Most strata owners often tend to fail in managing their budget due to a lack of planning and understanding of strata by-laws in Sydney. To understand and manage your owners corporation operating budget you require in-depth knowledge and understanding of every aspect of strata law. Even a slight mistake or negligence can lead to major problems in your budgeting process and affect the strata fees of most owners. Therefore it becomes more important than ever to take services from experienced specialist strata lawyers in Sydney.
This article will focus on budget operations covering the crucial information and factors that you should be careful about during the planning and execution stage.
Let us first begin by understanding the operating budget in detail.
What is an Operating Budget?
A detailed projection of your owners corporation’s revenues and expenses over a period of time. These types of budgets help owners corporations set and achieve goals effectively and efficiently. One can also compare the estimation with actual results each quarter to keep track of records.
The operating budget mainly includes revenue, variable costs, fixed cost, non-cash expenses, non-operating expenses, and more. It is also important to note while preparing an operating budget you must take into account the changing industry and sector trends, new products and services, competitors behaviour, seasonal changes in sales, and changes in the economy.
Generally, the annual budget and strata fees are approved by the majority votes of strata lot owners at the annual general meeting.
- Capital Works Fund
A capital works fund is a fund for common expenses that generally occurs less often. These expenses can include the cost of replacing the roof, upgrading the elevator, repaving of paths, painting or repainting any part of the common property which is a building or structure, to renew or replace personal property, to repair or replace the common property and to meeting other expenses of a capital nature.
- Administrative fund
These funds are created for expenses that usually occur more often than once in a year.These expenses generally payments of the kind for which estimates have been made under section 79 (1) of the Strata Schemes Management Act 2015 (the Act), payments made in accordance with Division 1 on a distribution of a surplus in the fund, payments to a member of the strata committee of the owners corporation in accordance with the Act, other payments in connection with exercising its functions under this Act or the by-laws, or the Strata Schemes Development Act 2015, except payments that are permitted to be made from the capital works fund, any monetary penalty payable by the owners corporation under the Act and the the transfer of money to the capital works fund or to pay expenditure that should have been paid from the capital works fund. To learn more about operating funds you can contact our strata lawyers in Sydney NSW.
We hope by now you have a basic knowledge about operating budget and ways you can manage more. To learn more about strata law you can contact us today to book your appointment.
Disclaimer: This is commentary published by Pobi Lawyers for general information purposes only and should not be relied upon as specific legal advice. You should obtain your own legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article. The content of this article is subject to change.
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