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© Copyright 2002 ICLUBcentral – All rights reserved Learning Club Accounting By Instructor Contact information BetterInvesting Event Location

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Page 1: © Copyright 2002 ICLUBcentral – All rights reserved

© Copyright 2002 ICLUBcentral – All rights reserved

Learning Club Accounting

By InstructorContact information

BetterInvesting

EventLocation

Page 2: © Copyright 2002 ICLUBcentral – All rights reserved

© Copyright 2004 ICLUBcentral Inc. – All rights reserved

Who am I?

Your NameWhy you are here today

Page 3: © Copyright 2002 ICLUBcentral – All rights reserved

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Welcome to Club Accounting

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NCA2 and CA3 Compared

Club Accounting 2 Club Accounting 3• Web application

• Windows 98, 2000, and XP

• Required helper programs to print

• Does not match NOCA

• No guided help

• Manual audit

• No reconciliation

• No exports, just cut and paste

• Desktop Application

• Windows 2000 and XP

• All printing is built-in

• Uses NOCA’s accounting engine

• Wizards for common tasks

• Automatic audit

• Reconciliation

• Export reports in Word, Excel, PDF

Page 5: © Copyright 2002 ICLUBcentral – All rights reserved

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PricingMember Non-member

Upgrade $99 $149

New User $169 $219

• NOCA subscribers who own NCA2 also get the member upgrade price of $99.

• Additional licenses, for a second treasurer, are $47• Covered under club’s current Maintenance contract• Purchase requires a Treasurer with CA3 in the club

• Upgrades are from NCA2 to CA3. NCA1 customers purchase a new user copy.

Page 6: © Copyright 2002 ICLUBcentral – All rights reserved

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MaintenanceMaintenance is REQUIRED

• Customer with maintenance• Updates – all IRS Tax changes• Automatic stock quotes• Technical Support• Club Accounting Online

• Customers without maintenance• No updates, stock quotes, or exports• Cannot save data

Page 7: © Copyright 2002 ICLUBcentral – All rights reserved

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Maintenance• New and Upgrade users get one (1) free year of

Maintenance

• This year is added to any existing accounting maintenance agreement

• Maintenance is $49/year

Page 8: © Copyright 2002 ICLUBcentral – All rights reserved

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Congratulations!

You have been elected Treasurer of your investment club

Page 9: © Copyright 2002 ICLUBcentral – All rights reserved

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What will you use?• By Hand

• Paid outside consultant– Bookkeeper– CPA

• Using a Computer– Spreadsheet Program (Excel, Lotus, etc)– Club Accounting Software (CA3)– Online Club Accounting (NOCA)

Page 10: © Copyright 2002 ICLUBcentral – All rights reserved

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Club Accounting 3

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Requirements

Recommended Minimum•Windows XP•1 GHz Processor•256 MB RAM•20 MB Drive Space•CD-ROM Drive•Internet•1024 x 768 screen

• Windows 2000, Windows XP

• 600 MHz Processor• 128 MB RAM• 20 MB Drive Space• CD-ROM Drive• Internet• 800 x 600 screen

Page 12: © Copyright 2002 ICLUBcentral – All rights reserved

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Requirements• Don’t meet the requirements? There’s a few

options:

• Upgrade• Windows 98 is 7 years old – an eternity• Windows XP is the proven standard

• Go online• Online Club Accounting (www.naic-club.com)• Win95, Win98, WinME, Macintosh

Page 13: © Copyright 2002 ICLUBcentral – All rights reserved

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Equal Shares

vs.

Valuation Units

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Equal Shares vs. Valuation Units

A club formed, intending to keep all members equal financial participants

• Worthwhile objective • Bookkeeping is simpler• Everyone has an equal say in the operation of the

club

There are drawbacks that may not be evident at first, but which become serious as the club matures

Page 15: © Copyright 2002 ICLUBcentral – All rights reserved

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What Equal Shares doesn’t cover• A member’s late payment

• Financial emergencies

• Increased or decreased individual payments

• Prospective new members

Page 16: © Copyright 2002 ICLUBcentral – All rights reserved

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A member’s late payment

Some members pay on time. Some do not.

Is it fair?

• Allowing the use of club money for an additional month (or more!)

• Granting the same benefits as members who pay on time?

Page 17: © Copyright 2002 ICLUBcentral – All rights reserved

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Financial emergencies• Despite the best planning, emergencies happen

• How does the partner remain equal?

• If they cannot pay, should they leave the club?

Page 18: © Copyright 2002 ICLUBcentral – All rights reserved

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Increased or decreased individual payments

• Some members can afford to pay more

• Some members want to pay less

• Life changes can force the decision

Page 19: © Copyright 2002 ICLUBcentral – All rights reserved

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Prospective New Members• Members paid $50/month for the last 5 years

• Should new members pay in $3000 to get started?• It’s even more – your club has been successful• The member needs to pay for your earnings, too

• Members can leave over time• Barriers to entry aren’t healthy

Page 20: © Copyright 2002 ICLUBcentral – All rights reserved

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Equal Shares vs. Valuation Units

• Equal is not necessarily fair • Equality is difficult to maintain• Equal shares can limit club growth• …and it’s just not necessary!

The Club Accounting software provides a standardized solution, making Valuation Unit

accounting relatively painless.

Page 21: © Copyright 2002 ICLUBcentral – All rights reserved

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So what is a Valuation Unit?• NCA uses Unit Value just like most Mutual Funds

use Net Asset Value

• It tracks of the value of 1 share or unit of the club

• Unit Value is set arbitrarily at the start of the club, usually $10/unit

• After the first valuation, the unit value changes based on the club’s transactions

Page 22: © Copyright 2002 ICLUBcentral – All rights reserved

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So what is a Valuation Unit?

• Keeps track of ownership in club• Changes by the amount of money invested or

withdrawn from the club• Value increases or decreases as the club’s

investments increase or decrease

Net Asset Value------------------------------- = Valuation ($) Total Number of Units

Page 23: © Copyright 2002 ICLUBcentral – All rights reserved

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Calculating Unit Value (An example)

• Initially, units are set at $10/unit• 12 people contribute $30/person to buy stock X

• Total = $360

• Since Unit Value is $10 => 36 total shares in club

• Then, the stock value goes up to $405• $405 / 36 shares = $11.25/unit

• If each member contributes $30 next month• Each member buys $30/$11.25 = 2.67 shares more

• There are now 68 shares in club (30+12*2.67)

Page 24: © Copyright 2002 ICLUBcentral – All rights reserved

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Calculating Unit Value• Every transaction is tracked this way:

• Dividends

• Buys

• Sells

• Withdrawals

• Interest

• Splits

• This quickly becomes a lot of number crunching

…but that’s why you’ve got a computer!

Page 25: © Copyright 2002 ICLUBcentral – All rights reserved

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Reviewing the Treasurer’s

Duties

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Your work follows the calendar

• Monthly• Deposits, valuations, print reports…

• Yearly• Close the books• Allocate income and expenses• File Federal and State taxes

• As needed• Spinoffs, mergers, splits, withdrawals...

Page 27: © Copyright 2002 ICLUBcentral – All rights reserved

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Monthly Tasks• Prepare for Meeting Wizard

• Add new members

• Member deposits

• Enter new transactions

• Reconcile books

• Security valuations

• Print reports

• Wrap Up Meeting Wizard• Add new members

• Member deposits

• Enter new transactions

Page 28: © Copyright 2002 ICLUBcentral – All rights reserved

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Yearly Tasks• Year-end Tasks Wizard

• Member deposits

• Withdraw members

• Enter final transactions

• Reconcile accounts

• Year-end valuation

• Print Reports

• Purchase Federal and State Tax Printer software

• www.iclub.com

Page 29: © Copyright 2002 ICLUBcentral – All rights reserved

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Yearly TasksFILE WITH IRS• Use Federal and State Tax Printer software• Obtain latest version for tax year• Verify all member SSN’s & Club Tax I.D.• Keep a duplicate for club records• Prepare 3 copies of Schedule K-1 for each member

• One copy of each to the IRS• One to each member• One of each for club records

Page 30: © Copyright 2002 ICLUBcentral – All rights reserved

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As needed• Members

• Withdrawals

• Securities• Buy / Sell• Dividends – Regular, Reinvested, or Money Market• Split / Merger / Spinoff

• Cash• Income / Expense / Interest• Charges by Company / Foreign Tax Paid• Charitable Donations• Cash Transfer

Page 31: © Copyright 2002 ICLUBcentral – All rights reserved

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Starting Your Investment

Club

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Startup Methods

• New Club • Starting from scratch• Use the New Club Wizard

• Existing Club • Gather your paperwork OR export your old data• Use the New Club Wizard

Page 33: © Copyright 2002 ICLUBcentral – All rights reserved

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Go to Club Accounting

Page 34: © Copyright 2002 ICLUBcentral – All rights reserved

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A Year in Your New Club

We’ll start in May, so we end with Tax

Season

Page 35: © Copyright 2002 ICLUBcentral – All rights reserved

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May• Pre-meeting wizard• Post-meeting wizard• Backup your club’s

data

Go to Club Accounting

Page 36: © Copyright 2002 ICLUBcentral – All rights reserved

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June• Pre-meeting wizard• Post-meeting wizard• Edit transactions• Backup club’s data

Go to Club Accounting

Page 37: © Copyright 2002 ICLUBcentral – All rights reserved

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July• Pre-meeting wizard• Post-meeting wizard• Transfer money to

broker• Buy a security• Backup club’s data

Go to Club Accounting

Page 38: © Copyright 2002 ICLUBcentral – All rights reserved

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August• Pre-meeting wizard• Post-meeting wizard• Enter interest• Buy more stock• Enter merger• Backup club’s data

Go to Club Accounting

Page 39: © Copyright 2002 ICLUBcentral – All rights reserved

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September• Pre-meeting wizard• Post-meeting wizard• Sell stock• Backup club’s data

Go to Club Accounting

Page 40: © Copyright 2002 ICLUBcentral – All rights reserved

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October• Pre-meeting wizard• Post-meeting wizard• Enter stock split• Backup club’s data

Go to Club Accounting

Page 41: © Copyright 2002 ICLUBcentral – All rights reserved

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November• Pre-meeting wizard• Post-meeting wizard• Withdraw member• Backup club’s data

Go to Club Accounting

Page 42: © Copyright 2002 ICLUBcentral – All rights reserved

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December• Pre-meeting wizard• Post-meeting wizard• Purchase Club

Accounting Federal and State Tax Printers

• Backup club’s data• Don’t do your taxes

yet…you don’t have all the paperwork!

Go to Club Accounting

Page 43: © Copyright 2002 ICLUBcentral – All rights reserved

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January• Pre-meeting wizard• Post-meeting wizard• Remind the club

when they’ll get their tax forms – in March

• Backup club’s data

Go to Club Accounting

Page 44: © Copyright 2002 ICLUBcentral – All rights reserved

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February• Pre-meeting wizard• Post-meeting wizard• Year-end wizard• Audit committee• Run the Tax Printer

software• Distribute forms and

reports to the club• Backup club’s data

Go to Club Accounting

Page 45: © Copyright 2002 ICLUBcentral – All rights reserved

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March• Pre-meeting wizard• Post-meeting wizard• Backup club’s data• Deliver tax forms

Go to Club Accounting

Page 46: © Copyright 2002 ICLUBcentral – All rights reserved

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April• Pre-meeting wizard• Post-meeting wizard• Make sure you’ve

filed your taxes!• Backup club’s data

Go to Club Accounting

Page 47: © Copyright 2002 ICLUBcentral – All rights reserved

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Audit Committee• Verify CA entries to Broker & Bank Statements• Compare Broker/Bank Statements with

Transactions (using the reconcile function)• 1099-B - Proceeds from Broker Transactions• 1099-Div - Dividends & Distributions• 1099-Int - Interest Income• 1099-Misc - Miscellaneous Income• 1099-OID - Original Issue Discount (Bonds)• Details of Buys / Sells / Mergers / Splits / Other

Page 48: © Copyright 2002 ICLUBcentral – All rights reserved

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Tax Printer• Pre-sales begin in December• Congress approves forms yearly

• Approved as early as November, as late as the beginning of February

• Software released AFTER forms approved• Watch the web site at www.iclub.com

Page 49: © Copyright 2002 ICLUBcentral – All rights reserved

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Federal Tax Information• 1-800-TAX-FORM (1-800-829-3676)• IRS Publications (www.irs.gov)

• IRS Publication 541 (Partnerships) • IRS Publication 550 (Investment Income &

Expense) • IRS instructions for Tax Forms

• Federal form 1065 (Partnership Tax Return) • Form 1065 - Schedule D • Form 1065 - Schedule K • Form 1065 - Schedule K-1

Page 50: © Copyright 2002 ICLUBcentral – All rights reserved

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Filing with the IRS• Use Form 1065 / Schedule K-1• Obtain latest version for tax year• Verify all member SSN’s & Club Tax I.D.• Keep a duplicate for club records• Prepare 3 copies of Schedule K-1 for each member

• One copy of each to the IRS• One to each member• One of each for club records

Page 51: © Copyright 2002 ICLUBcentral – All rights reserved

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Make it easy on yourself• Have an assistant Treasurer• Train the club members• Use the same valuation date every month• Limit the days members can deposit• Use consistent and fair rules for withdrawals• Use the wizards

Page 52: © Copyright 2002 ICLUBcentral – All rights reserved

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Where to get accounting help• BI Investment Club Accounting Handbook• Local Chapter contacts• BI Accounting web site

• http://www.betterinvesting.org

• Treasurers List• http://lists.better-investing.org

• BI Wiki• http://biwiki.editme.com/

Page 53: © Copyright 2002 ICLUBcentral – All rights reserved

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Where to get software help• Software manual

• http://www.iclub.com/support/downloads.asp

• ICLUBcentral Technical Support• http://www.iclub.com/support

• Treasurers List• http://lists.better-investing.org

• BI Wiki• http://biwiki.editme.com/

• Local Chapter contacts• http://www.betterinvesting.org

Page 54: © Copyright 2002 ICLUBcentral – All rights reserved

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Technical Support• ICLUBcentral’s Technical Support handles product-

related questions

• Must have two items• A licensed Club Accounting product • An active Maintenance Contract

• Software updates• Online Stock Quotes• 12 months of Technical Support

Page 55: © Copyright 2002 ICLUBcentral – All rights reserved

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Technical Support• Web-based Support

• www.iclub.com/support• Telephone Support

• 617-661-2582• 9:30 AM to 6:00 PM Eastern Time• Monday through Friday

• Renew your Maintenance Agreement • Call BI at 1-877-275-6242

Page 56: © Copyright 2002 ICLUBcentral – All rights reserved

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Thank You from

Your BetterInvesting Chapterand

ICLUBcentralfor your Participation