Small Business Bookkeeping in Dubai Explained

Yes — every registered business in Dubai and the UAE must maintain proper books of account that reflect its financial transactions and position. This requirement comes from federal Commercial Companies Law and is reinforced by tax regulations. 

Commercial Companies Law

Under Federal Decree-Law No. 32 of 2021, companies must keep accounting records for at least five years at their registered office. These books must show all transactions and provide an accurate picture of the company’s financial position.

VATLaw

If your business meets the VAT registration threshold (AED 375,000 in taxable supplies), you must keep all VAT-related records — such as tax invoices, ledgers, and supporting documents — for at least five years. 

Corporate Tax Law

Under the UAE Corporate Tax regime that came into effect in June 2023, taxable persons must retain tax records and supporting documents for seven years after the end of the tax period.

Accurate bookkeeping isn’t just about a spreadsheet — it’s about substantiating every financial action:

Core Financial Records Should Include:

• Sales and purchase invoices
  

• Cash receipts and payment records
  

• Bank statements
  

• Payroll and employee costs
  

• Contracts and agreements
  

• Tax returns and supporting documentation (VAT, Corporate Tax)
  

These records must be complete, consistent, and easy to retrieve during audits or regulatory inspections. 

Small businesses in Dubai are expected to maintain accounting entries in accordance with International Financial Reporting Standards (IFRS). This ensures clarity, comparability, and audit readiness, especially if your business grows or seeks external financing. 

IFRS compliance helps when preparing financial statements such as:

• Balance sheet
  

• Profit and loss statement
  

• Cash flow statement
  

These not only support tax filings but also form the backbone of audited reporting where required. 

If your small business becomes VAT registered, bookkeeping becomes even more important:

• Track taxable and exempt transactions
  

• Maintain VAT invoices with correct details
  

• File VAT returns accurately and on time
  

• Keep digital and paper records for FTA audits
  

Free zone entities are not exempt from bookkeeping requirements. All companies, whether mainland or free zone, must keep accounting records.

Many free zones (like DMCC, JAFZA, RAKEZ, IFZA, and others) now require annual audited financial statements as part of the license renewal process. Even if an audit isn’t mandatory by law, many authorities require audited accounts to demonstrate compliance and financial substance. 

Poor record-keeping can jeopardize:

• license renewals
  

• 0% corporate tax status in qualifying free zones
  

• compliance with VAT and Corporate Tax rules
  

• banking relationships

Record Every Transaction Promptly

Every sale, purchase, payment, or receipt should be recorded immediately to avoid gaps or confusion. 

Reconcile Accounts Regularly

Monthly reconciliation of bank statements, supplier accounts, and ledgers helps catch errors early and prevents discrepancies when filing taxes. 

Use Accounting Software

Excel may work temporarily, but the better long-term option is accounting software (like Zoho Books or Wafeq), which helps maintain an audit trail and integrates with banks / tax systems. 

Prepare Financial Statements

Even small businesses benefit from formal reports — they clarify profitability, cash flow, and support decision-making. 

Failing to maintain proper records can lead to:

• FTA penalties for missing or inaccurate records linked to VAT or Corporate Tax.
  

• Regulatory scrutiny during audits or license renewals.

• Inaccurate tax filings, fines, and loss of exemptions.

• Difficulty securing bank accounts, loans, or trade finance.

Is bookkeeping mandatory for small businesses in UAE?
Yes. All companies must maintain accurate financial records under UAE Commercial Companies Law, VAT Law, and Corporate Tax Law. 

How long do I need to keep accounting records?
Typically at least five years, and up to seven years for tax-related documents under Corporate Tax rules. 

Can I keep books in Excel?
Excel is allowed, but it’s risky — missing audit trails and integration with tax systems can lead to errors. Using accounting software is recommended. 

Do free zone companies need bookkeeping?
Yes. Free zone entities must maintain accounting records and often need annual audited statements for renewals. 

Will poor bookkeeping affect my tax filings?
Yes. Poor records can lead to incorrect VAT returns or Corporate Tax filings and result in fines. 

Do I need IFRS compliance?
Yes. Financial statements should follow IFRS for accuracy, transparency, and audit readiness.

Maintaining accurate bookkeeping in Dubai is not just about staying organized—it’s about staying compliant with UAE regulations, preparing for VAT and Corporate Tax obligations, and being ready for audits or bank reviews at any time. 

For many small businesses, keeping up with these requirements alongside daily operations can be challenging.

Fintrack Tax Consultants LLC works with small and growing businesses in Dubai to support compliant bookkeeping, tax-ready financial records, and clear reporting aligned with UAE laws. With the right systems and guidance in place, business owners can focus on growth while knowing their financial records are accurate, structured, and regulator-ready.