Whereas many property managers don’t have accounting backgrounds, managing their group’s monetary reporting continues to be on almost each PM’s to-do record. You probably have been tasked with dealing with accounting duties in your property administration firm, it’s a good suggestion to maintain GAAP accounting ideas in thoughts. Right here’s an summary of GAAP accounting and the way it will help you run your online business with extra accountability and transparency.
What’s GAAP accounting?
The phrase “Typically Accepted Accounting Ideas (GAAP)” refers to a set of rules which are generally utilized in monetary reporting. These accounting requirements observe ten distinct ideas which are issued by the Financial Accounting Standards Board (FASB), an impartial nonprofit group liable for setting accounting requirements for publicly-traded firms in america.
Notably, GAAP accounting requirements are barely completely different from the Worldwide Monetary Reporting Requirements (IFRS), that are utilized by many international locations across the globe. Nonetheless, lately, the FASB has made efforts to make GAAP ideas higher match the worldwide normal.
The ten ideas of GAAP accounting
There are ten GAAP accounting ideas in whole and they’re as follows:
The Advantages of Following GAAP Accounting Ideas in Property Administration
Whereas all publicly-traded firms in america are obligated to observe these requirements when issuing their experiences, personal firms are allowed to decide on whether or not or not they wish to adhere to them. As a property supervisor, you’ll more than likely be ready to select in your group.
There are numerous advantages to adhering to those ideas, together with:
- It helps you propose forward. Gaining access to dependable and constant monetary info makes it simpler to determine developments and forecast into the long run.
- It maintains consistency. Constant reporting makes file holding less complicated and reduces the chance of fraud.
- It makes it simpler to determine areas of enchancment. GAAP accounting provides you a sensible image of your group’s efficiency, which will help you to higher determine its strengths and weaknesses.
- It builds belief. GAAP accounting provides you the flexibility to supply your shoppers with dependable and sensible monetary info, which might make it simpler for them to belief you to deal with their hard-earned revenue.
For his half, Michael Morse, a Product Supervisor with Buildium, strongly recommends that property managers observe GAAP accounting ideas at any time when doable. After working within the trade for a number of years, he sees it as a greatest follow that may show you how to keep away from severe legal responsibility within the occasion of an audit:
“It may be a matter of your status and even your livelihood. In case you’re ever audited, you want to have the ability to again up your reporting with monetary documentation. In case your books are a large number and you may’t try this, you may be fined, you may lose your license, and you may even go to jail. [GAAP accounting] provides you a system for sustaining the documentation you’ll want if you happen to’re ever audited sooner or later.“
Is There Software program to Make GAAP Accounting Simpler?
Whereas GAAP accounting does supply some substantial advantages, there’s no denying that it additionally creates extra work. As Morse places it, “property managers are coping with a lot guide labor every day and GAAP accounting does add quite a lot of paperwork. Nonetheless, automating a few of that work could make it simpler.”
There may be software program on the market that may just do that, chopping down on the period of time you spend pouring over spreadsheets. Worldwide Monetary Reporting Requirements, specifically, gives a number of options that may assist simplify the GAAP accounting course of.
Right here’s a more in-depth take a look at among the options that may make your accounting duties extra manageable:
As Morse places it, “Buildium gives property administration accounting instruments for individuals who aren’t accountants. A number of the options that we construct into Buildium are arrange with GAAP accounting ideas in thoughts. We do the heavy lifting so as to simply set it and overlook it.”
The Backside Line on GAAP Accounting
On the finish of the day, following GAAP accounting ideas is more likely to be the most effective plan of action in your property administration firm. It not solely helps you streamline the monetary reporting course of and gives you with a sensible image of your group’s monetary well being, but it surely additionally lets you construct belief together with your shoppers, which is essential to enterprise development.
Nonetheless, you don’t need to shoulder the added administrative burden of adhering to GAAP accounting practices alone. Buildium will help you generate experiences which are GAAP-compliant and automate most of the processes that go into holding your group’s information updated.
In case you’re curious to see how Buildium will help you streamline your monetary reporting, give our free trial a spin at the moment.
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