Donna Genie explains why your reservation system shows different revenue than your financial statements: reservation systems use accrual accounting (revenue when guests stay), while small business tax reporting uses cash basis (revenue when you get paid). Keep them separate and use each for what it's designed for.
Have you ever tried to compare your reservation system to your financial statements and found that those numbers are different? Well, let's talk a little bit about why that is the case. Reservation systems are built typically on an accrual basis. Not like accrual world, but accrual basis means that when you take the reservation, you haven't really earned the money until those folks arrive in your park and stay with you, then you've earned it. So reservation systems track your revenues based on the people who are staying with you this month, this week, this day. In the financial accounting world, most taxes are prepared on the cash basis. For small businesses, that means the day you get the cash, it's considered to be income. And then the day you those people come into you, there's really not a real significant piece except collecting if there's a remaining deposit. So it's strictly based on the bank statement. When the cash hits your account, that's when it's income. Now most people, if you have to refund that later on, that would be a reduction in your income as it goes back out. So. So those two systems are never going to be the same, and they shouldn't be the same. If you've seen some of my other videos, I don't ever recommend integrating your reservation system with your financial accounting system. And it's for this very reason they're tracking two different things. Both are valuable pieces of information when you need to analyze things, but you need to know what you're trying to analyze. For most campgrounds, we're going to be taxed on the cash basis. So that's looking at when you get the cash. And if we're trying to compare things like looking at dynamic pricing or rate increases or occupancy levels, we're going to want to look at that based on the accrual basis. So it's like having a Phillips screwdriver and a regular screwdriver. You need one in each particular situation. Both are very valuable, but usually they're not interchangeable. So keep that in mind when you're thinking about why those two numbers are different. And if you have some other questions about how to handle that, we're here to help@campgroundaccounting.com.
