The Importance Of Outsourcing Accounting In The Real Estate Industry
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Having a strong accounting foundation is important whether you sell small properties as a hobby or facilitate property management services, generating millions of dollars. Though the scale of operations could differ, the underlying tasks are similar. Real estate professionals have a lot to manage since they have to keep up with clients, listings, finances, building business networks, and more. While connections and closing sales are drivers for success, complying with real estate accounting principles and business regulations guarantees success.
Real estate accounting requires strong acumen to record, track and process the daily transactions as revenue recognition is more complex when compared to any other business. A real estate accountant is responsible for a wide set of tasks ranging from general ledger accounting, payroll, bank reconciliations, monthly book closing, and reporting; to keeping track of changes in real estate valuations and identifying ways to improve asset management. This requires a duly qualified and experienced real estate accountant - to record, analyze and report transactions.
Significance Of Outsourcing Accounting In The Real Estate Industry
Increases Revenue While Decreasing Expenses
Keeping an eye on expenses is one way to boost your company's revenue. Due to the high volume of daily transactions involving employees, vendors, contractors, and agencies, acts of omission or commission cannot be ruled out. Being aware of these transactions requires knowledge, experience, and time. Despite best efforts, it is easy to get caught up in complexities. And before you know it, you will be tempted to make excuses and defer or avoid these tedious tasks.
This clearly highlights the need for an expert to critically review the books to avoid and identify mistakes before it impacts business performance.
Helps Determine Property Rates
Evaluating a property's current market value may not be as simple as it looks. The frequency of property transactions is generally low and property may remain with the same person for an extended period of time. Hence, calculating the current value of the property becomes difficult and complicated.
Again, an experienced accountant can find an adaptable solution that accommodates industry practices while ensuring adherence to business regulations and legal requirements.
Assist In Debt Reduction
Business debt can get out of control unless kept in check. An experienced professional accountant will save you fortunes by painstakingly evaluating interest rates on credit cards and mortgages, consequently preventing potential loss. They also assist in transferring your high-interest rate accounts and balances to zero interest rates..
Aids In Developing New Strategies
To streamline your business, you must develop a strategic plan that will influence the growth of your company. Real estate accounting aids in the development, implementation, and planning of new business strategies. It also compares growth year over year and identifies underperforming properties, enabling you to plan and act appropriately.
Keeps You Informed
Staying current on property tax rates helps avoid legal consequences and losses. Accounting keeps track of taxes enabling you to manage overall tax returns effectively. A professional approach and thorough research are the best bet for making informed decisions.
Considering the high volume and complex nature of financial transactions involved in the real estate industry highlights the need for an expert who can critically review the books and ensure the financial stability of the business.
Maintaining an in-house team of accountants may not be financially viable for many businesses, so partnering with an experienced team of accountants seems logical. Furthermore, a professional independent third-party review would help identify in-efficiencies in cash flow.
If you're looking for an experienced accounting team for your real estate business, reach out to the CJCPA team. Our experienced professionals analyze your business's financial and accounting requirements, create customized strategies and implement actions that have a positive impact on your bottom line. Partner with us today and watch your company succeed.