The real estate sector is a significant contributor to the Dubai economy. Real estate companies in Dubai need timely and accurate financial records to comply with the rules and regulations. Moreover, the RERA (Real Estate Regulatory Authority) deals with all the legal considerations in UAE. There are many areas to focus on, including the property and the construction aspects. Accounting can be very tiring for real estate companies in Dubai. Also, the huge volume of transactions and the large number of regulations can give a tough time for accountants.
Therefore, accounting and bookkeeping need to be done in an organized way. There is a continuous growth in land transaction rates, which shows the enormous growth of the real estate sector. Moreover, the right consistent filing and tracking system is very important. These are the users of real estate accounting include:
- Outsourced accountants to real estate clients
- Real estate agency consultants
- Accounting and tax consultancy firms
- Building construction firm owners
- Manager and investor of residential sales
Accounting considerations for real estate companies in Dubai
Real estate companies in Dubai need to consider the following specific factors:
Development projects
Development projects require special accounting treatment, such as capitalization of costs and recognition of revenue.
Property types
Different kinds of properties, such as residential, commercial, and industrial, and different accounting treatments.
Taxation
Real estate companies in Dubai are subject to various taxes, such as value-added tax, corporate tax, and registration fees.
Leases
Leases can be accounted for as operating leases or finance leases. The accounting treatment will depend on the terms of the lease.
General accounting principles
The following general accounting principles apply to real estate companies in Dubai:
Accrual basis accounting: This means that expenses and revenues are recognized when they are incurred or earned.
Matching principle: This means that expenses should be matched with the revenues they are incurred to produce.
Double-entry bookkeeping: This means that every transaction is recorded in at least two accounts, one debit and one credit.
Going concern principle: This means that the company is assumed to continue operating indefinitely.
Choose an accounting method
At this step, all the real estate companies have to choose between two accounting methods: accrual basis or cash basis to complete bookkeeping. Also, these two accounting methods use different principles for recording the transaction. Cash-based accounting is a simple method when you have to track transactions. You will make one entry every time physical cash is transacted. Record it as income when you receive cash and expenses when you pay the cash.
However, accrual accounting can be tougher than a cash basis. You will have to record at least two entries for each transaction. You can record income when you are incurring it and expenses when you are incurring them.
Set up a chart of accounts
You need to prepare a chart of accounts to record. Also, you can organize your accounting journal entries. A chart of accounts will list every real estate transaction you make. Moreover, you must create different categories or accounts for transactions while setting up your chart of accounts. For instance, you might have accounts called repair and maintenance, electricity charges, insurance for buildings, and advertising expenses.
How ebs help real estate companies?
ebs team has experienced professionals in Dubai-based accounting tasks. Also, our team also has experience in auditing tasks in Dubai. Let’s discuss our accounting services in the real estate companies.
Accountant Payable management
You have to enter accounts payable invoices into accounting software with an allocation of expenses to properties. Our team will help you enter accounts payable invoices. The allocation includes the following:
- Projects, buildings, entities, and tenants: Track expenses at each level for clear financial oversight.
- Utilities: Manage receipts, manage bills, and allocation across different properties.
- Insurance: Handle all insurance-related expenses properly.
- Check-in/Check-out: Ensure timely utility payments during tenant transition.
Accounts Receivable Management
- Lease management: Handle check-in/out, expires, and renewals for lease agreements.
- Receipt Management: Track security deposits for all tenants and record client payments.
- Rent processing: Analyze monthly rent, manage tenant accounts, and prepare invoices.
- Reporting: Generate security deposit and accounts receivable reports.
- Intercompany billing: Bill property for management fees and other charges.
Tenant Management
Our team helps to set up leasing-related information into accounting software comprising the following activities. So, let’s see some important tasks in real estate management:
Tenant management: Update ledgers for check-in or out and track utilities.
Billing: Charge criteria and send rent, collect monthly rent, and generate income statement.
ebs internal and external audit services
ebs provides a comprehensive range of internal and external audit services to assist businesses of all sizes. Our team of experienced auditors is dedicated to providing clients with high-quality assurance services.
Internal audit services are designed to give assurance on the effectiveness of an organization’s internal controls. Here are the benefits of internal audit services:
- Improved risk management
- Enhanced control processes
- Increases compliance
- Reduced operational costs
- Improved decision making
Our external audit services are designed to provide an independent opinion on the fairness of the financial statements of the organization. Here are the benefits of external audit services:
- Improved access to financing
- Increased credibility and transparency
- Enhanced investor confidence
- Improved access to financing
- Reduced risk of error and fraud
Conclusion
ebs empowers real estate companies to manage their finances efficiently. It also helps to gain valuable insights. In this blog, we discussed accounting tasks real estate companies in Dubai need to perform. If you are a real estate company, you should consider seeking help from the best accounting firms in Dubai. It helps you to:
- Improve cash flow management
- Reduce administrative costs
- Focus on core business activities
- Gain valuable insights to drive informed decisions
ebs is your trusted partner in achieving financial success in the real estate industry. Moreover, we also provide other valuable services for real estate companies.
Moreover, we provide other services such as accounting and bookkeeping services, Auditing, Due Diligence audit services, and many more. So, you should get in touch with our experts to discuss our services and contact us today.
FAQ’s
Why do real estate companies in Dubai need specialized accounting services?
Dubai’s real estate market is subject to different regulations. Also, these regulations such as registration, taxation, and reporting requirements. Real estate businesses deal with specific transactions like property sales, development projects, and leases. These require specialized accounting expertise.
What specific accounting service can benefit real estate companies in Dubai?
Accounts payable and receivable management, tax preparation and planning, and project accounting are some of the accounting services required for real estate companies.
What are the advantages of outsourcing accounting services for a real estate company in Dubai?
Here are some of the advantages of outsourcing accounting services for a real estate company in Dubai:
- Cost-effectiveness
- Focus on core business
- Expertise and compliance
- Improved decision making
- Technology and scalability