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๐ ๐๐ก๐ฒ ๐ญ๐ก๐ ๐๐ก๐๐ซ๐ญ ๐จ๐ ๐๐๐๐จ๐ฎ๐ง๐ญ๐ฌ ๐๐๐ญ๐ญ๐๐ซ๐ฌ
Behind every clear financial report is a well-organized ๐๐ก๐๐ซ๐ญ ๐จ๐ ๐๐๐๐จ๐ฎ๐ง๐ญ๐ฌ (๐๐๐).
Think of the COA as the financial filing system of a business. It organizes transactions into the right categories so financial information stays clear, accurate, and useful.
The five main account categories are:
๐ฐ๐๐ฌ๐ฌ๐๐ญ๐ฌโ What the business owns
๐ ๐๐ข๐๐๐ข๐ฅ๐ข๐ญ๐ข๐๐ฌโ What the business owes
๐ค ๐๐ช๐ฎ๐ข๐ญ๐ฒโ The ownerโs interest in the business
๐๐๐๐ฏ๐๐ง๐ฎ๐ โ What the business earns
๐ธ ๐๐ฑ๐ฉ๐๐ง๐ฌ๐๐ฌโ What the business spends to operate and generate income
A well-structured Chart of Accounts can help businesses:
โ
Keep financial records organized
โ
Generate clearer financial reports
โ
Understand where money is coming from and going
โ
Make more informed business decisions
You donโt need to be an accountant to start understanding your numbers. Sometimes, it begins with knowing how your financial information is organized.
As a bookkeeper, I believe organized books should do more than produce reportsโthey should help business owners understand the story behind their numbers.
๐ฌ๐๐ก๐๐ญ ๐๐จ๐จ๐ค๐ค๐๐๐ฉ๐ข๐ง๐ ๐ญ๐จ๐ฉ๐ข๐ ๐ฐ๐จ๐ฎ๐ฅ๐ ๐ฒ๐จ๐ฎ ๐ฅ๐ข๐ค๐ ๐๐ฑ๐ฉ๐ฅ๐๐ข๐ง๐๐ ๐ข๐ง ๐ ๐ฌ๐ข๐ฆ๐ฉ๐ฅ๐ ๐ฐ๐๐ฒ ๐ง๐๐ฑ๐ญ?
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Episode 7: Your bank balance is not your income. ๐ธ
As a designer, money reaches you from Stripe, PayPal, Wise, direct transfers and Contra. By the time it lands, fees, currency conversion and delays have already taken a cut, and some of it never gets recorded.
Thatโs why a monthly bank reconciliation matters. It means matching your bank statement to your books, line by line, so you can:
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Spot the client invoice that was never paid
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Catch the software subscription you forgot to cancel
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Find the processor fees nobody recorded
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Know your real profit per project
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Reach tax time with clean numbers instead of a panic
It takes about 30 minutes a month. A gap you catch in October is easy to fix. A gap you find a year later is expensive.
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โข 2d
You are giving real concepts how finances can be handled
Liquidity or Tax Saving
Which is best for a company owner?
Recently, I worked on a file where a business owner could save $450,000 in taxes.
But in the letter, she explained that she didnโt want to lose liquidity in her business.
In accounting, we know what liquidity means.
So, before making a decision, a business owner must ask some questions:
How much cash do you currently have on hand?
Do I have enough cash to run my day-to-day business operations?
Can I pay my loan instalments and interest on time?
As a bookkeeper, I want to ask you:
What financial problems are you facing in your business?
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Episode #6: The bank balance is NOT your profit.
โI have AED 250,000 in the bank, so Iโm doing great.โ
Not necessarily. Look at whatโs actually inside that balance:
๐ฃ AED 100,000 is a bank loan. You have to pay it back.
๐ก AED 60,000 is customer advances. You havenโt delivered the work yet.
๐ต AED 15,000 is VAT collected. It belongs to the tax authority.
๐ต AED 45,000 is your own capital that you put in.
๐ข AED 30,000 is the actual profit.
Cash and profit are different things, for three reasons:
1๏ธโฃ Timing. An invoice youโve sent is profit, but it isnโt cash until the customer pays.
2๏ธโฃ Non-cash costs. Depreciation lowers your profit, but no money leaves the bank.
3๏ธโฃ Not your money. Loans, advances, VAT and capital all add to your balance without adding to your profit.
Profit = Revenue earned โ Expenses incurred.
Earned โ received. Incurred โ paid.
Before you spend, ask:
โ
Did customers pay me, or did I only invoice them?
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Is any of this a loan, advance, VAT or my own capital?
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Which bills and taxes are still due?
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What is my real profit this month?
If you canโt answer these, your bank balance is giving you a false picture of how the business is doing.
Next up: Episode 7. Follow along so you donโt miss it.
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#Accounting #UAEBusiness #Profit #CashFlow #Bookkeeping #Founders #DubaiBusiness #SmallBusiness
Cash flow and profitability are two different things. Understanding where your money comes from and where it needs to go is essential for making smarter business decisions.