Money left over at end of year?

Heather,
How big is your developement and what type of buildings are you? Condo, stand alone homes, vills? Your excess is not that large and can be rebudgeted if done correctly. Never cut yourself too tight that a special assessment will be always near by.

We have 70 stand alone houses. The only common areas are strips of grass and small entrance signs (I've posted this part before). (no pool, playground, etc...)

Our budget for 2008 is $10,311.00. We started with $8806.56 last year in the checkbook and brought in $9159.85 (from dues, late fees, etc...) So, total assets of $17,966.41 but only spent so far $9265.13 from the budget. That gives $8701.28 surplus , leftover or whatever it is called (it is called "cash balance" on our budget spreadsheet). Out of that $8701, $7500 worth of CD's were purchased. Out of that 7500, 5200 is earmarked as the research. Maybe the "true surplus" is $10,311 {budget] less $8701.28 [cash balance] which would be $1609.72??

So the suggestion is all of this $8701.28 should go to reserve? Every year we just keep growing the reserve instead of helping to fund some of our committees (Activities, etc...).

Thanks for your help and patience as I'm clueless on this HOA stuff and trying to learn from this great site!!!

a non profit agency CAN HAVE unspent money at the end of each year. they simply roll it over to the next year. as long as you have a solid reason for building the money up, you will be okay with the IRS. I am sure you have reserves that could be built up, rainy day fund, or just operating expenses that are expected to increase next year.

non profits can't take profits out of the company. they can, in the short term, take "profits" as long as they expend them back into the organization.

(not a tax lawyer or anything, just common advice).

Heather, with no capital items to replace, I would consider reducing the assessments to prevent amassing so much in extra funds. There is nothing wrong with having a cushion; in fact many documents specify having X number of dollars in an operating account.

Have you checked your documents to see if excess funds are addressed? Before Ohio changed the law to allow us to place year end surpluses into reserves our documents specified that the excess monies would be returned to the H/O in the form of reduced assessments.

NL -please start another thread.

Heather - WHY did you START out with over $8,000 in the checkbook with a $10,000 budget?

Looks like this has been happening for a while.

SusanW1, what is your problem, I don't see you giving any sound advice.

Sorry NL - I thought you were asking a question to be the subject of another thread.

I wish people would use "Reserve Fund" and "reserves"

It looks like there is ONE checking account here that contains all funds. Perhaps taking this amount out and establishing a separate "Reserve Fund" with its own report would help to clear up confusion. Keep the annual operatiing funds in its own account.

Heather,

Sorry, I just saw this message you posted.

It appears to me you are very confused at what "surplus" or "money left over" means. At first I thought you were referring to the $2,500 CD that will come due in Nov as "money left over". Now, I'm not quite sure what you're referring to.

The amount of money in the checking account should not be shown on the budget as "income". Income only represents anticipated assessments and any other anticipated payments received by the assn. Any monies in the checking account can be used as a cushion or some of those monies can be transferred to a "reserve" (capital improvement) account. If the budget shows total income as $10,000 and total expenses as $10,000 (no surplus), but the actual income at year-end is $12,000 and the actual expenses are $11,000 that means there is $1,000 left over (excess monies or a surplus -- whatever you want to call it). The assn does not have to spend these monies. They can leave the excess in the checking account or transfer it to the reserve (capital improvement)account.