Here’s What You Need to Know About GAAP Compliance

Navigating the generally accepted accounting principles (GAAP) for business owners can feel overwhelming when dealing with confusing and inefficient financial processes. If you've ever found yourself buried in paperwork, unsure whether you’re following the correct guidelines, you're not alone!

We’re here to clear up the confusion and give you the tools you need to handle GAAP with confidence. Let's break down the essentials so you can streamline your processes and get back to what you do best – running your business.

What is GAAP?

1. Principle of Regularity

You should always follow the correct guidelines (set by GAAP) when preparing financial reports.

2. Principle of Consistency

Accountants should use the same methods each time they create financial reports to compare financial statements from different periods easily.

3. Principle of Sincerity

Be honest. Your financial reports should reflect the actual financial situation of your business—no exaggerating or hiding things.

4. Principle of Permanence of Methods

Similar to consistency, this means using the same approach over time so your financial reports are reliable and can be easily compared year after year.

5. Principle of Non-Compensation

Don’t mix up or offset what you owe (liabilities) with what you own (assets) or what you earn (revenues) with what you spend (expenses). You must report each separately to avoid confusion.

6. Principle of Prudence

Be cautious. Record expenses and debts as soon as possible to ensure they’re accounted for. However, only record income you are sure is coming to your business – not funds you assume you’ll get.

7. Principle of Continuity

Assume your business will continue to operate indefinitely – this affects how you value certain items on financial statements.

8. Principle of Periodicity

You should report financial activities over specific periods – like monthly, quarterly, or annually – to track and compare your business’ financial health.

9. Principle of Materiality/Full Disclosure

Include important details. If something could influence decisions, it should be in your reports. If something is too small to impact decisions, you don’t need to report it.

10. Principle of Utmost Good Faith

All parties involved in financial reporting should act honestly and present the financial information as accurately as possible.

How to Ensure GAAP Compliance

An efficient and streamlined accounting process is the best way to ensure GAAP compliance. Some business owners think they can hire a certified public accountant (CPA) to handle everything properly. However, if you aren’t recording your finances accurately or your system is disorganized, a CPA might not have all the necessary information to do their job correctly.

The best move is to use intuitive business management software with robust accounting features. In doing so, you’ll be able to automate many accounting processes, run complete reports with the click of a button, and get a full view of your company’s financial health in seconds. The right software will have GAAP compliance done for you.

GAAP Compliance with Storage Commander

With Storage Commander’s powerful single and multi-site reporting and dynamic revenue management solutions, your business will have no problem with GAAP compliance. Book a demo to see how Storage Commander can help transform your accounting processes.