With the right tools and software, you can master condo accounting tasks without spending too much time or energy on this key responsibility.
Using QuickBooks for condominiums
Date Published: September 30, 2020
Every successful business is supported by healthy cash flow. Though condominium corporations are considered not-for-profit organizations, they still need to generate revenue to operate well. Someone needs to keep track of profits and expenses to ensure there is enough money coming in to maintain the value of the property and ensure its longevity.
Good accounting is a must
Accounting is one very important part of caring for and maintaining any condo corporation. If you’re responsible for managing a condo corporation, you know that it’s not just good practice to keep accurate financial records; provincial and state laws mandate that condos must have certain reports and documents that demonstrate how much money is spent, how much is collected, what is available for emergencies, etc. This helps prevent any fraud or mismanagement of funds. Similarly, since the building belongs to owners, they have a right to see how it is performing. Part of the evaluation by owners of the performance of their directors is based on what the financial statements say about the directors’ conduct of the condo’s financial affairs. It’s important for them to have access to uniform and clear financial information so that they can have a real understanding of the fiscal performance of their corporation.
You don’t need to be an accountant
In a perfect world, every condo corporation would have a dedicated accountant to take care of the finances. But in the real world, that responsibility usually falls on property managers or board members. To best manage this ongoing task, property managers or boards may decide to use spreadsheets as a low-cost option to tracking expenses and profits, or they may invest in a more expensive all-in-one real estate accounting and management software. Depending on your situation, you may prefer one of those options, but QuickBooks is a happy medium that works for thousands of people.
QuickBooks for condos
Quickbooks is one of the most popular accounting tools for all types of businesses. However, small and mid-sized businesses have really gravitated towards the accounting software as it is robust, flexible and reasonably priced.
Property managers who already use QuickBooks appreciate that it has features specifically for:
- tracking income and expenses
- organizing receipts
- planning cash flow
- accepting payments
- bill management
The software is fairly easy to use; it was designed for people who don’t have an accounting background. QuickBooks will try to do as much of the heavy lifting for you as it can, but you can also make edits or adjustments if necessary. It also integrates with other software programs, and may work with the platforms you’re already using.
QuickBooks Online makes any place your place of business, meaning you can stay on top of accounting even if you aren’t on the property. Working online with the cloud accounting software means your data is always accessible, and any updates made on one device are automatically synced across all devices. You don’t have to worry about compromising security for convenience; QuickBooks prioritizes security and ensures that only authorized users have access to your data.
Accounting basics for condos
Different corporations may have different requirements and expectations, but all condos should have the following financial documents:
Think of a balance sheet as a snapshot of a corporation’s financial standing. A balance sheet shows the amount of money that is in the corporation’s bank account, along with any assets and liabilities. It gives you a general idea of how the condo is performing. Insurance payments, interest, and vendor payments are some examples of items included in the balance sheet.
A general ledger is essentially a list of the corporation’s financial transactions. The general ledger should include the date, description and balance or total amount for each account or category. It is often divided into a few main categories. These categories may include assets, liabilities, revenue, expenses, gains and losses. Main categories listed in the general ledger may be further divided into subledgers. A good accounting system will allow you to organize the transactions by category, date or amount.
Statements of Income and Expenses
While a general ledger shows a list of all transactions, a statement of income and expenses shows the corporation’s financial transactions that were made over a specific period of time. This could be a monthly, quarterly, or annual statement. Usually, people use a statement of income and expenses to identify revenue, expenses, and net income. This document is useful for instances where the board wants to see if the condo has adhered to its monthly budget or if it went over budget.
A cheque register keeps track of all of the cheques that a corporation writes. It usually has columns to include the dates, check number, payee, account names used, and the credit and debits associated with the transaction.
Accounts payable are amounts due to vendors or suppliers for goods or services received that haven’t yet been paid for by the corporation. The accounts payable list helps the corporation to properly anticipate its future cash flows.
Condos will require a regular financial audit to ensure that the corporation is in good standing (annual audits are recommended). The audit is conducted by a neutral accounting firm, with the help of the financials produced by the manager or the board. Here’s where it pays to have good accounting software. QuickBooks could produce the numbers needed for the audit in a matter of minutes. Putting these numbers together by hand could take hours or even days.
Best practices for successful property accounting
Now that you’re aware of all the accounting requirements, and the accounting tools that are available to assist you, you should be able to tackle accounting efficiently and confidently. Even though you’re not an accountant, these best practices can help you perform like one.
When managing their client’s money, most property managers are required to follow a strict set of guidelines. Don’t stray from these guidelines – they have been created for a reason.
Bank reconciliation helps you to find typos, duplicates, missing entries, and errors. It is a key step in maintaining accurate bookkeeping.
You work hard, and you should get paid on time. If you’re not in the habit of collecting your management fees on a regular basis, set up a calendar reminder. A regular schedule will help you to collect your fees which will ultimately help to keep your business in the black.
Without the help of quality condo accounting software like QuickBooks, doing accounting for condos can easily become a nightmare. Conversely, with the right tools and software, you can master accounting tasks without spending too much time or energy on this responsibility. Combine accounting software with reliable condo management software, and you’ll find that you’re doing a lot less manual labour and paperwork. Not only is online software good for the environment, it’s beneficial to your bottom line, too.