Homeowners associations (HOAs) are nonprofit organizations, meaning they operate with no intention of generating a profit. The funds collected by the association cater to the welfare of the community. Given the financial complexities involved with nonprofits, many HOAs turn to bookkeepers and accountants to handle their finances. This guide explains who to hire between nonprofit bookkeepers vs. nonprofit accountants.
Differences Between Bookkeepers and Accountants
Nonprofit bookkeepers perform an administrative role in the finance department. They track all the daily financial transactions a nonprofit organization conducts. The bookkeeper records all collections and expenses, creates invoices, prepares balance sheets, and manages account balances. Some HOAs entrust bookkeepers to prepare budgets for the association.
In contrast, nonprofit accountants have a more significant role in managing the finances of a nonprofit organization. They use the data generated by a bookkeeper to analyze transactions and prepare accurate financial reports and statements. Accountants also perform more intricate tasks such as filing tax returns, auditing financial records, preparing budgets, and enacting sound economic policies to ensure the organization’s financial stability.
Accounting vs. bookkeeping might have striking similarities but differ significantly. While an accountant can provide bookkeeping services, a bookkeeper cannot be an accountant without proper certification.
Accounting vs. Bookkeeping in Nonprofits
Accountants and bookkeepers have distinct roles in a nonprofit setup. The only common denominator is that they both provide professional back-office support. While bookkeepers provide critical financial services to nonprofits, their role is limited. They do not have the expertise to prepare and file tax returns, analyze accounts, review financial statements, and conduct routine audits.
Accountants have the upper hand over bookkeepers. They review financial records, analyze transactions, create reports, determine an organization’s financial health, prepare books for audit, and file the appropriate tax forms. Most importantly, they can provide bookkeeping and accounting services in one package, meaning an organization does not have to hire a bookkeeper and accountant separately.
Who To Hire Between an Accountant and Bookkeeper
The appropriate professional to hire depends on the size of your association. If your HOA serves a small community, you may consider enlisting a bookkeeper for a start. After all, they won’t have much data to handle.
However, as your community grows, consider hiring an accountant. Keeping track of your finances can become overwhelming, and you may want someone with advanced experience in handling complex financial data.
Enlist Nonprofit Accounting Services
A nonprofit accounting service can help your HOA navigate the complexities of analyzing, preparing, and updating the association’s financial records. Abel Accountants offers expert financial guidance and reporting aligned to your bookkeeping and accounting needs. Contact us for a free community assessment.