Cash basis for a small business
Can I keep my books on cash basis as a small trader?
The situation
Cash basis accounting is allowed for businesses with revenue up to AED 3 million, or in exceptional cases. Above that, accrual accounts are needed.
The law
- Ministerial Decision 114 of 2023: Cash basis permitted below AED 3 million revenue
What it means for you
Example: a shop with AED 1.5 million revenue can record income when cash is received. Once revenue passes AED 3 million, switch to accrual and record sales when invoiced. VAT still follows its own time of supply rules regardless.
What to do
- Check your revenue.
- Choose cash basis if within AED 3 million.
- Keep VAT records on time of supply rules.
- Switch to accrual when you cross the line.
Confirm thresholds in Ministerial Decision 114 of 2023 before relying on them.
We can do this for youBookkeeping, accounting standards and audited financial statements: what the FTA, free zones and banks require: AED 800