Essential Things to Know About HOA Accounting Services

A homeowner's association is a group dedicated to the upkeep, improvement, and promotion of a community. This is typically made up of a group of residents from that neighborhood. Residents in the neighborhood pay money to the HOA in order to enjoy certain benefits.

In some neighborhoods, this entails taking advantage of amenities such as a pool or tennis courts. An HOA may also pay for yard service for residents.

They will also host events throughout the year. They could throw a block party to commemorate the end of the school year or Halloween.

The problem is that all of these things are expensive. This is why residents contribute to their homeowners' association in the first place. This also implies that the residents in charge of the HOA must understand how to manage their budget and keep their financial information up to date.

Some homeowners' associations discover that keeping track of their own personal finances as well as the financials of the neighborhood is too much for them. The good news is that solutions are available. The HOA can hire a professional to assist them in keeping track of the neighborhood's finances.

HOA Bookkeeping
Homeowners' associations are not tax exempt. They are also not immune to deception. This is why an HOA's bookkeeping is so important.

For bookkeeping purposes, an HOA should keep track of a few things. These should be as comprehensive as possible. The first thing they require is an accurate income statement. It will show how much money has been invested in the HOA over the course of the year. This will be important during tax season because the state will use this to determine how much the HOA owes.

A record of receivables should be kept. This should show how much money the association is owed and who owes it. It should also state whether or not any vendor credits are owed. The HOA should keep track of how much money is in their reserve fund. This is the money that must be set aside by law for the upkeep and replacement of the neighborhood's amenities.

In addition, your HOA should have a general ledger that displays all account activity. This should include all account balances and bank statements for the HOA. This increases transparency, so residents know where their HOA fees are going. It also assists the HOA in making better financial decisions for the community.

HOA Management
HOA management is the other side of the coin. This refers to how the HOA operates on a daily basis and how its funds are spent. This includes ensuring that any questions or concerns raised by residents are handled efficiently and professionally. It means that the HOA makes certain that residents pay their fees on time. And it means that any events or amenities are covered without going over budget.

However, HOA boards are made up of people as well. These people have jobs and families that require their attention as well. As a result, an HOA board cannot meet every day of the week or ensure that all fees are paid on time. This is especially true in densely populated neighborhoods.

HOA Accounting
Strong HOA accounting is clearly the foundation of a good homeowner's association. Not every HOA is capable of handling this on its own.

Ensure that your HOA can return to focusing on keeping the neighborhood running smoothly without having to worry about finances. On the financial side, the HOA company should keep your general ledger and assist you in creating a budget each year, as well as provide your HOA with a monthly financial report. This provides your HOA with a more complete picture of your neighborhood's financial situation. That means your HOA can confidently plan events and maintenance.