3 Common HOA Bookkeeping Mistakes to Avoid

Your Homeowners Association (HOA) Board has a lot on its plate. If you’re a board member, you know this all too well. Looking out for the overall well-being of your community is complicated and requires time and dedication.

While the board is handling disputes and dealing with the day-to-day operations of the HOA, things are bound to fall by the wayside. Unfortunately, bookkeeping is often one of them.

Letting bookkeeping slide is dangerous for the financial health of your HOA. It is common for the treasurer of the board to handle the books, but often the workload gets overwhelming and mistakes are bound to happen. After all, this is a volunteer job.

These three common mistakes can end up being costly and creating even more work.

Poor Organization

Everything about your HOA bookkeeping needs to be meticulously organized. Most errors happen because things fall through the cracks and simply don’t get done in a timely fashion.

Good HOA bookkeeping has a lot of moving parts. There is a lot of information to keep track of, and it needs to be taken care of on a regular schedule. Ideally, HOA books need attention every day.

The errors that result from poor organization include everything from losing receipts that are necessary for taxes to not documenting small transactions. These small mistakes in daily bookkeeping result in larger mistakes at the monthly, quarterly, and annual levels.

Small errors from a lack of meticulous organization add up. They waste money and can make reconciling the books much more difficult than it needs to be.

The kind of organization you need to keep your HOA running smoothly is likely to be too large a task for your HOA treasurer or board member. It requires frequent, specific attention to detail that’s hard to accomplish without training.

It’s also very hard to get properly organized if your bookkeeper is trying to squeeze the job into their evenings and weekends. A professional HOA bookkeeping service has the time, experience and expertise required to keep your HOA books organized.

Data Entry Errors

We’ve all made data entry errors, whether we know it or not. A transposed number on a spreadsheet or the accidental duplication of an expense are examples of simple data entry errors.

Your treasurer may be trying to squeeze HOA bookkeeping into a few hours scattered throughout the month. That is exactly how data entry errors happen. People are tired, unorganized, and don’t have enough time to dedicate to the tasks at hand.

This is a recipe for data entry errors. And while these can seem small or insignificant, such errors can lead to major problems. HOA bookkeeping is already complicated. A data entry error can be difficult to track down.

The hours lost locating and fixing data entry errors put more pressure on your HOA treasurer or amateur bookkeeper. More pressure leads to—you guessed it—more errors.

Data entry errors tend to compound themselves. One wrong number throws off a balance sheet, which throws off a ledger, which makes a report incorrect. Even missing one decimal point can make closing out your books a nightmare.

Not Using HOA Accounting Software

It is so tempting to think that managing an HOA is simple. This is especially true if it’s a small organization that seems to have few expenses or transactions. The result is that well-meaning members take on the task of HOA bookkeeping.

As they set out to complete their duties they start with simple spreadsheets or even handwritten ledgers. They can balance a checkbook, after all, so how much harder can this be? You know the answer already—it’s much harder and more complex than it looks!

We saved this mistake for last because it encompasses both organization and data entry. It’s much harder to be organized using scattershot accounting methods, and it’s much easier to make mistakes without the proper tools.

HOA accounting software is designed to help bookkeepers stay on top of every part of your HOA’s finances. There are specific ledgers, reports, and audits required for homeowners associations.

Let’s go back to your HOA treasurer. They have to take care of documenting cash disbursements, accounts payable, balance sheets, multiple ledgers, reports, audits, and taxes. How many spreadsheets do you imagine that requires? How many handwritten ledgers? How in the world do they keep everything organized?

The answer is that they usually don’t. They make (perfectly understandable) mistakes. It’s like juggling too many balls, something is going to fall.

So they invest in some HOA accounting software. As they are unlikely to be financial professionals it now falls on their shoulders to learn how to use this new software and how it all applies to your particular HOA.

Every one of us who has ever tried to install and use a brand new computer program knows how this ends up. Frustration and curse words. HOA accounting software is essential to keeping your organization on track, but only if it’s used properly.

This poor board member is exhausted. By overwhelming them with a task too large for a volunteer, your HOA has set itself up for accounting errors that waste time and can be expensive to fix.

It’s time to stop this board member torture! A professional HOA bookkeeping service already has, and knows how to use, HOA accounting software. They know how to organize your books and enter data and check it for accuracy. They have the skillsets that your board members do not.

Bookkeeping for HOAs, as we’ve seen, is not easy. Mistakes are common and costly. Investing in an HOA bookkeeping service gives you peace of mind that your financial reporting is accurate and dependable, and it helps keep your board members from burning out.

Professionals also help your HOA save money by avoiding common and costly errors. Your HOA bookkeeper will become a trusted member of your HOA team, someone you can rely on to be accurate, knowledgeable, and dependable.

Contact us at Homey Bookkeeping, where we understand the accounting needs of homeowners associations. We’ll keep your HOA’s books organized, be the experts in using your HOA accounting software, and make sure data entry mistakes never plague your board members again.