Are you unable to understand your accounting figures? Do you have trouble comprehending the financial reports? If you’re a self-managed association, it might be time to hire an HOA accountant. While board members are dedicated to managing their community, they often lack the expertise when it comes to handling the finances of the HOA. If you want to make sure your community runs smoothly, then you need a professional to make sure that the HOA’s finances are all in order.
The Benefits of Hiring an HOA Accountant
Here are the benefits of having an HOA accountant in your community:
1. Clean and Accurate Bookkeeping
An HOA accountant makes sure that your association’s books are clean and accurate. The association accountant keeps track of all financial matters and makes sure that everything is recorded properly. A management company with HOA accounting services will monitor all the money coming in and out of the HOA’s accounts.
Though this task might seem easy to do, it can become very overwhelming, especially if you are in charge of a large HOA. Board members who lack the expertise will have a hard time dealing with Balance Sheets, Income Statements, General Ledgers, and Cash Disbursement Ledgers.
By transferring all the financial tasks to the association accountant, the board can spend more time on other pertinent matters involving the HOA. Thus, the entire association will be able to benefit from the presence of an HOA accountant.
Having an accountant also ensures the proper use of HOA accounting software. Even though accounting software makes bookkeeping easier, a lack of expertise can still result in errors. Your community manager or accountant ensures that the HOA accounting software is used correctly.
2. Consistent and Complete Financial Reports
It is the duty of an HOA accountant to assess your financial situation and keep it under control. To help the community, the association accountant will prepare financial reports based on their bookkeeping. The HOA board can rely on the accountant to send these reports on a monthly or quarterly basis. Thus, the HOA board will have an easier time keeping track of the community’s finances.
The HOA accountant also ensures that the board members have a clear understanding of the financial reports. In some cases, the accountant can even attend association meetings to explain the financials to homeowners and answer any questions they may have. Based on these reports, the board can make better financial decisions that will improve the HOA.
3. Detailed and Comprehensive Annual Audit
Apart from the monthly or quarterly financial reports, an HOA accountant also prepares the annual audit of the association. Given the expertise of the accountant, the HOA board can expect a detailed and complete assessment at the end of each year.
The annual audit will present results from the current fiscal year. The HOA board will be able to see how the HOA’s actual income and expenses compare to the amounts they initially budgeted. The annual audit will also take into account upcoming projects that need to be considered for next year’s budget.
Apart from that, the HOA accountant will walk the board through important changes and possible recommendations detailed in the report. Thus, the HOA board will have all the information they need to prepare for the next fiscal year.
In cases where an independent audit is needed, the HOA will already have detailed and complete reports prepared by the HOA management company.
4. Help You With Taxes
One of the benefits of having an HOA accountant is that they can also help you with your taxes come tax time. They can advise you on tax-related matters and make sure that your HOA is complying with all the tax laws. When preparing your tax returns, the association accountant can also inform you of strategies that can lower the taxes that you need to pay for the HOA.
For example, should your community file as a corporation or an HOA? The accountant can inform you that the former comes with lower taxes, while the latter exempts several expenses. Based on the accountant’s advice, you’ll be able to make better decisions for your HOA. The money saved on taxes can be reallocated to more improvement or maintenance projects.
5. Guidance on Other Related Matters
Aside from basic accounting and finance, an HOA accountant can also help you deal with other related matters. For example, if the HOA has a new reserve study, the accountant can help the board members understand the report. They can explain funding options that the HOA can take and how this will affect their overall finances.
Similarly, if a community takes out an HOA loan, the accountant can help the board keep track of all the expenses. If a major project is underway, they can monitor how much money is spent and also keep track of all the loan payments.
In cases where the HOA board has made financial mistakes or misappropriated funds, the accountant can also step in and find appropriate solutions for the HOA.
Finding an HOA Accountant That Meets Your Needs
The services provided by an HOA accountant vary depending on the nature of your property. If you are a small townhome community, the board may be able to manage some of the financial matters. Thus, you’ll be able to get by with an outsourced accountant. However, make sure to choose an accountant that has expertise in HOA matters.
Meanwhile, if you are a high-rise condominium or a large gated community, outsourcing accounting for homeowners associations may be non-negotiable. Keeping track of everything will be too overwhelming for board members that do not have financial backgrounds. Thus, you can choose an HOA management company that will take care of all the accounting and finance needs of your community.
An HOA accountant can help your association greatly. They will keep track of all your finances, as well as provide you with advice or recommendations that will improve your community. However, keep in mind that the board is the one responsible for all matters regarding the HOA. You are responsible for the community, so you will also be the one to decide which suggestions from the HOA accountant will be implemented.