Hi there, @spudster.
Allow me to share some insights on how to record reserves properly for a very small HOA company in QuickBooks Desktop.
When you collect dues, they are considered as income for that specific period, and you need to deposit them in a bank account. There's no need to create a separate bank sub-account. You can create an equity account with the reserve balance. That allows you to see how much has been set aside for reserve replacements but still keeps the cash in the savings account.
The proper way to handle reserves is to start by recording all dues from the homeowners as income. Then, make a journal entry that will simultaneously create an expense for the amount put into reserves and allocate those funds to a reserve equity account. That will offset the HOA's income since reserves are not taxable, but it will not have any effect on the bank account.
Here’s what to do to create Journal Entry:
- Go to the Company menu and select Make General Journal Entries.
- Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
- Select Save or Save & Close.
If they have a different bank account, then just transfer the amount after the steps above.
It can be challenging to keep track of transactions and use the appropriate account for the HOA company. Therefore, if you are unsure which accounts to use or how to track these transactions, I recommend seeking guidance from an Accountant. In case you don't have one, we can assist you in finding a ProAdvisor.
You can also use the information in this article for future reference: How to run and customize reports in QuickBooks Desktop
Please don't hesitate to reach back out if you have any other questions or concerns about properly recording reserves for a very small HOA company. I'll be here to lend a hand.
