For your first question, hoaprez3 is correct. You prolly do need to organize as a nonprofit corporation under state law.
As for your second question. yes HOA’s do need to pay and file tax returns. Just cuz you are incorporated as a nonprofit doesn’t mean yo0u’re automatically excempt from taxes. To qualify as a tax-excempt nonprofit, you must meet the IRS requirements under 501(c)(4). On a federal level most file Form 1120-H or 1120. State tax forms can vary so best to check that out your self.
Even though HOA’s don’t earn income in a conventional sense, they do still earn them in the form of dues and assessments. You also incur expenses like maintenance, landscaping, management fees, etc. Hopefully your income is enough to cover your expenses as well as have enough left for reserves. If not, you need to reexamine your budget.
Bottom line, you still do need to file federal returns even if you don’t owe any taxes.
To answer your questions, yes and yes. An HOA does need to be incorporated (usually a non-profit) most of the time. You also need to pay taxes since you’re still treated as a corporation.
I’m assuming you’re in the first stages of starting an HOA, which can be very difficult. Make sure you register with the proper agencies and have a solid declaration. You will also need to elect board members and they must thoroughly know your bylaws and covenants.
I find that many fledgling associations neglect insurance. Don’t make this mistake. Insurance is important and you should see to it that you have all the policies – a master policy, liability insurance, D&O, worker’s comp, crime and fidelity, etc.
It also wouldn’t hurt to hire a management company if you have the money for it. It’s going to make your life a lot easier, trust me.