Learning Club Accounting By Instructor Contact information Better

Who am I? Your Name Why you are here today © Copyright 2004 ICLUBcentral

Welcome to Club Accounting © Copyright 2004 ICLUBcentral Inc. – All rights reserved

NCA 2 and CA 3 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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Pricing Upgrade New User Member Non-member $99 $149 $169 $219 • NOCA subscribers who own NCA 2 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 CA 3 in the club • Upgrades are from NCA 2 to CA 3. NCA 1 customers purchase a new user copy. © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Maintenance 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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Congratulations! You have been elected Treasurer of your investment club © Copyright 2004 ICLUBcentral

What will you use? • By Hand • Paid outside consultant – Bookkeeper – CPA • Using a Computer – Spreadsheet Program (Excel, Lotus, etc) – Club Accounting Software (CA 3) – Online Club Accounting (NOCA) © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Club Accounting 3 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Requirements Recommended • Windows XP • 1 GHz Processor • 256 MB RAM • 20 MB Drive Space • CD-ROM Drive • Internet • 1024 x 768 screen Minimum • Windows 2000, Windows XP • 600 MHz Processor • 128 MB RAM • 20 MB Drive Space • CD-ROM Drive • Internet • 800 x 600 screen © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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) • Win 95, Win 98, Win. ME, Macintosh © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Equal Shares vs. Valuation Units © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

What Equal Shares doesn’t cover • A member’s late payment • Financial emergencies • Increased or decreased individual payments • Prospective new members © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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? © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Financial emergencies • Despite the best planning, emergencies happen • How does the partner remain equal? • If they cannot pay, should they leave the club? © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Increased or decreased individual payments • Some members can afford to pay more • Some members want to pay less • Life changes can force the decision © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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. © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

So what is a Valuation Unit? Net Asset Value ---------------- = Valuation ($) Total Number of Units • 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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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) © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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! © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Reviewing the Treasurer’s Duties © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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. . . © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Yearly Tasks FILE 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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Starting Your Investment Club © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Go to Club Accounting © Copyright 2004 ICLUBcentral Inc. – All rights reserved

A Year in Your New Club We’ll start in May, so we end with

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

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

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

August • Pre-meeting wizard • Post-meeting wizard • Enter interest • Buy more stock

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

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

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

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! © Copyright 2004 ICLUBcentral Inc. – All rights reserved Go to Club Accounting

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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

April • Pre-meeting wizard • Post-meeting wizard • Make sure you’ve filed your taxes!

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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-1 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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/ © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved

Technical Support • ICLUBcentral’s Technical Support handles productrelated questions • Must have two items • A licensed Club Accounting product • An active Maintenance Contract • Software updates • Online Stock Quotes • 12 months of Technical Support © Copyright 2004 ICLUBcentral Inc. – All rights reserved

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 © Copyright 2004 ICLUBcentral Inc. – All rights reserved