As the end of the year quickly approaches, so does the time for homeowners’ associations (HOA) to begin preparing for the New Year by planning their annual budget. An HOA’s budget is a financial road map that is prepared at the beginning of the fiscal year, which estimates the community’s income and expenses for the year.
Here are a few tips for the proper planning of an HOA’s annual budget from your local HOA management company in Tampa:
At the beginning of the fiscal year, HOAs should take a thorough look at all the projects that are anticipated to be completed before the year’s end and prioritize the most important ones to be completed and paid for first. In doing this, HOAs can better manage assessment fees and project funds.
CALCULATE INCREASES IN EXPENSES
It is not uncommon for a community’s expenses to increase over time. Such expenses that typically increase year over year include utilities, accounting, and legal services. To ensure that the HOA budget is as accurate as possible, it is particularly important to take these increased costs into consideration.
REVIEW CONTRACTS WITH VENDORS
Vendors are an absolute necessity to HOA communities. From landscaping to maintenance of common areas and buildings, HOA communities rely heavily on the services of their vendors. To keep costs low, HOAs should review their vendor contracts and determine if there are any opportunities to reduce costs.
COVER INSURANCE DEDUCTIBLES
HOA communities should have a separate fund aside from reserves to cover insurance deductibles for the community’s insured property. To ensure that the appropriate amounts are set aside for this fund, it is necessary to review all of the community’s insurance policies and calculate the total amount needed to cover all of the policy deductibles.
CONTRIBUTE TO RESERVE FUNDS
Each year, the HOA should set aside a certain percentage of income in a reserve fund to be used for the repair, maintenance, or replacement of the components of the property for which the HOA has an obligation to maintain. Examples of such components can include roofing of community buildings, roadways, parking lots, and community pools.
If your community has yet to begin planning for the coming year’s budget, consider hiring a professional Tampa HOA management company to assist your community with this task. A professional HOA management company can assist your HOA board with properly planning a budget and making the best financial decisions for your community.