For preparing proposed budgets that is. Annual budget preparation doesn’t have to be a chore. If you haven’t started the process for the annual billing for your association, now is the time.
First, review your contracts for services such as landscape maintenance, pool maintenance (if you have a pool) and retention pond maintenance. If the Board of Directors would like to check the existing prices against competitors, now is the time. If you’ve been unhappy with your service in the previous year, take the time to place your services out for bid. There’s a possibility that the Board could save the association money or improve the level of service provided. Once the Board has settled on contract services for the year, begin putting together your budget.
It’s not much different than a household budget. List your expenses, don’t forget the costs associated with being a business such as filing of state required forms each year (In Florida, its called the Corporate Annual Report), federal tax return (its best to have accountant handle this for you), costs associated with copying and mailing bills, newsletters, etc.
A significant factor to take into account is the number of delinquencies you plan to have for the year. In a perfect world, every association would be able to collect 100% of association fees. But, as you know, we don’t live in a perfect world. Plan to have at least 10% of your owners not pay their fees. For some communities, mostly starter homes, that number could be as high as 20%. Don’t leave the association short by not anticipating these delinquencies.
Most communities plan for an annual meeting at this time of year to present the proposed budget to the membership. Refer to your governing documents to see if there is a specific date required and if there is a specific time allotted for notification of the owners. Some associations require a 30 day written notification, others are mute on the topic. If your documents do not state a specific time, refer to your State’s requirement for non-profit entities or consult an attorney. For the State of Florida, the default notification is 14 days. Your state could be different. For condominiums, the rules are entirely different so please refer to your Declaration of Condominium for specifics.
In our next installment, we’ll talk about the HOA annual meeting and some things to expect.