An HOA end of year checklist is essential in setting the tone for the new year. As December rolls to an end, board members are gearing up for what’s ahead. They must get the association’s finances in order, maintenance plan, renew contracts, and more. Without a checklist to keep everything structured, essential tasks can easily fall by the wayside.
What to Include in an HOA End of Year Checklist
Operations are winding down as December comes to a close, but that doesn’t mean the HOA board has nothing to do. In fact, this is the perfect time to plan for the new year. Come January, operations will pick back up again, and the board must make sure it’s ready.
Planning for the year ahead can be difficult without the right approach. To ensure the HOA board doesn’t forget anything, it’s a good idea to create a structured list. Here’s what every end of year HOA checklist should have.
1. Set Goals
Every list should begin with objectives. This should detail what the board hopes to achieve in the new year. It could be breaking ground on a new project or completing an ongoing one. It could be getting more homeowners involved in committees or volunteer initiatives. Perhaps the board wants to get the reserves to a healthy level.
Whatever these goals are, it’s important to write them down. This will help board members plan what steps to take to reach these goals.
2. Plan Elections
Every HOA end of year checklist should include election planning. Board members should draft a timeline, beginning with when the elections should take place. From there, the board can work backwards and plot important dates, such as nomination deadlines and ballot distribution.
Complying with state laws and governing documents is crucial for elections. An HOA management company can help ensure elections go smoothly and according to procedural requirements.
3. Plan and Approve Budget
Budget planning begins long before the new year, as it involves extensive research and considerations. The board must take economic factors into account, plan for changes in vendor prices, and look at historical data. Anticipating costs and revenue takes time, so the board should start early.
An HOA management company can help with this, too. Professionals are well-versed in budgeting and projections, and they can bring this expertise to community associations.
4. Review Reserve Contributions
The HOA board must review its reserves to determine whether they remain at a healthy level. Board members should review their reserve study and update it as needed. Keep in mind that reserves should be at least 70% funded, if not fully funded. Contributions should also be incorporated into the budget.
An HOA management company can facilitate a reserve study update, whether it’s a full one or a simple review. Managers can also help determine how much the board must collect in monthly reserve contributions to ensure adequate funding.
5. Reconcile and Close Books
Every HOA year end checklist should include reconciliation and closing of books. This is an accounting practice that finalizes the year-end financial records. It involves verifying all transactions, resolving any discrepancies, and adjusting entries as necessary.
Most board members struggle with this area of accounting. If the association doesn’t have an accountant on retainer, it’s best to delegate the job to an HOA management company. A management company usually has an accounting department that can help reconcile and close the books.
6. Prepare Financial Statements
Board members must prepare year-end financial reports. These reports show the association’s financial condition. It is also from these reports that the board can adjust its budget and decisions. Additionally, boards must present these financial statements to homeowners.
Just like with every other financial task, an HOA management company can help prepare and present these statements. They can prepare balance sheets, income statements, cash flow statements, and more.
7. Prepare Tax Filings
While tax season isn’t until next year, it’s important to begin preparations now. An HOA management company can help prepare all financial records, complete Form 1120 or 1120-H, and maximize deductions. This ensures the association remains in good standing with the IRS.
8. Schedule Audits or Financial Reviews
Every HOA end of year checklist should include an audit or, at the very least, a financial review. This process involves checking all financial records to ensure accuracy. While an accountant or auditor can help with this, if the association already employs an HOA management company, their services typically include a financial review as well.
9. Review Insurance
Board members should review their existing insurance policies and check for any gaps in coverage. The board should also make sure that deductibles remain manageable and that its policies comply with state requirements and the governing documents.
An HOA management company typically maintains working relationships with insurance providers. They can get the best possible deal for the communities they work for, ensuring great coverage at reasonable rates.
10. Update Governing Documents
If the governing documents underwent changes this year, the board should ensure all copies are updated. Any amendments must be recorded with the county. Moreover, updated documents must be accessible to all owners. As with everything else, an HOA management company can assist with this, too.
11. Prioritize Maintenance
No HOA end of year checklist is complete without addressing maintenance. The board should inspect common areas to determine which elements require more attention in the new year. Then it should generate a maintenance schedule to ensure all aspects are cared for.
Board members don’t have to do this themselves. An HOA management company can conduct inspections or assign the task to vendors. Keep in mind that most companies maintain a network of pre-vetted contractors that associations can gain access to.
12. Renew Vendor Contracts
Boards must check which vendor contracts are set to expire or renew. If the board wishes to switch to a new vendor, it must cancel its contract with its existing vendor first. If the board wants to renew a contract, it is a good idea to open re-negotiations.
An HOA management company can help associations get the best deal. Managers can negotiate with vendors, ask for discounts, and ensure their contracts don’t include any unfavorable terms for the HOA.
13. Plan Calendar
As part of the HOA end of year checklist, the board should plot important dates and schedule events ahead of time. This includes social gatherings, annual meetings, and board meetings. By planning these dates in December, the board can get a jump on preparations for each event or meeting. They can also secure vendors, advertise the events, and notify homeowners early on.
14. Update Emergency Plan
Emergency plans can become outdated over time. To ensure they remain up to date, the board should revisit them annually. An HOA management company can help make necessary changes according to the community’s needs. They can also enhance the association’s preparedness, get feedback from residents, and consult with experts for advice.
15. File Annual Reports
Annual reports must always be included in an HOA board year end checklist. Many states require nonprofits to file an annual report with the Secretary of State. One example is North Carolina, where incorporated associations must submit an annual report.
Completing and submitting the annual report can be time-consuming and confusing. An HOA management company can help with this task, allowing the board to focus on planning.
A Handy Tool
While the new year signals a new start, things can quickly feel overwhelming for board members. To get a head start on important tasks and activities, planning should begin before the end of the previous year. An HOA end of year checklist promotes structure and ensures the board doesn’t forget anything.
Cedar Management Group provides effective management services to HOAs and condo associations, including insurance assistance. Call us today at (877) 252-3327 or email us at help@mycmg.com to get started!
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