You might think that you can plan your budget for the upcoming year based on the previous year's expenses. Just copy and paste and you're done, right? Well, not quite. While the previous year can provide a solid, general guide for planning purposes, you will need to consider possible changes in year-over-year expenses. Here are five items you don't want to forget about when drafting your condo board's budget for the coming year:
- Costs resulting from weather conditions: One of the most common items boards fail to remember is the weather. The fact is that no matter what the Farmer's Almanac says, you can't really plan for the weather next year. It's possible that there will be several blizzards necessitating additional snow removal, for example. Or a storm can come through and knock down trees, meaning you'll have to spend more on landscaping and cleanup. Ensuring your budget has sufficient wiggle room is essential when it comes to paying for these items.
- Taxes: Every year, taxes fluctuate based on changes at the local, province and federal levels. It's difficult to keep track of these on your own. Talk with an expert about how changes in tax law could have an impact during the next fiscal year. By doing so, you can accurately budget how much you'll need to set aside.
- Insurance deductibles: Just like the above items, emergencies and disasters don't follow any particular schedule. Fires and other catastrophes just happen. Be sure you know exactly how much your insurance company will cover versus how much you'll be on the hook for. Budgeting for a single event that affects the whole community, such as a flood, is a wise idea.
- Legal fees: Most years, you probably won't have much in the way of legal fees. However, you never know when someone might file suit against the condo corporation. Setting aside funds for legal expenses will help you avoid having to compromise other accounts in the event of a lawsuit.
- Reserve funds: Many condo boards consider reserve funds to be "extra," and they're often the first on the chopping block. However, these funds are crucial for covering unanticipated expenses. Not having enough in the reserve fund is a leading reason for why condo associations go into debt. Stay out of the red by setting aside plenty of reserve funds at the start of the budget process. If you don't end up using the money, you can always transfer it to the following year's budget.
If you have questions about how to best plan for your condominium corporations budget for the coming year, then the team at Imperial Properties can help. Imperial Properties has developed a strong reputation for sound, effective condominium and residential management in Western Canada. Our team is a leader in the field because we offer unparalleled management expertise paired with exceptional service, knowledge, efficiency and cost effectiveness to serve our diverse client base. Contact us today to learn more about how we can help you!