how to setup hoa accounting

Your income statement depicts your association’s income and expenses for the period specified (usually for the month). It lists down all your revenues as well as your expenses, deducting the latter from the former to arrive at your net income or loss. The Cash Basis doesn’t conform with GAAP, which means it’s an unacceptable method when preparing your official financial statements. When using the Cash Basis for your HOA accounting standards, you only report revenues once actual cash has come in.

Successful financial management is the key to a long-lasting association. Being prepared for expenses both expected and unexpected ensures that your HOA will keep running through the good and the bad times. Maintaining your records through HOA accounting software helps keep things organized.

Accounting App for HOAs That Offers Secure Online Payments

Ask to see those documents, and pay special attention to how well the needed expenditures line up with the reserve fund balance. Professional help can be valuable when analyzing these spreadsheets. If you’re new to technology, you may be asking yourself what HOA accounting software is.

  • They are the entity that makes sure the whole neighborhood is well maintained and safe.
  • Just choose the edition your accountant recommends—or your bookkeeper already uses.
  • According to California state law, all homeowners are legally required to obey all association rules as long as they are consistent with state laws.
  • We have compiled a series of videos and webinars as well as other resources (articles, sample letters, etc.) to help your HOA or Condo community through this difficult time.
  • One of those options is the popular QuickBooks Online package, especially if your HOA software interfaces directly with it.

Making major financial decisions for special projects or major expenditures requires due diligence. Outsourcing these types of decisions to HOA financial advisers and HOA accounting experts can help. Operating a homeowners association company makes you responsible for the maintenance and upkeep of common areas in a residential community. Thus, if the pump starts having trouble in the community swimming pool, you’re responsible for finding a solution and clearing up the murky green water.

Balance Sheet

This is more helpful to HOA members who are eager to ensure the manager is in control of board finances. If an HOA expense is not yet paid (you’ve been billed) you can make an accrual entry in its general ledger. It may also be listed as accrued in the balance sheet and then charged against income in the income statement. Ever feel like your association budget would be just fine if it didn’t have to deal with unit owners that didn’t pay on time? When some people don’t pay it can cause a lot of stress on your community’s budget. To help you we’ve put together this list of collections best practices for condo communities & HOAs.

how to setup hoa accounting

Similar to revenue recording, only the “Cash” account title is used. Payable accounts, such as “Accounts Payable,” don’t exist on the Balance Sheet. Using cash basis accounting, the only time you can record or report any revenue is when you receive the money.

What’s the best HOA accounting software?

In fact, either your accountant or your bookkeeper may be the one responsible for constructing this document based on data you supply. Your accountant may ask you to complete an HOA financial statement based on the financial data you accrue during a year. This simply may be a report you generate hoa accounting from financial software such as QuickBooks. You also may be able to request more in-depth statements from your accountant based on the data you supply, but with additional analysis and insights added in. Again, that’s a question you’ll need to ask your accountant and bookkeeper.

  • When it comes to HOA accounting software, your best bet is to look for a strong combination of financial features in your HOA management software.
  • As the association’s treasurer, you’re responsible for keeping accurate records and financial reports.
  • It also allows your association members to make secure online payments.
  • Every state has different regulations for reserve funds and reserve studies.
  • The best HOA accounting software package for your community is the one that provides the features you need and interfaces easily with your accountant or bookkeeper.
  • The associations also have legal powers, such as placing a lien on your home, imposing fines, or suing you for not complying with the rules.
  • Many volunteers are overwhelmed with the tasks it takes to self-manage an HOA.

Monitoring and paying for repairs and property maintenance requires you to collect HOA fees from every household. The fees you collect are likely used to pay monthly expenses and build a reserve fund for any emergencies that may occur. With all of your duties, keeping your homeowners association company accounting detailed and accurate is a high priority.

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