How to start a Supermarket in UAE

How to start a Supermarket in UAE

Supermarket businesses are fast growing and are a lucrative business on a daily basis.

Every locality  needs a supermarket as every human being needs the goods sold by them every day. Be it the rice or other utilities    every person requires it as a necessity.This type of business can’t be considered small scale so you need to have adequate funding. You can also  be ‘specialized’ in supermarket and offer ethnic foods, whole foods, or exotic foods. To successfully open a supermarket business, below mentioned steps need to be followed.

Being in a  food industry requires series of requirements regarding the production, handling, and storage of products being met. Therefore, one  should know all the details of the requirements to set up the supermarket according to the Municipality and health department

Be aware of the charges, fees and all expenses that involve the business. In the preparation of the business plan there will be a space to do the expenses planning of the supermarket, and according to the billing, it will be possible to measure things properly.

Legal permission from Food Authority Of UAE-  How to start a Supermarket in UAE

Before the actual operations of the business, you will need to secure the necessary operating permits and licensing. The required info should be provided and you need to pay the fees as well.

Firstly, to set up a business a location should be finalized. According to business experts  location can make or break the business. The supermarket should be situated near the town and is easily accessible. If you can find one large building at the town center, you should first inquire at the health department in your area if the location is suitable for your business.

After securing the location and the building, other activities should be planned where the water, equipment, plumbing, waste sources, and kitchen facilities will be situated. The layout should be studied by the local food safety specialist and if it’s approved, you can now have it developed. If there are any changes, make sure that the contractor is able to incorporate it. The construction of the supermarket should be based on the recommendations of the health department since renovations can be costly if you’re not able to incorporate everything. Remember that an inspection will be conducted by the health department after the construction is finished.

If you want to prepare food in the supermarket (e.g. bakery or deli), ask permission first and this should also be furnished to the authorities. The permit should be renewed each year so make sure that you comply accordingly. You can also offer stalls to those who want to sell other food items in your supermarket but if you want, you can get suppliers for all the contents of your supermarket.

Pricing of the products- How to start a Supermarket in UAE?

The sale price is arrived by the cost of the merchandise sold, added costs and profit intended. Besides these factors that make up the selling price of the goods, it is necessary to observe the prices practiced by the competing supermarkets. Many of the supermarket promotions are made at a discount on some products, many with zero profit margin to attract the consumer, To get an idea of how much your business is going to profit, knowing that the butcher shop represents approximately 20% of the total sale; Milk, by-products, sausages, and bakery correspond 12% and fruits, vegetables and meats 10%. It is worth remembering that these sectors require fresh produce and attractive prices.

 Management Control

Hiring dedicated and committed employees is very important since you can’t possibly run the supermarket on your own. You will need to have a small office on site so that you can monitor the day to day operations of the business. Designate tasks and responsibilities to your employees so that you don’t have to carry all the workload. Everything should be set prior to the date of the opening. Send out ads online and in your community. For the first week, you can also offer special promos and discounts. You can even set up an online store to make sales through the Internet.

Financial Control of the Supermarket

To succeed in setting up a supermarket it’s essential to have a good financial monitoring of the business because you will work with products with high turnover and small profit margin which can generate a false sense of profitability when dealing with a lot of money every day. However, almost all of this money is to pay suppliers, employees, rent, energy, among other costs.

Still talking about the financial part of the supermarket, you have to keep an eye on the cash flow of the supermarket and do a good planning to avoid unnecessary financial expenses, such as overdraft interest or anticipated sales in the long term. Managing grocery shopping and sales are essential to increasing profitability.

Offering   “THE FREE DELIVERY” option . Try to give a fair estimated time to provide a Free Delivery to the Area that the Supermarket is serving, but make sure that all ordered products are delivered in good condition without any damage since a super market will be dealing with Food Items which are closely regulated by the Municipality Department to guarantee a 100% healthy food items in the Market.

Tips to Setup a Supermarket 

• One should think that even when setting up a smaller supermarket, you will need to have good service, competitive price or convenience, cleanliness, variety and product organization, and trust.
• When thinking about food, knowing some food franchises can be a great business option.
• Having a well-defined business plan and flow charts
• Providing promotional offers and discounts.
• Location of supermarket should be easily accessible and terms and conditions of the supermarket should be flexible.

Impact Of VAT For Supermarkets

• Supermarkets and retailers are getting prepared for price hike as VAT is enacted across UAE. Standard rate of 5% will apply on many of the goods which are luxury goods. Zero rate will apply for the food items listed as per GCC.
• Retail such as Super Markets, grocery stores that may sell staple food items that may not attract Tax, but most non-staple items will be taxed. Retail must ensure that either they prepare separate invoices for each category or include the tax rate for each item separately. Each invoice must then declare the sum of the tax charged in each category to enable the buyer to calculate the tax credit available.

Challenges Faced by Supermarkets owing to VAT in UAE

Though the implementation of value added tax (VAT) in the UAE will result in brisk sales for groceries and smaller supermarkets, meeting the deadline in terms of organisational, operational and financial standpoints is an uphill task for its owners.Despite numerous announcements made by the Federal Tax Authority (FTA) to register before VAT comes into effect, it appears that many groceries are unlikely to meet the deadline as many of them have yet to start preparations. According to tax experts, items sold at groceries and small supermarkets will be subject to VAT. Advertised prices are required to be inclusive of VAT, per the law.If they have to reflect pricing inclusive of VAT, this would involve significant changes at the point of sale and also on the display counters. The current low level of documentation and record keeping in the sector also compounds the challenges in VAT preparedness,        maintaining proper books and records is key in VAT compliance, failure of which could attract heavy fines and penalties, in addition to losses because of incorrect VAT calculations and returns. Starting to maintain proper books of accounts is going to be the biggest challenge. Going forward, groceries have to issue a VAT invoice for every sale that they make. They also have to keep every invoice that they receive from their supplier since those invoices will carry VAT which they can claim back against the VAT on their sales. And they have to regularly file returns and pay the VAT on their sales on a quarterly basis. All of this needs discipline and proper book-keeping.

For the supermarkets standard rate of 5% will apply except for Food items as per GCC list.

How to prepare VAT Invoices in the UAE:

VAT is expected to be implemented in  UAE with effect from 1^st January 2018. VAT Invoices should be maintained for every businesses in the UAE as per the latest information by the Federal Tax Authority (FTA).

According to the  FTA, there will be two kinds of inovices for VAT in the UAE. Supply for less than the specified amount will be considered to maintain a simplified VAT invoice – specifically for supermarkets and retail industry. However, supply for more than the specified amount will have to make a detailed invoice.

Simplified VAT invoice for supply less than the specified amount should consider the below:

• “tax invoice” in a prominent place
• Name, address & TRN of supplier
• Date of issue
• Description of goods or services
• Total amount payable
• Total VAT chargeable

The VAT invoice for supplies above than the specified amount should consider the below:

• “tax invoice” in a prominent place
• Name, address & TRN of supplier
• Name, address & TRN of recipient (where they are a registrant)
• A sequential or unique identifying number
• Date of issue
• Date of supply if different to the date of issue
• Description of goods or services
• Unit price, quantity or volume supplied, rate of tax and amount payable in AED
• Value of any discount offered
• Gross value payable in AED
• Tax amount payable in AED
• Statement relating to reverse charge if applicable

Key actions to consider

Few points to ponder for smooth implementation of VAT:

• Identifying someone in the organization to develop and lead the VAT implementation strategy. This lead person should be senior enough to coordinate with all departments as VAT impacts on procurement, sales, IT, HR and legal.
• Sales and consumers facing staff need effective training in understanding VAT and how it impacts sales negotiations to ensure margins are not impacted in error and your consumer doesn’t value your product or service any less.
• Most business contracts would have provisions for future taxes within the pricing structure to ensure that there is clarity over whether the pricing is VAT inclusive or VAT exclusive. However it is worth reviewing all contracts to ensure that any contracts that require clearer provisions regarding indirect taxes are addressed before 1 January 2018.
• In many countries, VAT is based on the invoice date, not when the invoice is settled, for remittance to government collection agencies. If this approach is adopted in the UAE, carefully consider long term contracts to ensure that VAT on invoices received from the suppliers are in step in terms of timing with VAT on your invoices to consumers to help support cash flow management.
• In particular for the retail industry, consider how your Point of Sale systems are capable of dealing with VAT. Best practice is to run test stimulations in advance of the implementation date. For businesses not involved in retail, it is still important to assess existing systems.

No impact on consumers

Since the VAT rate is fairly low in comparison with other jurisdiction Supermarkets do not expect VAT to greatly affect consumer behaviour. Therefore, Supermarkets can expect the market to stabilise again shortly after the introduction of VAT,by planning business strategies accordingly for having less impact from 1 January 2018.

Need to upgrade to Reach online VAT Accounting Software :

Reach accountant software is properly designed to fit all of the desires for a success running of the enterprise. The software may be used in industries ,buyers ,producers, outlets,  workshop ,commercial enterprise projects and so forth. It’s far an accounting software program which can routinely manage your ebook of accounts, taxes, inventory, sales, purchases and many more

online speedy and securely

Top Features of the Reach Online VAT Accounting Software are:

• Accounting Management: All functions relating to accounts are inbuilt with the software. You can manage your Accounting Ledgers, Bank & Cash Operations, Purchase & Sales Estimates, Warehouse Allocations, Expense Recording, Expense Grouping, Payments – Part or Full, Journal Entries, Income and loss a/c, Balance sheets, Receipts – Part or Full, Contra Entries, Financial Reports, Day book.

• Tax Management: Our accounting Software automatically calculates the taxes relevant for every bill created. The Software is designed as per the government norms for calculation of VAT. It also has the option to add any number of taxes relevant to the business. In case of change in tax percentages a change it in the software on your own. All you have to do is add your tax percentage and our software will calculate the taxes automatically. This multiple tax scheme can also be applied to multiple products on a single purchase.

• Income Management: The Company can create Quotations then the same can be converted as a Sales order or Pro-forma invoice or Invoice. From Invoice you can create Receipts as well. Accountants will be able to know what payments have been received and what are pending in the reports. You can also set reminders for receiving payments.

• Expense Management: You can create Purchase Orders then the same can be converted as bill or payments. You can also create Debit notes for purchase returns. Accountants will be able to know which purchase bills have been paid and which are pending in the reports. You can also set reminders for making payments.
• Invoicing: Generates VAT compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the VAT at UAE standard rate.

·         Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.

• Auditor View: Full-fledged Financial reports, Tax reports VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
• Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.
• Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.
• Computation Of VAT Returns: The software is inbuilt with all the detailed crucial information  on tax computation Tax Assesee can  fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the VAT return  calculate input tax, reverse charge and output tax to avail claim if any 

• Filing Of VAT Returns: The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. Reach VAT software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.

• * VAT Reports etc.
• Calculate VAT automatically.
• VAT support in Sales, Purchase, Sales and Purchase returns, Journal entries.
• Generate Federal Tax Authority compatible tax reports.
• VAT Paid (charged by suppliers) and Vat Collection (Charged to customers) Analysis.
• Transaction wise details of VAT paid and VAT collected.
• Attach every Vendors/Customers VAT number and other details.
• VAT supported for Goods (stocked) and Service (non-stocked) items.
• Online application accounting.
• VAT Account Reconciliation, VAT Collection & VAT Paid analysis report.
• Report export to excel and other standard formats.
• VAT returns statement compatible with Federal Tax Authority standards.

Online accounting VAT software enables you to file vat returns, manage accounts and other business operations from any geographical area be it at the comfort of the house.

• Receipt: Receipts can either be manually entered or imported it in excel format easily.
• Payments: Payments can either be manually entered or imported it in excel format easily.
• Multi Company: Manage business through comfort of the smart phone.
• Tally Import: Tally files can be easily imported to Reach Software of various periods and manage business easily.
• Auditor’s Report: Full Financial Report are available,Read process by Auditor,Tax Reports,VAT Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some featuress mentioned.
• Mobile Application: Access business information through tabs and android smart phones, pick photos of expense vouchers and attach to expenses, daily profitability and other key reports can be viewed on phone.
• Bank Synchronization: Bank Statements can be imported in to Reach software through excel files.
• Security: There is complete security of data stored in the hard disk. Data can be accessed and control by creating access restriction. One time password facilities also ensures a check in the log in to the website.

• Run Business from anywhere: The business can be run access data from anywhere at your comfort. Just like checking mails from the laptop or systems.

• Free and Automatic Upgrades: At Reach Accountant you will be provided free services of upgrading the software frequently with new features and use it absolutely free.

• No investment in expensive hardware: The software is browser based. It just requires internet connection which can be connected to multi computers without using LAN and servers.

• API: The client can integrate the existing software with Reach accounting application ,

• Automatic Data Backup: Reach stores all the data in servers offsite with regular backups. Hence business information is safe and secure

·         User Interface & Complexity:The software is designed to make its use friendly and easy,no cumbersome process to operate the application and software.

• Scalability:It is an VAT accounting software which can scale with your business needs. . Some software companies offer only one version of the product and some have progressive versions depending the business type or size. Reach Accounting software offers both integrated an entry level version as well as a feature rich version which you might not need for the current business processing but will definitely need in future for business development.

Top Two Features of the Reach Accounting Software

• Outsourced Accounting: The software enables to finish the outsourced accounts in less than 30 minutes.

• Real Time Accounting: Allows client to record sales and purchases online, while finalizing accounts that is checking the Audit trail, providing MIS reports, checking Tax reports, printing financial reports and filing taxes.

Technology Used

Reach has implemented the latest technology Cloud Computing to handle  day to day business transactions just  a click away from your browser from any part of the world.

Cloud Computing is a concept through which organizations can manage their data centres, processes and applications online via internet on the scheme of pay for use basis. Many of today’s small businesses find great advantages when adopting a virtual office environment. Rather than maintaining one centralized business location, employees are given the opportunity to work from home and connect via computer. Virtual offices can stretch across the country, or even exist within a small geographic area while still providing benefits to both employees and employers. Yet certain business functions need to be managed differently in a virtual environment. When it comes to accounting, a cloud system can improve virtual office management, especially for tasks such as expense tracking and financial report consolidation.

Benefits of Cloud Accounting

1. Spread the cost of the software by making payments by monthly subscription instead of one lump sum.
2. All the upgrades for cloud accounting software are carried out by the supplier at no extra cost, so you are always on the latest version.
3. You can access cloud accounting software anywhere that has an internet connection, so no need to use a particular computer or be stuck in the office.
4. As the name suggests, all the data is stored securely in “the cloud” which means on the supplier’s bank of servers, continually backed up, so you never have to worry again about using up your own hard-drive or taking regular backups.

Best of all, with cloud accounting software, your accountant can share your data, so they can help you if you are stuck on recording certain transactions in your accounts, like the purchase of a new laptop.  They can post their year-end journals directly, so your data is always up to date, but more importantly we can be more help to you.  For example if you would like your accountant to check the figures for your VAT Return or even file it,or prepare some management