Changes in Lease Accounting Means Stricter Bookkeeping

Software companies don’t often hold many leases because of the nature of their operations.

A software company will have very few concurrent leases, unless it operates retail locations. Despite this, many software companies will soon be pulled into the accounting and finances world as a result of a regulatory change to the guidelines for reporting leases. In a few years times, companies will be required to put all of their active leases on their books. Previously, they were allowed to keep a lease off of the ledger, depending on how they chose to classify it. This change will add a level of transparency and drastically alter bookkeeping best practices processes.

Of course, only those companies with numerous leases (or high value leases, as it is revenue-based, too) will be drastically impacted. Still, this is a vital piece of small business law to be aware of. For more on the change to lease reporting, watch the full video from OpenView Labs featuring David Lewandoski.