Whereas many property managers don’t have accounting backgrounds, managing their group’s monetary reporting continues to be on practically each PM’s to-do checklist. You probably have been tasked with dealing with accounting duties to your property administration firm, it’s a good suggestion to maintain GAAP accounting ideas in thoughts. Right here’s an outline of GAAP accounting and the way it may help you run what you are promoting with extra accountability and transparency.
What’s GAAP accounting?
The phrase “Usually Accepted Accounting Rules (GAAP)” refers to a set of rules which can be generally utilized in monetary reporting. These accounting requirements observe ten distinct ideas which can be issued by the Financial Accounting Standards Board (FASB), an impartial nonprofit group answerable for setting accounting requirements for publicly-traded firms in the USA.
Notably, GAAP accounting requirements are barely totally 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 complete and they’re as follows:
The Advantages of Following GAAP Accounting Rules in Property Administration
Whereas all publicly-traded firms in the USA 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 most definitely be ready to select to your group.
There are a lot of advantages to adhering to those ideas, together with:
- It helps you propose forward. Gaining access to dependable and constant monetary data makes it simpler to establish developments and forecast into the long run.
- It maintains consistency. Constant reporting makes report maintaining less complicated and reduces the danger of fraud.
- It makes it simpler to establish areas of enchancment. GAAP accounting offers you a practical image of your group’s efficiency, which may help you to raised establish its strengths and weaknesses.
- It builds belief. GAAP accounting offers you the power to supply your shoppers with dependable and sensible monetary data, which may 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 each time doable. After working within the trade for a number of years, he sees it as a greatest follow that may enable you 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 multitude and you’ll’t try this, you may be fined, you may lose your license, and you may even go to jail. [GAAP accounting] offers you a system for sustaining the documentation you’ll want in case you’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 each day and GAAP accounting does add loads 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, slicing down on the period of time you spend pouring over spreadsheets. Worldwide Monetary Reporting Requirements, particularly, presents a number of options that may assist simplify the GAAP accounting course of.
Right here’s a better take a look at among the options that may make your accounting duties extra manageable:
As Morse places it, “Buildium presents property administration accounting instruments for individuals who aren’t accountants. A variety of the options that we construct into Buildium are arrange with GAAP accounting ideas in thoughts. We do the heavy lifting as a way to simply set it and overlook it.”
The Backside Line on GAAP Accounting
On the finish of the day, following GAAP accounting ideas is prone to be one of the best plan of action to your property administration firm. It not solely helps you streamline the monetary reporting course of and offers you with a practical image of your group’s monetary well being, but it surely additionally lets you construct belief along with your shoppers, which is essential to enterprise progress.
Nonetheless, you don’t must shoulder the added administrative burden of adhering to GAAP accounting practices alone. Buildium may help you generate experiences which can be GAAP-compliant and automate lots of the processes that go into maintaining your group’s data updated.
In case you’re curious to see how Buildium may help you streamline your monetary reporting, give our free trial a spin at this time.
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