The sustenance of your business depends on how financially aware you are. To determine this, you have to keep track of your financial transactions; simply put; you have to account. E-commerce is a new form of commerce and a response to how much people have grown with technology.
E-commerce is using the internet as a medium for buying and selling. Recently, there has been an explosion in e-commerce, and the pandemic played a role in that. Safety measures required people to evolve and invest in other means of selling and buying. Like every other business in the UAE, accounting essentials remain the same for e-commerce. So, sellers must abide by these accounting requirements.
However, some challenges are involved, so AM Audit experts have written this guide to E-commerce accounting in the UAE. This is necessary, so you won’t offend the mandatory requirements of maintaining books of account in the UAE
What is E-commerce Accounting?
E-commerce is not a fad that will pass away. People have discovered the comfort of getting products or services over the phone or any other device. This alternative to traditional commerce has shown an upward trend, with a whopping sum of $4.2 trillion being the total amount made with e-commerce in 2021.
E-commerce accounting is the collection, analysis, and reporting of the financial transactions relating to your e-commerce business. Also, it includes abiding by the relevant financial compliance regulations which the government set. The information you obtain from this e-commerce accounting process is crucial to the sustenance and planning of your business. Without e-commerce accounting, you might not be able to get a clearer picture of the position of your business. In addition, you will be offending UAE laws.
What Makes E-commerce Challenging in the UAE?
As we have mentioned earlier, as it is compulsory for physical stores, e-commerce stores must also maintain books of accounts. With physical stores, customers come in and purchase products or services. So, maintaining books of account looks easier as you receive the cash directly and can put a face to said cash. For e-commerce, the situation is tricky simply because when customers purchase your products or services online, the money comes in through different payment channels. For sellers, this can be confusing, and when confusion arises, keeping the mandatory book of accounts that the UAE requires become difficult. This is one of the reasons you need AM-Audit. AM Audits has experts that help manage finances. Despite the difficulty in tracking where the money comes in, UAE’s requirements are unequivocal. As an e-commerce store owner, you must abide by it. You still have to gather, organize and analyse financial data.
Getting Financial Data
Again, we reemphasize the need for a professional as keeping inventory which forms part of financial data, is tricky. The inventory issue adds to the existing problem of tracking the money entering your business via different channels. The inventory issue arises from tracking which of your stores ‘sold’ the product as your products could be shipped from different stores.
E-commerce Transaction and the VAT
UAE requires that goods sold domestically or domestic sales have a 5% VAT on them. This looks simple, doesn’t it? Sadly it isn’t as due to the nature of e-commerce, the seller doesn’t sell all the goods locally. There are some there that the seller sells to people in other countries. The challenge for the merchant is to determine which of their products sold the 5% VAT apply to.
How AM-Audit Will Help
AM-Audit has experts who will help you keep inventory, maintain your books, and organize the products you have to pay the 5% VAT. These seasoned professionals have outstanding professional qualifications, have been in the finance industry for quite a while, and understand finances to its core.
Don’t have problems with UAE Authorities. Book AM-Audit now to keep your e-commerce business afloat.
