The first three months you live with for years
The accounting decisions taken when a company is founded are the ones it lives with — and they are almost always made by someone with more urgent things to do.
The accounting decisions taken in a company's first three months are the ones it lives with for years — and they are almost always taken by someone with more urgent things to do.
What to get right at the start
- Register for Corporate TaxRequired for every taxable person regardless of profit, within the applicable deadline. This is the most commonly missed obligation of a new UAE business, and the penalty applies whether or not any tax was ever due.
- Decide the financial yearIt sets your filing deadlines for the life of the company and determines when your first tax period ends. Changing it later is possible but administratively awkward.
- Watch the VAT threshold from day oneThe AED 375,000 test is rolling over twelve months. A strong first quarter can cross it, and registration is mandatory within the prescribed period once it does.
- Separate the money properlyA company bank account used for personal expenditure creates a director's account nobody can later explain, and under Corporate Tax those balances are related-party transactions requiring arm's-length treatment.
- Set up the ledger onceChart of accounts, tax codes and dimensions for whatever you will want to report on later — location, product, project. Retrofitting these means losing comparatives or re-coding history.
- Understand what your licence actually requiresFree zone or mainland changes your audit and renewal obligations, and for free zone entities determines whether the 0% rate is even available. See free zone accounting.
Founder questions we answer early
- Should I pay myself a salary or take drawings? Both have Corporate Tax consequences — a salary to a connected person is deductible only up to market value for services actually provided. It should be documented before it is paid, not justified afterwards.
- Is Small Business Relief right for us? Often yes below AED 3 million of revenue, but not always — losses arising in a period where it is claimed cannot be carried forward, which matters for a business investing ahead of revenue.
- How do I account for founder investment? Share capital, shareholder loan or director's account are three different things with three different consequences. Getting it recorded correctly at the time is trivial; reconstructing it three years later during due diligence is not.
- What do investors expect to see? Clean monthly management accounts, a three-way model, and no unexplained related-party balances. See due diligence.
A conversation before the licence is issued, rather than after the first year end. Almost every expensive fix we are asked to perform on a young company — restructuring owner remuneration, unwinding mixed personal and company spending, reconstructing a first year with no records, discovering the free zone 0% rate was never available — was avoidable in an hour at the start.
Reviewed 18 August 2026 by Ahmed Nabil Selim. UAE tax rates, thresholds and deadlines change — confirm the position for your period before relying on it.
Startup accounting — frequently asked questions
Registration is required for taxable persons within the deadlines set by the Federal Tax Authority, and it applies regardless of whether the business is profitable, dormant or claiming Small Business Relief. It is the single most commonly missed obligation among new UAE companies, and the administrative penalty applies independently of the tax position — so a company that owed nothing and registered late still pays.
You need the registrations and a basic ledger; you may not need a full monthly service. A pre-revenue company still has Corporate Tax registration and filing obligations, still accumulates costs that will matter for loss carry-forward, and still needs its founder investment recorded correctly. Our usual answer to a very early-stage business is a short setup engagement and a light quarterly arrangement, moving to monthly when trading starts — and we will say so rather than sell a full service you do not yet need.
According to what it actually is. Share capital is permanent equity and is not repayable at will. A shareholder loan is a liability, repayable, and — because the shareholder is a related party — needs arm's-length terms and documentation under the transfer pricing rules. A director's current account is a running balance that must be explainable. The three have different tax, accounting and legal consequences, and the time to decide which one you intended is when the money moves, not during a future investor's due diligence.
Is this your situation?
Tell us how the business is set up and where things currently stand. We will tell you what is required and what it costs to have it handled properly.
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