As a community association, it is essential to have a clear and concise budget for different projects. It’s a roadmap that outlines how the association plans to spend its money and ensure that the community’s finances are in order.
By having a well-thought-out budget, the association can ensure that its finances are in order and that all members know the association’s spending.
Here are some of the essential things you need to include in your community association’s budget:
1. Legal Fees
Every community faces legal challenges from time to time. Whether it’s a zoning dispute, a contract negotiation, or a lawsuit, having a fund to cover the costs of legal assistance can help ensure that your community can handle any challenge.
This shows your commitment to transparency and accountability. By being upfront about the potential for legal challenges and setting aside money to protect them, you’re sending a message that you’re prepared to deal with any issue that may come up.
Of course, no one can predict every legal challenge that may arise. But having a fund in place will help give your community the resources it needs to face whatever comes its way.
2. Reserve Funds
A reserve fund is a savings account that covers unexpected or significant expenses. It is vital to have one because it ensures that your community association can cover unforeseen costs without raising dues or assessments.
It is important to note that you should not dip into your reserve fund unless it is vital. This money is meant to be used in case of an emergency, so you should only use it if there is no other way to cover the expense.
3. Capital Improvements
This budget is used to fund projects that improve or maintain the common areas. From time to time, the association will need to make improvements to shared spaces. These should be included in the budget so they can be planned for in advance. Capital improvement projects can be expensive, but they’re often worth the cost.
Taxes are one of the necessary expenses of running a community association. They are usually a significant expense and one that is difficult to predict. By including taxes in the budget, the association can be sure they will have the funds available to pay their tax bill when it comes due.
There are a few reasons why you should include insurance deductibles in your budget.
First, deductibles help to ensure that your association has the money it needs to cover damages in the event of an accident or natural disaster.
Second, deductibles can help to keep premiums low. This indicates to your insurance company that you are willing to take risks yourself.
Lastly, deductibles can help ensure that your association has the money to cover repairs or replacement costs in case of common areas or amenities damage.
Community associations need to have a budget that includes all the necessary expenses. This will ensure that the association can function properly and provide its members with the services required. However, planning the community’s association budget can be too much of a hassle. You can contact experts to help you on this matter.
Here at California Builder Services, we know the significance of a solid and dependable HOA for the community’s betterment. We offer HOA budgeting services to help you achieve this. For more information about our service, feel free to contact us!