If your association collects dues, it will be necessary to open a bank account in the name of the association. Do not deposit any association money in your personal account, even temporarily.
To open an account:
- Determine who will be able to sign on the account.
- Choose a local, preferably neighborhood bank.
- Apply for an Employers Identification Number (EIN) also known as a Federal Identification Number. This number identifies your corporation and enables you to open a bank account. An individual’s social security number should not be used to open the neighborhood association’s bank account.
To get an EIN/FIN:
- Contact the IRS either on-line or in person www.irs.gov.
- Fill out an IRS SS-4 form.
- An EIN will be issued immediately when the completed SS-4 form is turned in.
- There are several on-line companies that you can pay to file your EIN for you. This is really unnecessary as it is a simple and free process to do through the IRS.
- Take your incorporation paperwork, EIN Number and all signatories (those people who will be authorized to sign checks) to the bank to open the account.
- When officers change, make sure to get new signatory cards.
The association treasurer will be responsible for balancing the checking account and for giving the financial report at each meeting.
Keep bank records for seven (7) years in a safe, transportable box. It will be easier to transfer the records when you elect your new treasurer if all records are kept in an easily movable plastic filing bin. If electronic accounting systems are used, choose something that will easily transfer to a new treasurer. These financial records are the property of the association, not the individual, and as such must be shared with membership within reasonable request.
The person who writes the check should not be the person who signs the check. This creates a double set of eyes on each transaction and keeps everyone honest.