Accounting
Invoicing and VAT work without them.
What are the books, and do I need them?
Where in the app: Finance → Chart of accounts
Invoicing and VAT work without them. The books — the ledger — are the second layer: from the day they start, each document also becomes a journal entry, so you can see profit, what you own and owe, and prepare corporate tax from the ledger. Turn them on if you want financial statements, a bank reconciliation, or a corporate tax return. If you only issue invoices and file VAT, you can leave them off. Profit & Loss then stays the cash report.
Turning accounting on
Where in the app: Finance → Journal
Settings → Accounting. Choose Accounting starts on — the first day of a month — and Financial year end month, if it is not set yet. That month decides the tax period and the return deadline. Documents dated before the start date are not posted, so you can start clean without re-entering history. The start date is fixed once anything has been posted or reversed. A draft locks it too, until you delete that draft. You can turn accounting off only while the journal is still empty. That is by design — finding out later is worse. Imported invoices and bills are flagged as conversion data and are never posted, so an import does not double the books. What customers still owe, and what you still owe suppliers, is entered once under Opening balances.
What is the chart of accounts?
Where in the app: Finance → Journal
Finance → Chart of accounts. It is the list of accounts your money moves between: cash, bank, customers who owe you, VAT, sales, each kind of expense. Fatura creates a standard UAE set when you turn accounting on. You can rename an account, including a system one, and add your own. System accounts — marked System, the ones postings depend on — cannot be removed. Each expense category needs a ledger account. That is what decides where a cost lands. A category left Not linked cannot be posted.
What is a journal entry?
Where in the app: Finance → Journal
Finance → Journal. Every posting is a journal entry: a date, a description, and lines that must balance — debits equal credits. Your documents create them automatically. You can also write one yourself, with New entry, for something with no document, such as a bank charge. A draft changes nothing until you post it. The screen says Not in reports until posted. A posted entry is never edited or deleted. If it is wrong, Reverse it. That writes the opposite entry, and both stay in the record. The confirmation says this creates an opposite entry and does not remove the original.
Why must the trial balance balance?
Where in the app: Finance → Trial balance
Finance → Trial balance. It lists every account’s net for a range: Debits, Credits, and Closing. Debits and credits must be equal. If they are not, the screen says the ledger itself is wrong, not your reading of it. Drafts are not in it. They are not posted. An imbalance is a real fault, and it blocks a period close until it is fixed. An unposted document is a different problem, with its own warning: the document was issued but never became an entry.
What is the general ledger?
Where in the app: Finance → General ledger
One account’s story: opening balance, every posting in order, and a running balance. Finance → General ledger, or click an account on the trial balance. Use it when a figure looks wrong. The trial balance shows Accounts Receivable (1100) with a closing balance — the general ledger lists the entries that made it.
Profit & Loss
Where in the app: Finance → Profit & Loss
Finance → Profit & Loss. With the books on, it is income minus expenses for the posted entries in a range. It follows documents, not money: an invoice you issued but have not been paid for is still income. The screen says revenue is counted when an invoice is issued, not when it is paid. Before you turn accounting on, the same screen shows a cash profit and loss. Cash income is paid invoices, excluding VAT, counted on the date they were paid. Expenses are what you recorded, and currencies are never combined. Once the books are on, the ledger version replaces it.
What does the balance sheet show?
Where in the app: Finance → Balance sheet
Finance → Balance sheet. What you own, what you owe, and what is left, as at one day. Assets should equal liabilities plus equity. If they do not, the screen says the ledger itself is wrong. Profit for the year so far appears as its own line, marked Calculated. Profit from earlier financial years appears as Retained earnings (previous years), also Calculated. You do not post anything for those lines.
The To do list
To do is one list of what this business needs. The sections are Getting started, Deadlines, Close the month, and Worth checking — overdue invoices, drafts, open bank statements. A task is left out when you do not have the permission to act on it. Close the month is left out when the books are off. Advisory items can be dismissed, except Getting started. Deadlines cannot, and neither can overdue items such as unpaid invoices. It is the list to open first.
Books health
Where in the app: Finance → Journal
Finance → Books health. It answers whether you can trust the figures. It checks that the books balance, then reconciles each control account with its detail: what clients owe against receivables, suppliers against payables, VAT on the books against your documents, the bank against your last reconciled statement, stock, gratuity, and the asset sale clearing account. Each check passes, shows a difference between the ledger and the detail, or says it cannot be checked yet and why. Checks that do not apply stay under Show not applicable. Customer credits are an action, not a fault. The line is You owe clients a refund: money waiting to be refunded or applied to their next invoice.
What does closing a month do?
Where in the app: Finance → Accounting periods
Finance → Accounting periods. Closing locks a date range so nothing new lands in it — no entries, not even drafts — until you reopen it. Close a month once you are done with it, so last month’s figures stop moving. The dates start as the last complete VAT quarter, and you can change them. Two things refuse a close: a trial balance that does not balance, and issued documents with no posted journal. Fix those and close. Everything else is advisory and does not prevent closing, including depreciation not run, a missing stock count, VAT that differs from your documents, an unbilled asset sale, a purchase above the capitalisation threshold, and a corporate tax return coming due. Read them, decide, and close anyway if they are fine. Reopen asks for a Reason for reopening. It is required and is kept with your name and the date. If the period overlaps a filed VAT or corporate tax return, Fatura lists it and you must confirm. The filed return does not reopen. Reopening does not undo entries already posted.
How do I change something in a closed accounting month?
Where in the app: Finance → Accounting periods
Once a month is closed, its books are frozen. Nothing dated inside it can be added or changed, so figures already reviewed stop moving. If you find a mistake later, you have two options. First, leave the period closed and post a prior-period adjustment dated now. Second, reopen the period, make the change, and close it again. Reopening only reopens the books. It does not reopen a VAT or corporate tax return that was already filed. Your changes will not be in what was filed, so a correction may be needed there as well. Common mistake: expecting a reopen to reopen the return. In Fatura: a document or journal dated in a closed period is refused, with a message to use today's date or reopen. To reopen, go to Finance, then Accounting periods. A reason is required and is kept with your name and the date under History. If the period overlaps a filed VAT or corporate tax return, Fatura lists those returns and asks you to confirm you understand they are already filed. Close the period again when the books should be frozen.
Related: How to correct a filed VAT return
What is a prior-period adjustment?
Where in the app: Finance → Accounting periods
A prior-period adjustment corrects an earlier month without reopening it. You post a journal entry dated today and note which earlier months it belongs to. The earlier period stays closed and its reports do not change. The note does not move the entry into the earlier month. The entry is dated now, so it counts in the current month. Common mistake: tagging an entry and expecting the earlier month's reports to change. A manual journal that carries a VAT code cannot be dated inside a filed VAT period. In Fatura: on a journal entry you tick Relates to a prior period and choose From month and To month. Both must be before the month of the entry date, and the first cannot be after the last. Once the entry is posted, the tag cannot change. Finance, then Prior-period adjustments, lists every tagged entry with Relates to and Posted by, and can be exported as CSV. Its date filter is on the date of the entry, not the month it relates to.
Related: Changing something in a closed month
What is a lasting purchase?
Where in the app: Finance → Lasting purchases
Finance → Lasting purchases. Equipment, furniture, a vehicle — something you will use for years. It is not an ordinary expense: it goes on the balance sheet and its cost is spread over its life. VAT on the purchase is recovered straight away and is never part of the cost. A draft appears here when a bill or expense is posted to a fixed-asset account. You can also add one with Add a purchase. A draft does nothing until you Start spreading the cost. The capitalisation threshold does not create that draft. On period close, a purchase coded as an expense above the threshold (AED 5,000) is only a question: should it have been an asset instead?
How does depreciation work?
Where in the app: Finance → Lasting purchases
Straight line only: what you paid, minus what you expect to have left at the end, spread evenly over How many months it will serve. Each month posts an expense and reduces what is still left to write off. On Lasting purchases, Charge now catches up any months still due, up to the date you pick. No charge is posted for months before the books started. If you ran it by mistake, Remove last charge — while that month is still open. Its journal is reversed.
Selling or scrapping an asset
Where in the app: Finance → Lasting purchases
Mark it Sold or retired, with the date and what you received, if anything. Fatura catches depreciation up to that date, removes the asset and its accumulated depreciation, and posts the gain or loss. If you sold it, the screen says Now invoice the buyer. Raise a normal invoice, and on the line choose the asset sale clearing account. Until you do, the proceeds sit in that account, and Books health and period close will ask about it. If you got it wrong, Undo sold or retired. The monthly charges stay — those months were served — and you are reminded to credit or cancel any invoice you already raised.
What is bank reconciliation?
Where in the app: Finance → Bank reconciliation
Finance → Bank reconciliation. The statement is what the bank says happened. The books are what you recorded. Reconciling proves they agree. Upload the statement, confirm each suggested match, and create an expense or income for a line that is not in the books yet. Then reconcile. A suggestion is a guess until you confirm it.
Importing a bank statement
Where in the app: Finance → Bank reconciliation
CSV or Excel: drop the file and map the columns. You confirm the period and the opening and closing balances before anything is saved. PDF: a model reads the pages. You must check every row before it is saved — the rows come from a picture of a page. Rows already stored are recognised and skipped. Re-uploading the same file adds nothing.
The difference is not zero
Where in the app: Finance → Bank reconciliation
The screen shows Books balance, Statement balance, Difference, and which lines are still unmatched. Reconcile is refused while the books and the statement differ. Look at the unmatched lines first, then at In the books, never on the statement — a payment recorded twice, or one recorded in the wrong month. Once reconciled, the matches are locked. Reopen the statement to change them.
Who must register for corporate tax?
Where in the app: Finance → Corporate tax
Most UAE businesses, even when the tax is zero. Registration is separate from paying: you register, you file, and you may owe nothing. Late registration carries an AED 10,000 penalty. The dashboard shows Corporate tax registration until you add your corporate tax registration number, or until you dismiss that reminder.
How is corporate tax computed?
Where in the app: Finance → Corporate tax
Finance → Corporate tax. From the books: accounting profit for the period, plus add-backs for costs the law does not allow, gives taxable income. The first AED 375,000 is taxed at 0%, and 9% applies above that. Profit here is the ledger’s profit, not cash in minus cash out. Fatura suggests add-backs from accounts marked not deductible — fines, half of entertainment, donations outside the approved list. A suggestion counts only once you Accept it. Nothing is added until you do.
What is Small Business Relief?
Where in the app: Finance → Corporate tax
If revenue is AED 3,000,000 or less, the period ends on or before 31 December 2029 (Ministerial Decision No. 131 of 2026), and revenue has not exceeded AED 3,000,000 in any tax period since June 2023, you can choose Small Business Relief and be treated as having no taxable income. No tax, but you still register and still file. It is a choice on the return, not automatic. Any loss that year cannot be carried forward. Unless it is extended again, from 2030 the normal rules apply: 0% on taxable income up to AED 375,000 and 9% above.
How are corporate tax losses carried forward?
Where in the app: Finance → Corporate tax
A tax loss in one period can reduce taxable income in later periods, but with limits. A loss from a period where Small Business Relief was chosen cannot be carried forward, and that period uses no earlier losses either. In a later period, a carried-forward loss can offset at most 75% of that period's taxable income, oldest loss first. The cap is worked out on taxable income before losses. A loss can be used only if at least 50% of the company has had the same owners from the start of the loss period to the end of the period it is used in, or the same or a similar business continues (Article 39). If neither is true, the brought-forward losses are lost for good. A registered tax agent can confirm the ownership test. In Fatura: a loss is recorded when the period is filed and carried forward. On Finance, then Corporate tax, each period asks whether the same owners kept at least 50% of the company, or it continued the same business. Answering No forfeits the brought-forward losses when you file. Left unanswered, they are not used, and Fatura will not file the period while they could reduce taxable income. A Tax losses view shows brought forward, used this period, forfeited and remaining.
Related: Corporate tax for freelancers · Small Business Relief
Filing corporate tax
Where in the app: Finance → Corporate tax
The return is due nine months after the period ends. File this return freezes the figures. If tax is due, it is posted to the books. You still enter the figures by hand on EmaraTax. This app does not file the return. The books must be closed through the last day of the period first. Figures that can still change are not figures you can file. There is no undo. A mistake after filing is corrected with an amended return.
Can I change my financial year end for corporate tax?
Where in the app: Settings → Documents
The financial year end decides your corporate tax period and your return deadline. Setting it for the first time is always allowed. Changing the tax period afterwards needs approval from the FTA. Common mistake: changing the month in your software and assuming the FTA has agreed. The approval is a separate step you take with the FTA. A change moves future tax periods and return deadlines. Entries already posted are not changed. In Fatura: you set the financial year end month under Settings, Documents, VAT & currency. Fatura does not ask for FTA approval; it only applies its own lock. Once any accounting period has been closed or a corporate tax return filed, the month can no longer be changed, because those were worked out on the current month, and you see "The financial year end can no longer be changed." Before that, if you already have entries or tax periods, Fatura asks you to confirm the change, and you choose Change year end or Keep current month. The change is recorded.
Related: Corporate tax for freelancers
Related guides
- How to Start a Business in the UAE: 8 Steps from Licence to First Invoice
Mainland or free zone, trade licence, visas, bank account, corporate tax, VAT, your first tax invoice and bookkeeping, in plain language with official sources and a one-page checklist.
- Do Freelancers Pay Corporate Tax in the UAE?
Only above AED 1 million of business turnover — and even then most pay nothing. But the relief that makes it nothing now runs to 2029, and it has never been automatic.
- How Long Must You Keep Invoices in the UAE?
Five years for VAT records — but counted from the end of the tax period, not the invoice date, and seven years if you are also subject to corporate tax. The periods that actually apply.
- Do I Need an Accountant to File VAT in the UAE?
For a simple business, no — the return is arithmetic you can do yourself. Here is where it stops being simple, and what it costs to find out the hard way.