How Are My HOA Assessments Being Spent?January 1, 2019
Why Compliance is a Smart Strategy to Protect Property ValuesJanuary 16, 2019
Accruals, IRS forms, and more!
Besides closing out the books for 2018, HOA accountants perform some other important tasks to keep your financials in good order and keep your HOA in compliance with federal regulations.
- Big deposits from assessment payments account
for large cash flows. More than 95% of CMA clients have an assessment due
date on January 1st. Accountants monitor association bank accounts so
that they don’t exceed the FDIC limit of 250k per institution. When
payments come in, CMA transfers funds to interest bearing accounts. CMA
staff open an additional association account with a different bank in order to
stay under the FDIC limit.
- It’s also time to accrue for Federal
Income Tax based on the investment income earned during 2018. CMA
accounting calculates the estimated
amount that needs to be accrued. The association’s tax preparer
calculates the final tax amount when the taxes are actually filed and reports
the amount to accounting. The accrued dollar amount should cover the tax!
- Accountants try to fully accrue for all
expenses to limit audit entries down the road. For example, they
typically make sure landscaping, pool contracts, security and all utilities are
accrued. They also inspect invoices to spot items covering work/service performed
in 2018 that must be paid in 2019.
- All of the budgets that our managers
produce and Boards approved are reviewed and imported into our financial
management system so that the data is up to date for the new calendar year.
- All associations are required to file
1099s and the associated 1096 with the IRS by January 31 of each year.
And guess who reviews and prints those forms to be mailed to vendors and the
IRS? Our accounting team!
Isn’t it great to have a management company that handles these details for you?