Three
features make community association homeownership different from
traditional forms of homeownership. One is shared ownership of common
land and shared access to common facilities. The
second is that by virtue of ownership of a home within the association,
the homeowner automatically becomes a member of a community association
and typically must abide by covenants, conditions, and restrictions
(CC&Rs). The third feature is that homeowners pay an "assessment"
(a regular fee that is used for upkeep of the common areas and other
services and amenities). These three features can lead to some unique bookkeeping and accounting requirements.
Homeowners’ associations are also in a unique tax situation. In
developing tax law for homeowners’ associations, Congress attempted to
treat associations as it would an individual homeowner. This led to a special tax rate and special form for associations, Form 1120H. Also uniquely, homeowners’ associations have the option to file a standard corporate tax return in lieu of the form 1120H. This may be advantageous for some associations, especially large associations.
Association Board and Officers are comprised of unpaid volunteers who are members of the association. Large associations have professional staff for operating and maintaining association assets and associated financial operations. Smaller associations rely on contractors and volunteers to do the work, overseen by volunteer board members. One particularly demanding job is that of treasurer. Fred
Stutsman C.P.A. is experienced in homeowners’ association accounting
and management and can help your association in several ways:
· Assistance with selection and set-up of a bookkeeping and accounting system
· Bookkeeping services, including collection of assessments and disbursement of payments for accounts payable. This can relieve the treasurer of transaction and bookkeeping tasks.
· Compilation of financial statements.
· Reserve fund development.
· Risk assessment and risk management, including review of insurance policies
· Tax returns, including selecting the proper form to file for your homeowners’ association.
Homeowners'