Setting Up Your Chart of Accounts for a Condo Corp
Introduction
Section titled “Introduction”A chart of accounts is the backbone of your financial records. It’s the organized list of every category used to track money coming in and going out. Getting it right from the start saves enormous headaches later.
Why it Matters
Section titled “Why it Matters”A well-structured chart of accounts makes it easy to produce meaningful reports, prepare budgets, and satisfy auditors. A poorly structured one creates confusion, misclassified expenses, and reports that don’t tell you anything useful.
The Fund Accounting Structure
Section titled “The Fund Accounting Structure”For a condominium corporation, your chart of accounts needs to reflect fund accounting from the ground up. Your operating fund and reserve fund each need their own revenue, expense, and balance sheet accounts, clearly separated in your numbering system.
Standard Structure
Section titled “Standard Structure”- 1000s — Assets: Operating cash, reserve fund cash, investments, receivables, prepaid expenses
- 2000s — Liabilities: Accounts payable, prepaid condo fees, loans payable
- 3000s — Net Assets: Operating surplus/deficit, reserve fund balance
- 4000s — Operating Revenue: Condo fees, late payment fees, interest income
- 5000s — Operating Expenses: Management fees, insurance, utilities, maintenance, landscaping, snow removal, accounting fees, legal fees
- 6000s — Reserve Fund: Contributions in, expenditures out by component
Keep it Simple
Section titled “Keep it Simple”Don’t create an account for every possible scenario. Start lean and add accounts only when you have a real, recurring need for them.
Disclaimer: For general informational purposes only. Not legal, financial, accounting, or tax advice.