How HOA Bookkeeping services make a board member’s life easier

You decided to run for the board of your homeowners association (HOA), and you got elected!

Now the hard work begins.

You have to navigate the unique personalities on the board and the diverse voices you hear at meetings when homeowners speak on issues they’re passionate about. These issues often revolve around neighbor disputes, keeping the bushes maintained at just the right height, or, most commonly, the financial state of the HOA.

Your job as a board member is to prioritize the needs of the community while balancing the individual needs of each homeowner.

One aspect the board must oversee is how to spend the dues that everyone pays to the HOA. After all, it’s a community chest that helps keep things running.

But how does a volunteer board member keep up with all of these financial obligations? By seeking professional help, of course!

Let’s learn how HOA bookkeeping and accounting services can help make a board member’s life easier.

What Exactly Is HOA Bookkeeping?

HOA bookkeeping entails recording, classifying, and retrieving all financial transactions of the homeowners association. A bookkeeper compiles the information into reports and financial documents to see if the books are balanced and that everything is accounted for in terms of income and expenses.

Most HOA Board Members Aren’t Accountants

We are going to guess that most HOA board members aren’t accountants.

Do they understand credits, debits, outlays, margins, and receipts? Can they draw up monthly reports that everyone can agree upon that follow accounting standards? Even if you have a board member who excels at accounting, do they have the time to dedicate to keep up with these tasks every month as a volunteer?

A professional HOA bookkeeper will manage all of these aspects of your organization’s finances and make it easier and less time-consuming for your board members to review and make the best financial decisions for your HOA.

Takes Pressure Off of the HOA Board

When financial questions arise, a bookkeeper can answer them in the correct way. The monthly, quarterly, and yearly reports generated for the HOA can speak to the overall financial health of the organization.

Financial statements are more than just holding expenditures and collection of dues accountable. It’s also about setting budgets and project priorities for every month, year, and quarter.

When HOA accounting services shed light on the strength or weaknesses of the current state of the finances, it allows board members to make relevant decisions based on accurate reporting and facts.

Allows Board Members to Spend Time on Other Projects and Tasks

HOA board members’ time is valuable. Even if they are retired and don’t have a full-time job, everyone has priorities. If members of the HOA vote to have a bookkeeper or accountant work with the board treasurer, it will free up more time for the board members to devote to the approval and implementation of projects that members want.

Rather than worry about the minutiae of financial statements, which is left up to the HOA accountant, the treasurer can identify projects and priorities based on cost-effectiveness, budgets, time frames, and overall benefits to the community.

An Example of How Bookkeeping & Financial Reports Can Help

For example, the treasurer receives an accurate end-of-year report about the overall finances of the HOA. Due to the rise in property values and fewer vacant homes in the neighborhood, the annual report states dues and collections rose by 10 percent from the previous year.

As such, the board can now recommend additional projects for the HOA. Perhaps the automated entry gate is outdated and needs to be replaced after 30 years of use. Using monthly budgeting and dues collection projections based on the end-of-year report, the board determines that with a monthly budget and some financing, the HOA can afford to get a new entry gate costing $1,000 a month over 12 months.

Without accurate financial reporting and these budgeting insights, that proposal might not bear fruit.

HOA Accounting Helps to Identify Areas for Growth

Accurate accounting for HOAs, when performed by a bookkeeping expert, helps the board identify areas for growth when members receive an honest assessment of the organization’s finances.

The board routinely takes ideas from members. HOA bookkeeping and financial reporting can spur ideas from members as to what projects to improve or start.

Actually Reduces Overall Costs

Budgeting for future projects can lead to overall beautification projects that stay within a budget. If there are payments that aren’t made, the HOA may end up spending more in late fees and interest than it would cost to hire an outsourced account to make sure it never happens.

An HOA accountant is like having financial peace of mind to prevent costly errors.

Even though the monthly costs and line-item budget for an HOA bookkeeping service may seem like an extra expense, in the long run it actually saves money by helping to prevent cost overruns.

With the advice and reporting of an accountant, HOA board members can then approve projects that don’t cost too much.

Plus, a third-party HOA accountant does not play politics, take sides, or know the nuances of the personalities involved in the association. The bookkeeper simply sees the numbers, assesses them, and makes accurate reports.

There is no infighting when it comes to a third-party observer for a self-managed HOA.

Assists Taxes & Dues Collection

As an established organization, an HOA may have to pay some kind of taxes, depending on the legal framework and location of the HOA.

To survive, an HOA must also collect dues on a regular basis.

A homeowners association bookkeeping service assists with the organization’s taxes while identifying the best way to collect dues. How often should the HOA collect? How much? Should the HOA set aside money for taxes every month or quarter? How much disposable income does the HOA have every month? Can the HOA afford to get financing for certain projects?

An HOA accountant can help answer these questions and more.

How to Hire an HOA Accountant or Bookkeeper

As with anything, shop around. Ask for recommendations. Leverage any relationships that current homeowners have with any accountants or bookkeepers in town. Maybe one of the homeowners has had an accountant for 30 years and they can help run the HOA’s books at a discount.

Looking for a place to start? Learn more about how Homey Bookkeeping can reduce the accounting and financial burden on your HOA today.

Managing an HOA is hard enough… so why make it harder? Leave the accounting to the professionals so you can focus on taking care of your home.