The unique financial structure of homeowners associations requires intimate knowledge of how they operate. There’s no denying that staying on top of accounting tasks can be time-consuming and tedious. From recording and categorizing expenses to reconciling accounts receivable, even basic bookkeeping can drain hours out of your day and work week. Without accurate financial records, you could open yourself and your boards up to some big risks. For example, you could run out of money the next time an emergency expense pops up, forcing you to levy a special assessment on your residents.
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Premier Property Management is a full service property management company and our property managers are members of the national organization Community Associations Institute (CAI). Property Manager Ron Grandchamp holds the designation of Certified Manager of Community Associations (CMCA) and Association Management Specialist (AMS). Abel Accountants is a reputable accounting firm that specializes in providing high-quality HOA accounting and budget preparing services. With over 50 years in the industry, we have a deep understanding of the unique financial needs of homeowners associations. Our team of expert HOA accountants is dedicated to helping HOAs run smoothly and efficiently.
#6: Strategically Use Technology to Automate Accounting Tasks
Reliable, consistent, and transparent financial statements not only help the HOA board of directors make well-informed decisions. It also supports community health by allowing all community residents and stakeholders to be a part of the team. Keeping members in the dark only promotes mistrust and working with inadequate or no financial information can lead to dwindling reserves for community upkeep and new projects. HOAs often allocate an average of 5% to 10% of their budget for professional accounting software, showcasing the importance of technology in maintaining accurate and efficient financial records.
- Problems arise when volunteers or board members aren’t experienced in financial reporting.
- Plus, our focus on flexibility means you only pay for the bookkeeping services we provide.
- The difference between total revenues and total expenses indicates the net income or loss for the period.
- By following the guidelines outlined in this guide, board members can navigate the complexities of HOA accounting with confidence and make informed decisions that benefit everyone involved.
- In a self-managed HOA, the board treasurer acts as a bookkeeper and oversees the community’s finances.
- If your HOA has a large number of units or complex financial transactions, hiring a professional management company could be a wise decision.
- If you need help in this area, it might be time to consider a HOA bookkeeping service.
Put HOA Accounting Best Practices into Action
It might seem like a small error, but it can throw your whole accounting setup into chaos. Your accounts payable report details all of your association’s payables. This report has a receivable counterpart, usually known as the account delinquency report, which shows all of the money owed to the Accounting Periods and Methods association. Your income statement depicts your association’s income and expenses for the period specified (usually for the month).
Aged Delinquency Report
It’s also not recommended to restrict their access to amenities or shut off their utilities during a trying period in their life. When a homeowner declares bankruptcy, the first thing your HOA board should do is check with your attorney or management company. Keep in mind that there are certain hoa bookkeeping bankruptcy laws that protect bankrupt homeowners. Therefore, you may not be able to push through with any pending legal cases with the homeowner or collect past due balances. If you only need help with accounting, though, it might be better to seek help from an accounting firm, CPA, or a financial management company.
- Your homeowners association’s equity is the balance of the reserve account.
- As an alternative, many HOAs turn to expert financial management services.
- It’s a good idea to take a look at how you’re organizing each association’s financial records.
- For a smaller community this can be all that is needed along with a willing volunteer to handle the accounting.
- In this method, revenues are recorded when earned, and expenses are recorded when incurred (regardless of the time when the payments are actually made).
Who is responsible for handling HOA taxes?
By handing your taxes off to us, you’ll avoid a last-minute scramble when tax season arrives. You’ll also prevent compliance issues or audits due to incorrect information or oversights. However, they must be filed correctly or your HOA could face penalties. Finding the right combination of technology frees you up to focus on what matters most—providing a better experience to residents and board members while adding value to the community.
- If you want to have a prosperous and successful association, master these aspects of accounting.
- HOA finances should be accessible to board members without the need to request a meeting or spend hours on the phone.
- If you only need help with accounting, though, it might be better to seek help from an accounting firm, CPA, or a financial management company.
- There are certain financial reports you’ll need on a monthly basis, including the balance sheet, statement of income and expense, cash disbursements ledger, and the accounts payable report.
The CPA will verify the debtors and HVAC Bookkeeping creditors on amounts owed and they will also inspect the homeowners association’s inventories. The CPA will also inspect the homeowners association’s contract for mistakes. This report has a positive assurance, meaning that the CPA guarantees that the financial statements are accurate and that your homeowners association is in good financial health. Being a member of an HOA board means you’re involved in homeowners association accounting. Furthermore, it combats financial dishonesty within the board or among employees.