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bneater
June 29, 2023
Question

HOA Setup

  • June 29, 2023
  • 1 reply
  • 14 views

Greetings and thank you in advance for your assistance. I know there are some HOA Setup posts out there, and I've reviewed them, but I just want to ensure this unique situation is done correctly! So, apologies for any perceived redundancy, but i promise, it's unique!

 

I'm setting up the books for a 96 unit HOA in QBO. Ultimately, I'm seeking advice on the best way to map this out, customize it, etc. to ensure this is done correctly. There's a current treasurer keeping the books by hand and I'm being brought in to wave the digital wand and convert the masses!

 

Thus far, I've setup the following:

  • Entered the Property Addresses as Customers
  • Added the Resident Information as Sub-Customers to the associated property

 

NOW...here's the business they will be conducting and how they're conducting it...

  • They will collect monthly dues from each resident. The details are fuzzy here, but I believe that the residents can pay in the following ways:
    • Send a Check which is then processed by the Treasurer
    • Send a check/pay directly to the bank with a coupon. Theoretically, I will be able to connect to the bank to check the #'s and use it for QBs transactions.
  • The amount owed each month is the same for each resident (i.e. $100 X 12)
  • They don't have huge capital expenditures...they pay out to vendors for Lawn care, Cable, etc. usually on a monthly basis.
  • They want to be able to track income from dues against expected payments resident by resident 

 

WHAT I WANT CLARITY ON

  • Given this relatively easy and simple flow of $$, what is the best way to set up COAs? Money comes in from Dues, over to savings, then out to vendors.
    • Keep in mind, we want to show that $xx.xx came from Y resident and their balance is zero (?) or something like that. 
      • Initially, I think I set this up as a recurring PLEDGE?
      • How then does the mula come in, get credited to the right resident and then into savings for spending on vendors after???
  • Do I then set up recurring Pledges? Or, invoices?
  • Can I link the bank to then complete the above referenced action of correctly mapping to a resident account, and then into the gen fund. 

 

THANK YOU ALL AGAIN for any assistance you can provide! 

1 reply

A
Archie_B
Level 6
June 29, 2023

Hi there, bneater. I appreciate the effort in sharing those details. I'll explain how property management works in QuickBooks Online.

 

In QuickBooks Online, you have two options for recording income from residents or property owners. It depends on when you receive your payment. You can either record it as an Invoice if you expect to receive payments later or as a Sales receipt if you receive their payments right away.

 

In your case, what you initially set up as customers and sub-customers is correct. However, keeping track of transactions and using the correct account for property management can be tricky.

 

Thus, I recommend consulting an accountant for guidance if you're not sure what accounts to use, or how to track these types of transactions. If you don't have an accountant, we can help you find one in you: Find a ProAdvisor.

 

You can also use the information in this article as a reference:: Record transactions for a property management company. Although the steps in this article are specific to QuickBooks Desktop, you can use them to guide you in recording transactions for rental property and property management.

 

Let me know if you have any additional concerns or questions about customers or invoices. I'll be here to assist.

B
bneaterAuthor
June 29, 2023

Thanks Archie - It's good to know that I'll have support through the process. The only thing I'll add is that there is a treasurer - with what I have to believe is knowledge of accountancy given his prediliction for keeping the books by hand on a physical ledger. So, I anticipate there being an intentionality to the existent bookkeeping - I just want to think about what a typical setup would look llike in anticipation of what is either going to be shared or turned over to me. 

Keep in mind that there is some resistance to this switch over, but the project is being mandated by the Association Board. So, putting the political discussion aside, I just seek information such that I can be ready to work with whatever exists and build confidence in this transition throughout the process - because ultimately, it is he that will inherit these books! 

 

To piggy back off your reply - the Dues are received asynchronously. That is, residents are submitting their dues for 7/1 throughout the month of June - sending it to the bank, sending it to the treasurer, carrier pigeon - i don't know. But, suffice to say that throughout the month of June, money continually comes in for the July 1 due date. And then, when we get to 7/1, we Groundhog Day it and start doing the same for 8/1. Having said THAT, we all know that there will be residents who have paid 6 months in advance and some residents who will pay late. That's life. 

So, is the set up as a PLEDGE correct? And then, when we process the payment - are we sending a receipt because we're processing it at that time, whatever that time is??? And, what is happening behind the scenese in the journal, re: money flowing to accounts. 

Thanks again!

BN

Rainflurry
Rainflurry
Level 11
July 9, 2023

First-  thank you, from the bottom of my heart for the great info. It has been invaluable. In the interest of continuing this discussion and establishing a great guide for future folks in this position (in addition to the wonderful resources noted already)...

 

I've attached our COA - thus far.

 

if I've interpreted correctly - when money comes in via bank (C- A/R, D+ 105 Checking), or in Person (C- A/R, D+ 101 UF). When money goes to bank (C- UF, D+ 105 Checking).

 

Now, from 105 Checking - to pay bills - what should happen. The structure exists from when a management company had their books, so I dunno how much of this is necessary. But, should the money move to Equity Accounts, or to Expenditures, based on bills?

 

SECOND QUESTION - This is a QBs specific. If I want to set up Recurring Transaction Pledges for all residents each month...should it be a recurring transaction or batch pledge? It's actually remarkably simple, 96 residents, each one due on the first, for $162. In Recurring transactions, it looks like it's just a template.

 

How can I quickly make a template that is applicable to all 96 properties...AND, let's say I need to adjust the amount to $168 in two years - NOT have to do it 96 times. 

THANKS!


@bneater 

 

if I've interpreted correctly - when money comes in via bank (C- A/R, D+ 105 Checking), or in Person (C- A/R, D+ 101 UF). When money goes to bank (C- UF, D+ 105 Checking). 

 

Correct.

 

But, should the money move to Equity Accounts, or to Expenditures, based on bills? 

 

The income account assigned to the Product/Service on the resident's recurring monthly pledge (invoice) determines where the dues are recorded when billed (if accrual basis) or paid (if cash basis).  The Category assigned to the bill determines the expense account.  The receipt of payments on pledges and the issuing of payments for bills does not determine the income or expense account, that is the function of pledges and bills.  On the COA that you attached, all of those equity accounts (like street resealing) appear to be for long-term fund reserves.  IMO, you want to assign all of the monthly dues to your revenue account and then move the appropriate amount of funds to those reserve accounts per your HOA's agreement for reserve funding.  That way, all 96 pledges are recorded solely as revenue which makes them much easier to edit when dues increase. 

 

.should it be a recurring transaction or batch pledge? It's actually remarkably simple, 96 residents, each one due on the first, for $162. In Recurring transactions, it looks like it's just a template.  How can I quickly make a template that is applicable to all 96 properties...AND, let's say I need to adjust the amount to $168 in two years - NOT have to do it 96 times.

 

There are plusses and minuses to both IMO.  A recurring transaction automates the sending of the pledges but you will need to update all 96 recurring transactions when dues increase.  Batch transactions cannot be recurring (as far as I know) so you will need to select all 96 residents each month when you send out the batch.  However, you will only need to update one pledge when dues increase.  Also, I believe batch transactions can only be done in QBO Advanced

 

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