Accounting Checklist for Startups in the UAE

1. Choose the Right Business Structure

Before diving into accounting, determine your business structure:

• Sole Proprietorship
• Limited Liability Company (LLC)
• Free Zone Establishment (FZE)
• Branch Office

Each structure has different accounting and audit obligations. For example, free zones may require annual audits depending on the authority.

2. Register for VAT (If Applicable)

If your annual turnover exceeds AED 375,000, VAT registration with the Federal Tax Authority (FTA) is mandatory. Startups earning between AED 187,500 and AED 375,000 may opt for voluntary VAT registration.

Action Items:

• Apply for VAT TRN (Tax Registration Number).
• Maintain tax invoices and VAT-compliant bookkeeping.
• File quarterly or monthly VAT returns via the FTA portal.

3. Open a Corporate Bank Account

Separate your personal and business finances. UAE banks require documentation such as:

• Trade License
• Emirates ID of shareholders
• Office lease agreement
• MOA (Memorandum of Association)

Having a dedicated corporate bank account streamlines expense tracking and audits.

4. Set Up Accounting Software

Invest in reliable cloud-based accounting software that complies with UAE standards. Options include:

• Zoho Books (FTA-approved)
• QuickBooks Online
• Xero
• Tally

Benefits:

• Automated invoicing & expense tracking
• Real-time financial reports
• Easy VAT calculations and filing

5. Establish a Chart of Accounts

Create a detailed Chart of Accounts (COA) to categorize all financial transactions. Common categories include:

• Revenue
• Cost of Goods Sold
• Salaries & Wages
• Marketing Expenses
• VAT Payable / Receivable

This foundation ensures accurate reporting and helps monitor business health.

6. Record Transactions Regularly

Don't wait until the end of the quarter. Maintain daily or weekly records of:

• Sales invoices
• Purchase bills
• Payroll records
• Bank statements
• Expense receipts

Tip: Use scanning apps or expense-tracking tools to digitize paper records.

7. Track Cash Flow and Budgeting

UAE startups often face early-stage cash flow challenges. Create monthly cash flow forecasts and monitor:

• Incoming revenue
• Operational expenses
• Payment cycles
• Emergency reserves

Budgeting helps manage seasonal fluctuations and avoid cash crunches.

8. Stay Payroll & WPS Compliant

If you employ staff, you must follow Wage Protection System (WPS) requirements in the UAE.

Checklist:

• Issue payslips and salary transfers through WPS.
• Calculate and pay end-of-service benefits (gratuity).
• Maintain proper payroll records for audits.

9. File Corporate Tax Returns (from 2024 onwards)

As of June 1, 2023, the UAE has introduced a 9% corporate tax for businesses earning over AED 375,000 annually.

What to do:

• Determine your fiscal year.
• Maintain financial records for 7 years.
• Prepare and submit corporate tax returns as per FTA guidelines.

10. Hire a Professional Accountant or Outsourcing Firm

Even with the best tools, professional expertise ensures compliance and efficiency. Consider:

• Hiring an in-house accountant
• Outsourcing to UAE-based accounting firms
• Scheduling periodic financial audits

This step can save you time, penalties, and stress in the long run.

Bonus Tips for Accounting Success

• Conduct quarterly internal audits.
• Separate VAT collected vs. VAT paid
• Keep digital backups of all documents.
• Monitor KPIs like gross margin and burn rate.
• Stay updated with FTA announcements.