Real estate agencies have to complete several internal processes besides selling and renting properties. One such process is accounting, which needs to be performed regularly by a real estate firm.
Many real estate agencies hire in-house accountants to complete the accounting processes. However, real estate accounting has its own challenges. A real estate firm has to address all of its accounting challenges for better results.
A slight mistake in accounting records can invite legal hassles for a real estate firm. Read on to know the challenges faced by real estate companies in accounting.
Real estate accountants find it challenging to classify expenses under different heads. For example, personal expenses should not be mixed with business expenses by real estate accountants. Similarly, payroll and contractor transactions must be separated from each other. Receivables and payables also need to be separated for real estate accounting.
Incorrect classification of expenses can lead to accounting errors, which can lead to further hassles like incorrect company valuation and incorrect tax structure.
For the classification of expenses, real estate accountants have to reconcile many bank accounts, credit cards, and funds. Thus, it often gets hard for accountants to classify expenses for a large real estate company.
Accounting rules for real estate companies keep changing from time to time. Real estate firms having in-house accountants find it hard to keep up with the changing regulations. Even if you think you have the best accounting system, it needs to be updated at regular intervals.
If a real estate agency has in-house accountants, it should spend on training them. Internal training ensures that in-house accountants will be aware of the current rules/regulations.
If a real estate company ignores the latest accounting rules, it may invite legal hassles. As a result, real estate agencies must look for professional accounting firms to help them with the ever-changing rules/regulations.
Transactions in the real estate industry are bound to be huge. Real estate agencies sell houses and properties which aren’t exactly cheap. Sometimes, an established real estate agency can experience more than a dozen closings in a month. Accountants may find it hard to manually deal with such transactions on a large scale.
Real estate accounting becomes trickier when a client cancels the deal at the last hour. In addition, real estate agencies face issues in managing financial data on a large scale. As a result, complex real estate transactions with many details become a headache for accountants.
Accounting for real estate companies becomes tricky due to the lack of effective accounting software. You need the best accounting software to track income and expenses with the least manual effort.
Ideal accounting software offers seamless integration of data from different sources/systems. There shouldn’t be any data silos to lose important financial data. The best accounting software will offer high visibility into complex financial data. From tracking cash flow to reconciling transactions, all can be done easily with a reliable accounting software.
Real estate agencies should refrain from hiring in-house accountants. Instead, they can rely on accounting outsourcing companiesto complete accounting processes timely.
By doing so, real estate firms will save in-house training and recruitment costs. Real estate agencies also need to use reliable accounting software for the real-time reconciliation of transactions.
Accounting outsourcing companies can offer accounting services at a lower price. OHI is a reliable firm that has been offering FAO (Finance & Accounting Outsourcing) services since 2006. Our focus is on Real Estate Companies. Outsource your real estate accounting processes now!
OHI is a fifteen-year-old real estate services company working with 50+ commercial and residential real estate developers, funds and property management companies across USA. Our deep expertise in real estate accounting, financial analysis, lease administration and asset management has helped clients cut associated costs by 40-50%. We now provide these services to a portfolio of 75000 units across clients.
We invite you to experience finance and accounting outsourcing through us.
Low Cost Property Accounting Services for Real Estate Companies: AP | AR | Reconciliations | Month End Closing | Financials | Year End Accounting | Reporting – VIEW MORE
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