of managing taxes.
These softwares serve as reminders for your tax payments.
The final step is understanding the big picture of your e-commerce by analysing the balance sheet. It aids in future planning and makes budgeting simpler.

Businesses in the UAE are expanding, and there is a steady sense of outnumbering other businesses in order to maintain your foothold. As a result, it is vital to maintain that your e-commerce is running smoothly. Furthermore, many businesses are perplexed by the VAT policy, so having a thorough knowledge will set you apart and keep your e-commerce from being caught off guard. Many e-commerce websites have been established in the UAE, and accounting skills are also required.

As a result, a qualified professional accountant in the UAE can assist the e-commerce venture in future planning by analyzing its growth. A specialist financial planner will also be able to resolve account discrepancies at the appropriate times. Nobody knows what the future of e-commerce will be like, but one thing is certain: e-commerce ventures will grow in the future, and one must be well-versed in the economic aspects of accounting.

Want a reliable accounting firm in the UAE? Contact Alchemist Accounting today.