© Copyright 2006 ICLUBcentral – All rights reserved Don’t Do That! By Daniel Abraham InvestEd 2007 Orange County, CA

© Copyright ICLUBcentral Inc. – All rights reserved Acknowledgement This presentation was developed by Dan Abraham Director of Technical Support ICLUBcentral, Inc. Additional material by Ira Smilovitz BetterInvesting NJ Chapter aide

© Copyright ICLUBcentral Inc. – All rights reserved Who am I? Dan Abraham –Director of Technical Support

© Copyright ICLUBcentral Inc. – All rights reserved Congratulations! You have been elected Treasurer of your investment club

© Copyright ICLUBcentral Inc. – All rights reserved Unfortunately… You have been elected Treasurer of your investment club

© Copyright ICLUBcentral Inc. – All rights reserved …do that! How do I know? This section tells you how to find out if this problem affects your club Don’t… The consequences If you don’t do anything about the problem, this is the price you pay How to fix This is what you should do Get your club back on track

© Copyright ICLUBcentral Inc. – All rights reserved …use obsolete software How do I know? CAO – you’re fine CA3 – updates automatically NCA2 or earlier – upgrade! The consequences Not up to date with current tax law Look forward to refiling your taxes and future upgrade woes How to fix CA3 – Adjust Settings to check for updates on startup NCA2 (or 1!) – Contact ICLUB at Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …forget to backup How do I know? Check your hard drive or floppy disk for *.ICF (CA3 or CAO) files. Check the date of the file! The consequences If your computer crashes, your data’s gone How to fix CA3 – File > Export CAO – Utilities > Backup Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …forget to enter your monthly valuations How do I know? Check Valuations (or Accounting > Security > Enter/Edit Valuations). There should be one each and every month The consequences Your unit value won’t change Any new units purchased will be incorrect Withdrawn members get paid the wrong amount How to fix Enter a valuation for every month for the life of the club Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …enter extra valuations How do I know? Check Valuations (or Accounting > Security > Enter/Edit Valuations). There should be only one each and every month The consequences Unit value changes too frequently Any new units purchased will be incorrect Withdrawn members get paid the wrong amount How to fix Delete extra valuations Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …forget to enter your Allocation How do I know? Check Allocations (or Reports > Allocation of Income and Expense) There should be one each year prior to this. The consequences You can’t calculate your taxes! How to fix Enter an Allocation for every year for the life of the club Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …forget to file your taxes How do I know? Check your paperwork. You should have tax forms for every year since your club started The consequences Consult your local IRS and state tax offices – they’ll tell you How to fix File returns, as described on the IRS web site, and your state’s web site Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …forget your Audit Committee How do I know? Check your paperwork. You should have a signed certificate from your club’s audit committee for each year-end. The consequences None…maybe. How to fix Make yearly audits part of your club’s operating procedures Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …guess about transactions Don’t… Money to or from a member? Yes Member Transaction Associated with a security? Yes Security Transaction Everything else? Yes Cash Transaction No

© Copyright ICLUBcentral Inc. – All rights reserved …enter member contributions as income How do I know? Check your members section and view the transactions. Every deposit should be recorded there The consequences Your members won’t be buying new units Your taxes will go through the roof How to fix Delete the income transactions and re-enter them as deposits Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …enter member withdrawals as an expense How do I know? Check your withdrawal report. Is the member there? The consequences The member didn’t leave the club, but their money did! They’ll stay on the books. How to fix Delete the expense. Enter the withdrawal under the member section Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …try to keep all members equal How do I know? Your members get upset if one member has more units than the others The consequences Headaches for you How to fix Understanding the unit value system Why "Everyone is an Equal Partner" Doesn't Work by Herb Barnett - Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …pay out members based on old reports How do I know? Your withdrawal report doesn’t match your checkbook The consequences You’ll pay out the wrong amount How to fix Print out the withdrawal report If you paid too little, send them the cash If you paid too much, enter an adjustment Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …withdraw a member on a day with any other transaction How do I know? Withdrawn members show up again on reports The consequences Withdrawn members stay on your reports May have paid w/d member too much or too little How to fix Delete the withdrawal and re-enter it on a day with no other transactions Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …transfer units from one member to another How do I know? A member wants to give units to another The consequences May violate your Partnership Agreement May incur extra taxes or penalties How to fix Don’t transfer – withdraw Either partial or full Follow with member deposits for the amount Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved...get fancy if a member dies How do I know? You get a request to transfer units or pay someone other than the deceased member The consequences May violate your Partnership Agreement Can expose each of your members to lawsuits How to fix Don’t issue a check to the surviving spouse Follow your PA to the letter Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …enter a stock purchase as an expense How do I know? Check your Security Transaction History report. Is the stock there? The consequences The money left the club, but you didn’t get anything for it! You won’t be able to calculate your return on investment How to fix Delete the expense transaction Enter a buy security transaction Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …enter a stock sale as income How do I know? Check your Security Transaction History report. Do you still own shares? The consequences You will be taxed on the full sale proceeds, not the capital gain Your taxes will go through the roof How to fix Delete the income transaction Enter a sell security transaction Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …invest in unusual securities without weighing the overhead for your Treasurer How do I know? Does your club own REITs, Partnerships, Royalty Trusts, or real estate? The consequences More paperwork than you want to handle May not be able to use the Tax Printer How to fix Do your research before you buy – find out the extra paperwork associated with these holdings Consider for your personal portfolio instead Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …create two separate stocks for separate purchases How do I know? Click on Securities. Are any stocks duplicated? The consequences Unable to calculate return How do you enter dividends? How to fix Delete the extra stocks Enter the additional buys under the original stock Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …invent ex-dividend dates How do I know? Your 1099-DIV lists different qualified/non- qualified than your club reports The consequences You’ll pay too much or too little in taxes How to fix Go back and fix the ex-dividend dates For more information: Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …hold on to a worthless security How do I know? Look at your valuation report. Has the stock been worth zero for several months running? The consequences You’re not realizing the loss How to fix Contact your broker to sell the stock Truly worthless? Enter the sale in the software Sell for $1, commission of $1 Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …forget the fractional shares How do I know? Your mergers, splits, and spinoffs never come out right The consequences The amount of stock you own with the broker doesn’t match what you have in the software How to fix Cash in lieu is for the sale of fractional shares. When you get cash in lieu, include the entire amount of the stock, including the fraction Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …confuse a Money Market Account with a stock How do I know? You enter deposits as buys for $1/share You enter withdrawals as sales for $1/share The consequences Confusion with qualifying dividends Many extra transactions on Schedule D of your tax return How to fix Make a new Cash account called Money Market Sell the Money Market stock at $1/share, putting the money from the sale into Money Market acct Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …mix up deductible and non-deductible expenses How do I know? Edit an expense you’ve entered and ask yourself “Is this necessary to operate as a club?” The consequences Over- or underpaying your taxes How to fix Edit the expense. If it is necessary for your club, select deductible. For more information: Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …try to apply club expenses to a single member How do I know? You try to enter an expense for one person The consequences The money gets taken from the entire club What about a bounced check? It’s a club expense Enter the member’s reimbursement as a fee Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …(ab)use Petty Cash How do I know? (NCA2) Do you use PC for deductible expenses? Do you use PC to pay your operating expenses? The consequences You’re paying too much in taxes You’re doing far too much work How to fix (NCA2) Use PC for non-deductible expenses Don’t keep a separate cash account for operating expenses Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved …collect fees to offset an equally-allocated expense How do I know? You have an equally-allocated expense and a fee matching that expense The consequences Newer members are unfairly burdened How to fix Keep the expense as equally-allocated Delete that fee, make it a payment instead For more information: Don’t…

© Copyright ICLUBcentral Inc. – All rights reserved Make it easy on yourself Have an assistant Treasurer For additional security, break up duties 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 …but please DO

© Copyright ICLUBcentral Inc. – All rights reserved Where to get accounting help ICLUBcentral Technical Support Accounting Manual The Handbook for Investment Club Accounting Local Chapter contacts Treasurers List BI Wiki

© Copyright ICLUBcentral Inc. – All rights reserved Where to get software help Software manual ICLUBcentral Technical Support (9:30 AM to 6:00 PM Eastern Time) Treasurers List BI Wiki Local Chapter contacts

© Copyright ICLUBcentral Inc. – All rights reserved Technical Support ICLUBcentral’s Technical Support handles all your accounting and software 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 ICLUBcentral Inc. – All rights reserved Technical Support Web-based Support Telephone Support :30 AM to 6:00 PM Eastern Time Monday through Friday Renew your Maintenance Agreement Call ICLUBcentral at

© Copyright ICLUBcentral Inc. – All rights reserved This was Seminar ID: IE7121 Please take a few moments to complete your Seminar Evaluation Form Thank you!