GAAP Accounting 101 For Property Managers

Whereas many property managers don’t have accounting backgrounds, managing their  group’s monetary reporting remains to be on practically each PM’s to-do record. When you have been tasked with dealing with accounting duties in your property administration firm, it’s a good suggestion to maintain GAAP accounting rules in thoughts. Right here’s an outline of GAAP accounting and the way it may help you run your enterprise with extra accountability and transparency.

What’s GAAP accounting?

The phrase “Usually Accepted Accounting Ideas (GAAP)” refers to a set of rules which might be generally utilized in monetary reporting. These accounting requirements comply with ten distinct rules which might be issued by the Financial Accounting Standards Board (FASB), an unbiased nonprofit group liable for setting accounting requirements for publicly-traded corporations in the US.

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, in recent times, the FASB has made efforts to make GAAP rules higher match the worldwide customary.

The ten rules of GAAP accounting

There are ten GAAP accounting rules in whole and they’re as follows:

what is GAAP accounting principles

The Advantages of Following GAAP Accounting Ideas in Property Administration

Whereas all publicly-traded corporations in the US are obligated to comply with these requirements when issuing their reviews, personal corporations are allowed to decide on whether or not or not they wish to adhere to them. As a property supervisor, you’ll most certainly be ready to choose in your group.

There are numerous advantages to adhering to those rules, together with:

  • It helps you propose forward. Accessing 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 easier and reduces the chance of fraud.
  • It makes it simpler to establish areas of enchancment. GAAP accounting offers you a sensible 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 flexibility to offer your purchasers with dependable and real looking 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 comply with GAAP accounting rules every time doable. After working within the trade for a number of years, he sees it as a greatest observe that may enable you keep away from critical legal responsibility within the occasion of an audit:

“It may be a matter of your status and even your livelihood. For those who’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 possibly can be fined, you possibly can lose your license, and you possibly can even go to jail. [GAAP accounting] offers you a system for sustaining the documentation you’ll want should 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 every day and GAAP accounting does add plenty of paperwork. Nonetheless, automating a few of that work could make it simpler.”

There may be software program on the market that may do exactly that, slicing down on the period of time you spend pouring over spreadsheets. Worldwide Monetary Reporting Requirements, specifically, provides a bunch of options that may assist simplify the GAAP accounting course of.

Right here’s a more in-depth have a look at a few of the options that may make your accounting duties extra manageable:

what is GAAP accounting software features

As Morse places it, “Buildium provides property administration accounting instruments for individuals who aren’t accountants. Quite a lot of the options that we construct into Buildium are arrange with GAAP accounting rules in thoughts. We do the heavy lifting to be able to simply set it and overlook it.”

The Backside Line on GAAP Accounting

On the finish of the day, following GAAP accounting rules is more likely to be the perfect plan of action in your property administration firm. It not solely helps you streamline the monetary reporting course of and offers you with a sensible image of your group’s monetary well being, however it additionally lets you construct belief along with your purchasers, 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 reviews which might be GAAP-compliant and automate most of the processes that go into maintaining your group’s data updated.

For those who’re curious to see how Buildium may help you streamline your monetary reporting, give our free trial a spin at the moment.

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