Accounting for Startups
UAE 2026

SAFE issued: cash received is booked as equity (a separate “SAFE notes” line in the equity section — NOT a liability, despite the name). On conversion at the next priced round, that line flips to Share Capital + Share Premium at the contracted discount or valuation cap. Priced round: cash received splits into Share Capital + Share Premium. ESOP grants: under IFRS 2 share-based payment, the fair value at grant date is expensed monthly over the vesting period — salary expense up, ESOP Reserve (in equity) up by the same amount.

Pre-incorporation expenses (founder paid suppliers before formation): first post each expense against a Founder Payable (the company owes the founder), then reimburse from cash later — which clears the payable. Founder loans to or from the company sit in a related-party loan account — document rate and repayment terms so the Corporate Tax filing can defend them. Related-party transactions with another founder-owned entity (services, IP licence, shared staff) need an arm's-length price if material — the FTA requires transfer-pricing documentation above thresholds.

Vendor invoices — legal, agencies, contractors, freelancers, AWS / GCP / SaaS recurring charges — entered in Books when the bill is received, so the expense lands in the right month even if cash goes out later. Founders & employees submit reimbursement claims.

Purchase order issued → goods received → inventory asset goes up, Accounts Payable goes up (you owe the supplier). At sale, inventory comes off the asset and lands as COGS at the per-SKU cost (typically weighted average for early-stage). Per-SKU cost accuracy drives gross-margin reporting — the metric every B2C investor asks about first.

Each month, the period's share of every active subscription moves from Deferred Revenue to Revenue (annual AED 12K plan = AED 1K/month: DR Deferred Revenue / CR Revenue). The accountant sets up a recurring journal once — or uses the Zoho Books revenue-recognition module, which auto-builds a schedule per subscription invoice — and Books posts each month automatically. Mid-period upgrades, downgrades and refunds adjust the schedule — the place SaaS books most often drift.

Walk through every settlement line. Match lines that already have a record in Books — revenue → auto-created Invoices (deferred-revenue Invoices for SaaS, gross-revenue Invoices for B2C); refunds → Credit Notes; acquirer fees (typically 2.4–2.9% + AED 1 per transaction) → Bills auto-synced from Stripe / Chargebee / the marketplace. Categorize what's left — the net transfer to bank clears the Stripe / marketplace clearing account to zero. FX revaluation gain/loss posts on foreign-currency receipts.

Pull the bank statement and corporate-card statements (Alaan / Pemo). Match lines that already have a record in Books — customer invoice receipts, supplier Bill payments (clearing Accounts Payable from Phase 2). Categorize everything else, because there's no matching Bill yet — payroll & employee compensation, employee reimbursements, corporate card or petty cash expenses, owner withdrawals, bank fees, FX revaluation gain/loss on foreign-currency receipts and payments. Catches anything missed elsewhere.

Books inventory asset balance vs marketplace / 3PL / FBA stock counts. Resolve cycle-count variances, returns, damaged-stock write-offs, FBA reimbursements (Amazon credits for lost / damaged FBA inventory). SKU-level detail is what drives gross-margin accuracy — the most-watched B2C metric.

VAT (quarterly): 5% charged on UAE customers. Cross-border B2B service exports are often zero-rated; cross-border services received from abroad (e.g. AWS, foreign SaaS) trigger Reverse Charge — you self-charge 5% and reclaim 5%, net cash impact zero, but still reportable on the filing. Voluntary VAT registration at AED 187,500 rolling turnover; mandatory at AED 375,000. Corporate Tax (annual): 9% on taxable profit above AED 375K. Small Business Relief elects 0% taxable income if revenue ≤ AED 3M for both the current AND the immediately preceding tax period — available for tax periods ending on or before 31 December 2026.

The standard reporting trio. P&L: revenue, gross margin, operating expenses, net income. Balance Sheet: cash, Accounts Receivable, Accounts Payable, deferred revenue (large for SaaS), share capital, ESOP reserve. Cash Flow: operating / investing / financing — the early-warning signal when your P&L says you're profitable but the bank account says otherwise. Investors want all three, monthly or at least quarterly.

Books financials + ops data (new / churned customers, channel attribution) feed a metrics layer the ops/founder team owns — a sheet, or a tool like Mosaic / Drivetrain / Causal. MRR / ARR rollforward: opening + new + expansion − contraction − churn. LTV: ARPU × gross margin × expected retention period. CAC by channel: sales & marketing spend ÷ new customers, split paid vs organic. GMV: gross merchandise value before fees & returns. Contribution margin: revenue − COGS − fulfilment − returns − channel fees. CAC by channel: ad spend per channel ÷ new customers acquired in that channel. Burn & runway: see Cash Runway Calculator for the forward-looking projection.