The first 90 days after incorporation are when a company forms its accounting habits, and good or bad, those habits stay for years. In this period you need four things: a separate business bank account, a chart of accounts that fits your activity, compliant e-invoices from the first sale if you are VAT-registered, and accounting software for small business in Saudi Arabia that brings it all together in one place.
Many start-ups put accounting off until “things settle down”. Receipts pile up in a drawer, personal expenses run through the company account and handwritten invoices go out that no system will accept. By the first VAT return or the first financing request, fixing it all has become an expensive project.
This guide closes our series on setting up a new company. If you have not started yet, first read how to start a company in Saudi Arabia, from commercial registration to your first e-invoice, then come back here to set up the accounting side week by week.
The First Weeks: Separating Company Money from Yours
The first accounting decision in a company’s life is a complete separation between its money and yours. Open a bank account in the company’s name, run every receipt and every payment through it, and avoid using your personal card for company purchases except in rare cases that are documented and settled straight away.
Mixing the two accounts hides the real profit, makes expenses harder to support in a tax review and weakens your file when you apply for financing. If you need to take money out of the business for yourself, record it as owner drawings or an owner’s salary, depending on the legal form, not as an operating expense.
In the same weeks, complete the registrations that follow the commercial registration, covered in the new business checklist for ZATCA, GOSI, Qiwa and Mudad. Set up an organised place to keep contracts, invoices and expense receipts in electronic form from day one. ZATCA’s guidance requires tax records to be kept for at least six years from the end of the related tax period.
A Chart of Accounts That Fits Your Activity
The chart of accounts is the list of accounts every transaction is classified into, and it is the base for every report you will produce later. Start with a simple chart for small business that suits your activity, then extend it when needed, rather than starting with hundreds of accounts you never use.
A chart is usually divided into five main groups: assets, liabilities, equity, revenue and expenses. The difference between activities shows in the detail:
| Type of Business | Accounts Needed Early |
|---|---|
| — | — |
| Retail shop or online store | Inventory, cost of goods sold, sales revenue, payment gateway fees, shipping costs |
| Services and consulting firm | Service revenue, accrued unbilled revenue, project costs, software subscriptions |
| Contracting and projects | Cost per project, retentions held by clients, customer advances, subcontractors |
| Restaurant or café | Raw materials, cost of sales, POS sales, delivery app commissions |
Every business also needs, from the start, separate accounts for input VAT and output VAT, an account for capital and another for owner drawings, and accounts for salaries and for GOSI contributions. To see how a chart of accounts is organised and displayed inside the system, read Odoo’s interface, charts of accounts and ledgers.
E-Invoicing from the First Invoice
If your business is VAT-registered, its invoices must be issued electronically from a solution that meets ZATCA’s requirements, starting with the very first invoice. Phase 1 (generation and storage) has applied since 4 December 2021 to all resident taxpayers. It rules out handwritten invoices and requires a QR code on simplified invoices.
Phase 2 (integration with the Fatoora platform) is rolled out to groups of taxpayers in waves, and ZATCA states that it notifies taxpayers of their wave at least six months in advance. It makes sense to choose a system that is ready for integration from the start, so you do not have to change software when your notice arrives.
On VAT registration itself, ZATCA states that registration is mandatory where annual revenue exceeds SAR 375,000, and optional where it exceeds SAR 187,500 but is below the mandatory threshold. Always check the details and any updates on ZATCA’s e-invoicing roll-out phases page.
Also read: cloud vs on-premise ERP: how to choose.
Choosing Accounting Software: Cloud or On-Premise?
For most new small businesses, cloud accounting is the practical choice. It needs no server and no IT team, works from any device and updates automatically as requirements change. On-premise software suits organisations with specific infrastructure needs and a team able to run it.
When comparing options, do not start with price. Start with these questions:
- Does it issue e-invoices that meet both Phase 1 and Phase 2 of Fatoora?
- Does it support an editable chart of accounts in Arabic and English?
- Does it link sales, purchases, stock and bank into automatic entries instead of manual input?
- Can HR, payroll, point of sale and an online store be added later without changing systems?
- Is there local support that understands ZATCA requirements and speaks your language?
The best accounting software for small business is the one that answers yes to these questions and stays with you as you grow, not the cheapest one in year one. Moving from one system to another after two or three years costs far more than any difference in subscription.
Monthly Reports to Track from Month One
From the first month, set aside an hour at the start of each month to review five reports. This simple habit catches problems while they are still small.
| Report | The Question It Answers |
|---|---|
| — | — |
| Income statement | Did you make a profit this month, and what are the largest expenses? |
| Cash flow and bank balance | How much cash do you have, and how many months will it cover at current spending? |
| Aged receivables | Which customers are late, and by how long? |
| Supplier payables | What has to be paid this month and next? |
| VAT summary | How much VAT will be due in the next return? |
If these reports come straight out of the system, you will not need an accountant to assemble them by hand from scattered spreadsheets, and you will spot a falling margin or slow collections early.
Make the end of each month a fixed date for closing: reconcile the bank balance in the system with the bank statement, make sure every supplier invoice is recorded, and review any expense not yet classified. A regular month-end close turns the VAT return and the annual statements into a short task instead of weeks of searching through documents.
A 90-Day Plan with Daysum
Daysum is a cloud system built on Odoo that brings together accounting, ZATCA-approved e-invoicing (Phase 2), HR and payroll, point of sale and a Salla store integration. Here is a suggested split of the first ninety days:
| Period | What Gets Done |
|---|---|
| — | — |
| Days 1 to 30 | Company details and VAT number, a chart of accounts for the activity, bank account link, first compliant e-invoice |
| Days 31 to 60 | Products and stock, purchasing and suppliers, point of sale or Salla store link where relevant |
| Days 61 to 90 | Employees, payroll and attendance, review of the first month-end close, VAT report setup |
You can learn more about the system’s modules on the Daysum ERP page. If you want a detailed plan built around your business, talk to the Daysum team.
Conclusion: A Clean Accounting Start Saves Years of Corrections
A company that separates its money from day one, works with a clear chart of accounts, issues compliant e-invoices and reviews its reports every month enters its second year with figures it can rely on in front of ZATCA, the bank and its partners.
Postponing these steps means paying later to rebuild the books, and possibly penalties that could have been avoided. If you are in your first months and want to start the right way, contact the Daysum team to help you set up the system from day one.
FAQs About Accounting for New Companies
The best option issues e-invoices that meet ZATCA's requirements, supports an editable chart of accounts and links sales, stock and bank into automatic entries. Ideally it is cloud-based and can be extended later with payroll, point of sale and an online store. Price matters, but changing systems after a few years costs far more.
Start with the five main groups: assets, liabilities, equity, revenue and expenses. Then add the sub-accounts your activity actually needs, such as inventory and cost of sales for a store or project costs for a contractor. From the start, add separate accounts for input and output VAT and for owner drawings.
At the start, a part-time accountant or an external accounting firm is usually enough, combined with a system that automates daily entries. A full-time accountant becomes necessary when the volume of invoices, suppliers and employees outgrows a monthly review, or when there is significant stock and several branches. The decision depends on transaction volume, not on the company's age.
If the business is VAT-registered, yes: invoices must be issued from a compliant electronic solution, and handwritten invoices are not accepted. Integration with the Fatoora platform under Phase 2 applies according to the wave ZATCA notifies the taxpayer of. That is why it is better to pick a system ready for both phases from the start.
ZATCA's guidance requires tax records, including invoices, to be kept for at least six years from the end of the related tax period. Longer periods apply to some records relating to assets and real estate. A cloud system makes it easier to keep records organised and retrieve any document when needed.
