A well-built chart of accounts (COA) is the backbone of clean reporting. For UAE service companies, it also helps you stay ready for UAE VAT, Corporate Tax filing, audits, and day-to-day decisions. However, many businesses still start with a messy COA copied from another industry. Then, invoices get posted “anywhere,” reports look wrong, and month-end takes forever.
Table of Contents
So, let’s fix that. Below is a practical, UAE-friendly way to design a COA that supports financial statements, management reporting, and growth—without overcomplicating your general ledger.
1) Start With the End in Mind: What Reports Do You Need?
Before you create account codes, decide what you want to see every month.
For most service companies in the UAE, that includes:
- Profit & Loss by service line (or department)
- Profit & Loss by project (if you bill by job/contract)
- Balance Sheet with clean accounts receivable and accounts payable
- VAT return-ready VAT buckets (output vs input)
- Payroll cost split (admin vs delivery team)
- Cashflow—clarity
Once you define the outputs, you can build the structure—backwards. As a result, your COA stays lean and useful. Get details on Accounting for DMCC Companies
2) Keep the COA Simple, Then Use Cost Centres for Detail
Here’s a common mistake: businesses create 400+ accounts to track every tiny expense type. That makes posting confusing and reporting messy.
Instead, keep the COA focused, and track detail with:
- Cost—centres
- Projects / Jobs
- Locations if needed
So, your COA stays readable, while your reporting stays detailed.
3) Choose a Numbering System That Scales
Most UAE SMEs do well with a 4-digit or 5-digit system. Also, keep the first digit for the main category:
- 1xxxx Assets
- 2xxxx Liabilities
- 3xxxx Equity
- 4xxxx Revenue
- 5xxxx Direct Costs / Cost of Services
- 6xxxx Operating Expenses
- 7xxxx Other Income/Expense (optional)
This approach matches common IFRS-style reporting and keeps your accounts organised.
4) Build a UAE-Ready COA Structure (Sample)
Below is a simple COA blueprint for a typical consultancy, agency, IT services firm, facilities management provider, or any UAE service company. Looking for a Accounting for Dubai Humanitarian Companies?
Sample Account Ranges (Recommended)
| Range | Category | What to include (examples) |
| 10000–19999 | Assets | Bank, cash, accounts receivable, prepayments, fixed assets |
| 20000–29999 | Liabilities | accounts payable, VAT payable, accruals, EOSB provision |
| 30000–39999 | Equity | Share capital, retained earnings, current year profit |
| 40000–49999 | Revenue | Service income, project income, retainers, discounts |
| 50000–59999 | Cost of Services | Subcontractors, direct staff cost (delivery team), direct materials |
| 60000–69999 | Operating Expenses | Rent, utilities, marketing, admin payroll, software, professional fees |
This table stays tight, and yet it covers 95% of real-life postings.
5) Revenue Accounts: Split by Service Line, Not by Every Client
In services, revenue can get complicated fast. However, you usually don’t need separate revenue accounts for each client. Instead, group revenue by “what you sell.”
Examples:
- 40100 – Consulting / Professional Fees
- 40200 – Project Revenue
- 40300 – Retainer / Monthly Contract Revenue
- 40400 – Support & Maintenance Fees
- 40900 – Discounts / Credit Notes (contra-revenue)
If you want client-level detail, use your accounting software’s customer tracking, not your COA.
6) Cost of Services: Track Delivery Costs Separately From Admin
This is where service businesses either win or suffer. If you mix delivery costs with office costs, your gross margin becomes meaningless.
Direct costs (Cost of Services) examples:
- 50100 – Subcontractor Costs
- 50200 – Direct Staff Cost (Service Delivery)
- 50300 – Project Materials / Tools (Direct)
- 50400 – Site Travel & Transport (Direct)
Then, keep office/admin payroll under operating expenses. That way, gross profit actually means something.
Related Articles:
» Accounting for DMC Companies
» Accounting for DKP Companies
» Accounting for DSO Companies
» Accounting for JAFZA Companies
» Accounting for DCC Companies
7) UAE VAT Accounts: Set Them Up Properly From Day One
VAT mistakes often happen because VAT gets posted inside generic tax accounts.
Create clear VAT buckets such as:
- 21510 – VAT Payable (Output VAT)
- 11510 – VAT Receivable (Input VAT)
- 21520 – VAT Adjustments / Rounding
- 11520 – Blocked Input VAT (Non-recoverable) (if relevant)
Also, set tax codes in your software so VAT reports match the return format. As a result, filing becomes “review and submit” instead of “panic and rebuild.” Read on Accounting for DIFC Companies
8) Corporate Tax Readiness: Design Accounts That Support Add-Backs
Even if your bookkeeping is monthly, tax review is yearly. So, plan ahead.
Create expense accounts that make tax adjustments easier, for example:
- Entertainment / Client Gifts (often treated differently)
- Donations / Sponsorships
- Fines & Penalties
- Related Party Charges (if any)
You don’t need to overthink it. Still, a small—amount of structure now saves big cleanup later.
9) Payroll, End of Service, and Accruals (Very UAE-Specific)
Payroll in the UAE often includes allowances and end-of-service accrual thinking.
Consider:
- 61100 – Salaries (Admin)
- 61200 – Salaries (Operations/Delivery) (or treat as Cost of Services)
- 61300 – Visa / PRO / Labour Card Costs
- 21450 – EOSB Provision (Liability)
- 61400 – Staff Benefits & Allowances
Also, create accrual accounts:
- 21900 – Accrued Expenses
- 11800 – Prepaid Expenses
Then month-end becomes smoother, and your Balance Sheet stays real. Get details on Accounting for Dubai South Companies
10) Keep the Balance Sheet Clean: AR/AP, Deposits, and Advances
Service businesses often collect advances, mobilization fees, or security deposits. So, separate these from revenue.
Useful accounts:
- 12100 – Accounts Receivable
- 22100 – Accounts Payable
- 22300 – Customer Advances / Deferred Revenue
- 11600 – Supplier Deposits / Advances
- 11100 – Bank – Operating
- 11200 – Bank – VAT
- 11300 – Petty Cash
When you separate them, you avoid overstating revenue and you track obligations properly.
11) Add Tracking Segments (If Your Software Allows)
A modern COA works best when paired with segments. For example:
- Cost centres: Admin, Sales, Operations
- Projects: Client A – Contract 2025-01
- Locations: Dubai, Abu Dhabi (only if needed)
This way, you don’t clutter the COA, and yet you can still slice performance in 10 seconds.
12) Implementation Tips: Rollout Without Breaking Your Books
To implement safely:
- Build the new COA in a test copy (or map it in Excel first).
- Decide the “go-live” date (often start of a month).
- Map old accounts → new accounts clearly.
- Lock posting rules and give your team a short cheat sheet.
- Review the first two months closely, then refine.
And if you want clean reporting quickly, Sharp Accounting can help you design the COA, set up cost centres, and align your bookkeeping with VAT and tax needs—without making it heavy or confusing.
FAQs:Chart of Accounts for UAE Service Companies
A chart of accounts is the full list of accounts used in your general ledger to record transactions and generate reports.
Most SMEs run well with 80–200 accounts, plus cost centres and project tracking for detail.
Usually no. Track clients in customer records, and split revenue by service line in the COA.
A 4–5 digit system grouped by category (assets, liabilities, equity, revenue, costs, expenses) works best and scales easily.
Create clear accounts for Input VAT and Output VAT, and use correct tax codes so your VAT report matches the return.
Put them under Cost of Services if they directly relate to delivering client work. That keeps gross margin accurate.
Yes, if you collect advances. Use a liability account like Customer Advances / Deferred Revenue until you earn the income.
Split it: delivery staff can sit in Cost of Services, while admin and sales payroll sits in operating expenses.
It’s strongly recommended for better reporting. A separate EOSB provision liability helps you track obligations cleanly.
Use cost centres (Admin, Sales, Operations) rather than duplicating expense accounts.
You can, but it often causes problems. Service businesses need proper cost-of-service structure, projects, and deferred revenue logic.
