For those who do not quite understand accounting, managing a joint venture’s accounts can seem difficult. Whether you are a trustee or a member of a syndicate’s board of directors, having a basic understanding of accounting can help you manage a co-ownership more efficiently.
Moreover, once you know the challenges of managing the accounting of co-ownerships, you will be able to choose a management platform or software that actually helps you work. Comprehensive accounting software must have certain feature to be useful. For example, you need complete and detailed records and the possibility of viewing documents and of recording meetings.
In this article, we will discuss the specificities of co-ownership accounting management, and we will present tools that facilitate the process.
Keep a Record of Transactions
The co-ownership must keep a record of all its transactions. They should be classified properly to keep the accounts clear. They are usually distributed as such:
- Reserves, advances, subventions, loans
- Co-owners and third parties
- Financial accounts
- Expense accounts
- Income accounts
Classifying the transactions into accounts with similar transactions facilitates the management.
Bank Accounts
Since March 2015, Bill 16 requires that syndicates with more than 15 lots open a specific bank account to the syndicate of co-ownership’s name. This is a way to maintain greater transparency in the accounts.
Prior to this decision, property managers would place the entirety of the co-ownership’s funds in one account, which would make it difficult for the syndicate to know the real state of the accounts and to consult the bank statements.
Accounting Documents
The accounting consists of three essential documents, and it is the administrator’s responsibility to ensure that they are always up-to-date:
The accounting journal: accounts every transaction, with the date and the transaction number;
The general ledger: classifies the transactions into the accounts;
The balance sheet: summarizes the year-end account balances.
Moreover, the bookkeeping vouchers for every accounting operation must be kept. For example, the statements of income and expenses present the totals for revenue and expense categories for any given month.
The list of accounts payable contains every expense that the syndicate has not yet paid.
In this list, you will usually find the unpaid invoices and unfinished renovations, among others. The cheque register, which keeps a record of every cheque issued by the syndicate, is another important document.
Fiscal Year
The fiscal year lasts 12 months. The budgetary annuality has been in effect since 2007, when changes were made to make accounts more transparent. Beforehand, the fiscal period lasted three months, and the co-owners would pay the fees afterward. Now, the fees are collected in advance.
Double-Entry Bookkeeping
Double-entry bookkeeping also came into effect in 2007. Instead of recording transactions at the time of payment or of collection, one must now record expenses and revenues as soon as they are incurred or acquired.
Planning Budget
The planning budget’s purpose is to anticipate the co-ownership’s expenses for the next twelve months. It is a way to secure funds by charging the right fees to the co-owners. This annual document must be presented and approved during the annual meeting.
The co-ownership’s accounts will be approved by the co-owners during the annual meeting. The balances are compared to the previous year, and the co-ownership fees will be set according to the annual budget.
Integrated Accounting Management System
Given the complexity of co-ownership management, using co-ownership management software is highly recommended. Condo Expert, a user-friendly management platform, helps you manage your accounts receivable and payable, your supplier invoices, your bad payers, and your costs, and has an integrated accounting section, and many other features.
Moreover, thanks to this software, you can easily access your documents, record your reunions, and present your accounts. The data is updated in real time, and you can share access according to different permission levels. Thus, you can classify users and allow or prohibit access to some information.
Another great benefit of this software is that you carry out a bank reconciliation with an unlimited number of accounts. You can also access your data anywhere via a mobile phone, a tablet, or a laptop.
With Condo Expert, you can generate simplified reports and your cash flow, do your tax returns, and organize your work routine. The software is tailored to the Canadian and Quebecois markets and includes government forms.
Check the complete list of features and discover how Condo Expert has helped so many administrators.