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4 Year-End Property Management Accounting Best Practices (Nov. 19 Webinar Recap)

Posted on 03. Dec, 2009 by Aimee Miller in Best Of, Webinars

In a recent webinar, we reviewed four accounting best practices property managers should be doing to close out 2009 and prepare for 2010. We talked through these best practices and demonstrated how to enact them using our web-based property management software but they are definitely applicable if you’re using a different type of software. What follows is an outline of this webinar along with the complete video recording.

1. Year End Tax Preparation: What Reports Do You Need?

3 Reports
The best practice is to get started on this before the end of the year. Be prepared – test results of this report now! Email this information if you can – save paper, keep record of the communication.

• December 2009 Cash Flow Report
• Consolidated 12 Month Cash Flow report
• Year End Owner Statements

Note: if you do business in California, new California tax withholding requirements for rent payments may apply to you.

2.  Review and Clean-up General Ledger Account Descriptions

Make sure you have the owner income setup in an orderly fashion. Rent and all income are in the same GL section in sequential order. The best practice is to review your Chart of Accounts at least once per year and devote some time to edit and clean up account descriptions.

Print Out Your Chart of Accounts and Review It With Your Accountant

• Review the naming conventions (Ex. a GL account that says “general maintenance” could be anything. This is an opportunity to update these with more detailed names…like “plumbing expense.”)
• Eliminate (or stop using) redundant accounts
• Clean up formatting to increase the professional appearance of reports
• Correct spelling errors
• Consistently use upper and lower case titles to illustrate hierarchy of Chart of Accounts. Top level accounts should be in all CAPS.

Apply Policies and Procedures
Use this time to apply your policies and procedures and ensure they are reflected in your Chart of Accounts. Note: in AppFolio, when you do change a GL code on the fly it will affect all reports.

• For example, a GL account is labeled “Gas” – but where is this gas going to? The pool, the house, etc.
• If you have recoverable and non-recoverable expenses use the same prefix for ease of coding

3.  1099 Forms for Vendors and Owners

Best Practice – Start By Testing Now (even though you may not need to submit them for a few months)
If you’re planning to use Fire File to submit, start testing sooner than later!

Clean up and update information for owners and vendors:

• Check for missing Social Security numbers (these are required by the IRS)
• Check for missing addresses, update as necessary
• Input dollar amounts

4. Evaluate Your Process

End of year is a good time to evaluate your processes to ensure you are maintaining compliancy and best practices across your business.

Be Ready for New Laws In 2010 and Review Your Management Agreements

• Take this time to review any recent law changes that may be starting in 2010. If you’re a member of local associations (NARPM, local apartment associations) they offer great education and resources to prepare you for law changes.
• Review your management agreements to be sure they are up to date, which are renewing in 2010. This may be an opportunity to update your agreements.

Review Roles and Procedures for Your Staff
Do you have processes / checks and balances in place for:

• Vendors and checks
• Controls and process via software
• Who does the Bank Rec?
• Tenant and Cash handling (concessions+deposits)

Communicate With Owners
End of year is a great time to communicate with your owners and share with them the improvements you’ve made in your business that allow you to fill vacancies faster, run a more efficient business or give them better information.

One idea is to send an “Annual Newsletter” announcing:

• Any software upgrades / technology improvements you’ve made
• Website or other marketing sources you’re using and how effective they are
• Introduce new staff members

Store Your Documents Online So Next Year Prep Will Be Even Easier!

• Invest in a fast scanner
• Organize your files at least once a year
• For those using AppFolio, customized letters will be saved to the applicable records within AppFolio

Related Posts
Preparing Your 2010 Property Management Marketing Plan (Dec. 15 Webinar Recap)
Bank Reconciliation Best Practices for Property Management
Property Management Law with Daniel Bornstein (July 22 Webinar Recap)
Website Best Practices for Property Managers (Sept. 15 Webinar)
Choosing the Right Property Management Accounting Software

Tags: Accounting, events, Law, Video, webinar