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Why Accrual Accounting Is the Best HOA Accounting Method for your HOA
HOA accounting is among the most complex tasks in HOA management. In any case, it involves tracking, recording, and reporting the financial activities of the community. Sound financial management is critical to ensuring the fiscal stability of the association. While HOA accounting can be daunting, understanding the basics of the different HOA accounting methods can…
Understanding HOA Tax Returns
Many people assume that since homeowners associations (HOAs) are not-for-profit entities, they have no obligation to pay taxes. Nothing could be further from the truth. While HOAs are nonprofit organizations, the IRS requires them to pay taxes and file tax returns. Here is everything you need to know about HOA tax returns. What Is an…
Nonprofit Accounting 101: How Many Steps Are in the Accounting Cycle?
Whether running a nonprofit or for-profit organization, understanding the accounting cycle is critical for any company. This holistic process comprises a sequence of steps that identify, track, analyze, and record the financial activities of your nonprofit. The goal of an accounting cycle is to protect your company’s assets and financial health. It also makes financial…
How to Analyze HOA Financial Statements
Homeowners association boards comprise elected volunteers. Board members have various roles in the running of the community. However, some HOA board members might not have adequate expertise or experience to interpret or analyze complex HOA financial statements. Understanding the basics can help an HOA keep track of the association’s fiscal activities and ensure accountability. Whether…
What Are HOA Reserve Funds?
Homeowners associations (HOAs) usually collect monthly or annual fees from members to help run the community. The collected funds go toward maintaining common areas and upgrading community facilities. Aside from dues, most HOAs have reserve funds. While establishing a reserve fund is not mandatory, doing so can go a long way to help the community…
How Can Homeowners Request HOA Financial Reports From Their HOA?
Living in an HOA community can be a fulfilling experience. Residents get to enjoy regular maintenance of common areas, enhanced safety and security, and an increased level of community engagement. HOAs also ensure proper enforcement of local laws and ordinances. However, one question remains. Can homeowners request HOA financial reports? Let’s find out. Can Homeowners…
When to Conduct a Forensic Audit of an HOA
A homeowners association is a legal entity that manages a community’s operations and resources. It comprises elected board members who are typically volunteers selected from the community. They play part-time roles and do not derive a salary for their work. That said, electing board members with limited experience and expertise in community development and financial…
How to Handle Unfiled HOA Tax Returns
The IRS classified homeowners associations as corporations. For this reason, HOAs must file tax returns at the end of their financial year unless they have a tax exemption status. However, filing tax returns can be complex and overwhelming, even for small HOA communities. Many associations owe the IRS unpaid taxes because of unfiled HOA tax…
Quick Guide to Florida HOA Audit Requirements
Proper financial management is critical to the success of a homeowners association. However, many HOAs rely on volunteers rather than experts to oversee day-to-day operations. For this reason, financial irregularities might go unnoticed. Conducting an HOA audit can help detect fraud and discrepancies in financial reporting and improve transparency. It allows the association to strengthen…
What Is the Difference Between Form 1120-H and 1120?
Homeowners associations file annual tax returns like any other registered corporation. The only difference is that HOAs have distinct taxation laws with different rates. When filing tax returns, your association can select from two filing methods—Form 1120-H or Form 1120. Interestingly, an HOA can switch from one filing option to another each financial year. Each…