Every Society has its own budget and bifurcation of collection of maintenance from the society members. How much should be collected and under what Heads?
Charging society maintenance expenses to members under more specific heads is good instead of using an umbrella term for everything such as, ‘Maintenance charges’?
While making the Maintenance bill with proper heads, the managing committee should keep in mind that Bill is made as per Bye-laws and society members should be given a clear idea of all the services that they are paying for. It also shows transparency in handling Society accounts.
Thus, a Maintenance Bill should be prepared with proper heads so that each member knows if he has been charged correctly as per the laws laid down or not.
The first step is to make bills with proper heads. The Managing Committee members would need to prepare a budget. A Budget helps to understand the real financial health of a housing society. Hence, the Budget should be prepared at the beginning of every fiscal year.
What is a Budget?
A Budget is a financial document that reflects future income and expenses. It is a simple way to make financial information available to all members of the Society. It is easy to make and understand a budget Let us make one for your Society which will assist you to charge each member accurately as per the bye-laws.
First, make a list of major expenses that you have spent in the previous year, and find out what are the projected expenses for this year. For that, we will require the Income and Expenditure of the last 1 months or the amount spent on various services and utilities.
In the below table, we have expenses of the previous year and projected expenses of the current year. It is always advisable to consider and budget for a 10% rise in expenses to cope with any unforeseen or sudden hike in prices or an increase in service charges.
Expenses | Previous year | Current year(approx.10% Increase) |
Common electricity charges | 12,000 | 13,200 |
Water charges | 5,000 | 5,500 |
Lift maintenance | 30,000 | 33,000 |
Security charges | 7,20,000 | 78,000 |
General repair and maintenance | 1,00,000 | 1,10,000 |
Printing and stationery | 1,000 | 1,100 |
Audit fees | 2,000 | 2,200 |
Accounting charges | 10,000 | 11,000 |
Housing federation subscription | 500 | 500 |
Education cess | 120 | 120 |
Insurance | 7,500 | 8,250 |
Salaries and wages | 80,000 | 88,000 |
Miscellaneous expenses | 5,000 | 5,500 |
Total expense | 79,311 | 87,201 |
Now, let us consider the following information about ABC Co-operative Housing Society Ltd.
Before we split the bills of this Society into various heads, we need to know on what basis the various charges are levied as per bye-laws (refer bye-law no. 67, 68 and 69).
Instead of a monthly bill, if the Society prefers to give quarterly or six-monthly bills to members, then they can multiply the monthly amount into 3 or 6 months as applicable. Most Societies settle for a Quarterly frequency
Every Society should be financially organized. It is a one-time job to make a budget which would be very useful for the whole financial year. Managing Committee members should take up the responsibility and take the proper guidance of accounting procedures and split the maintenance bills into proper heads.
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