5 Reasons why HOA Bookkeeping is harder than you think

If you’re like most HOA board members, you are not a CPA or a financial professional. You joined the board to be a positive part of your community. But the financial management of your HOA is arguably the most important function of the board. If you do not keep up with tracking your accounts, you may find yourself buried in receipts and spreadsheet cells at the end of every accounting period.

HOA Board Financial Responsibilities

Buckle in! There is a laundry list of bookkeeping and accounting details that are ultimately the responsibility of the self-managed HOA board.

General Bookkeeping

This is an umbrella term we’re using to cover the day-to-day tracking of your HOA’s finances. Balance sheets, general ledgers, cash disbursements, and the statement of income and expense are all part of general bookkeeping.

These are the documents that provide accurate records of your HOA’s incoming and outgoing money. The maintenance of these records is ongoing and each aspect has its own rules and best practices.

Large HOAs will find that keeping up with general bookkeeping is rather time-consuming, no matter how much bookkeeping software you purchase. Even a small HOA has a lot of transactions that need to be meticulously tracked and recorded.

While you can certainly learn how to manage each of these aspects of HOA financial planning, it’s a big project. HOA board members already have a lot of responsibilities. This day-to-day record-keeping can feel overwhelming even for a very financially literate member.

Financial Reporting

To be able to make informed decisions about your HOA’s finances, the board needs regular reporting. These reports summarize all of the bookkeeping to give an accurate picture of the HOA’s overall finances.

The board relies on these reports, usually produced monthly or quarterly, to be complete and accurate. Moreover, they must be accessibly presented so that everyone can understand the material.

Maybe you have a board member who has chosen to dive in and take care of the general bookkeeping. Do they have the time and experience to create useful, understandable, and accurate periodic financial reports?

These reports are not optional. The board needs them to understand the HOA’s financial situation and take any actions necessary to keep it healthy and controlled.

Yearly Audits

Your HOA board also needs a yearly financial overview, sometimes called an audit. These are the reports that discuss your HOA’s goals and budget. They give board members a complete look at whether the budget was on target, look at future projects, and dive into budget preparations for the coming year.

Let’s look back at the member who decided they could handle the bookkeeping. Maybe they’re the board treasurer. Now they are responsible for not only the day-to-day record-keeping but several sets of reports.

Those reports need to be accurate, comprehensive, and accessible to every member of the board, no matter their financial background.

Your board member, who was already frazzled with general bookkeeping, has now taken to begging for just one full night’s sleep. And we haven’t even started talking about…HOA taxes.

Taxes

Nobody wants to do their taxes. Can you imagine asking a neighbor, someone who probably considers you a friend, to take on an extra set of taxes? That’s exactly what needs to happen if you have a board member handling your HOA finances.

Not only are they unlikely to be a CPA, but they’re also probably getting resentful of the amount of work they’re doing. Like you, they came into the HOA board thinking that it would be great to contribute to the community.

Now they can’t wait for the day when someone else takes over this enormous workload.

Hiring a Professional

Even the most frugal of HOA boards needs to consider hiring a professional bookkeeper or HOA accounting service. Keeping every financial record, document, report, and tax return accurate is too much work for a board member.

In addition to being a recipe for resentment, having a board member handle finances for an entire community is a lot of pressure. As we mentioned before, your board members are unlikely to be financial professionals. This job is complicated and mistakes are costly.

If you’re fortunate enough to have a financial professional on your HOA board, don’t expect them to do this job for free. Imagine working all day and coming home to…a whole evening of more work, done free of charge.

HOA bookkeeping services supply the records and reports your HOA board needs to make the best decisions for your community.

Here are just a few of the benefits of hiring a bookkeeper or accountant to handle your HOA finances.

• Accuracy. Your bookkeeper or accountant has the training and experience needed to manage ledgers and statements.
• Accountability. When you pay for a service, the professional expects to be held accountable for the quality of their work.
• Consistency. Your HOA financial professional will design a consistent system so your board members know what to expect from reports and audits.
• Accessibility. A trained professional has the skills necessary to explain complicated finances to every board member.
• Taxes. This is self-explanatory. You will never be more grateful to have hired a professional than at tax time.

In all likelihood, you enjoy the projects you take on and feel good about your contribution to the community as an HOA board member. You’ll feel even better after you hire an HOA bookkeeping service.

You’ll come to see your financial professional as a valued part of your HOA team, making your life easier with their expertise. HOA board members provide many services of great value to their communities. They don’t need to try and be financial experts as well.

Decrease your stress and increase your peace of mind with a professional HOA bookkeeping service. You won’t regret the investment.

Talk with us about how Homey Bookkeeping can help your HOA today!