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

2. © Copyright 2004 ICLUBcentral Inc. – All rights reserved Who am I? Your Name Why you are here today

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

4. © Copyright 2004 ICLUBcentral Inc. – All rights reserved NCA2 and CA3 Compared Club Accounting 2Club 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

5. © Copyright 2004 ICLUBcentral Inc. – All rights reserved Pricing MemberNon-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.

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

7. © 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

8. © Copyright 2004 ICLUBcentral Inc. – All rights reserved Congratulations! You have been elected Treasurer of your investment club

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

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

11. © Copyright 2004 ICLUBcentral Inc. – All rights reserved Requirements RecommendedMinimum 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

12. © 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) Win95, Win98, WinME, Macintosh

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

14. © 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

15. © 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

16. © 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?

17. © 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?

18. © 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

19. © 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

20. © 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.

21. © 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

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

23. © 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)

24. © 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!

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

26. © 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...

27. © 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

28. © 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

29. © 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

30. © 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

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

32. © 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

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

34. © Copyright 2004 ICLUBcentral Inc. – All rights reserved A Year in Your New Club We’ll start in May, so we end with Tax Season

35. © Copyright 2004 ICLUBcentral Inc. – All rights reserved May Pre-meeting wizard Post-meeting wizard Backup your club’s data Go to Club Accounting

36. © Copyright 2004 ICLUBcentral Inc. – All rights reserved June Pre-meeting wizard Post-meeting wizard Edit transactions Backup club’s data Go to Club Accounting

37. © Copyright 2004 ICLUBcentral Inc. – All rights reserved July Pre-meeting wizard Post-meeting wizard Transfer money to broker Buy a security Backup club’s data Go to Club Accounting

38. © Copyright 2004 ICLUBcentral Inc. – All rights reserved August Pre-meeting wizard Post-meeting wizard Enter interest Buy more stock Enter merger Backup club’s data Go to Club Accounting

39. © Copyright 2004 ICLUBcentral Inc. – All rights reserved September Pre-meeting wizard Post-meeting wizard Sell stock Backup club’s data Go to Club Accounting

40. © Copyright 2004 ICLUBcentral Inc. – All rights reserved October Pre-meeting wizard Post-meeting wizard Enter stock split Backup club’s data Go to Club Accounting

41. © Copyright 2004 ICLUBcentral Inc. – All rights reserved November Pre-meeting wizard Post-meeting wizard Withdraw member Backup club’s data Go to Club Accounting

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

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

44. © 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

45. © Copyright 2004 ICLUBcentral Inc. – All rights reserved March Pre-meeting wizard Post-meeting wizard Backup club’s data Deliver tax forms Go to Club Accounting

46. © Copyright 2004 ICLUBcentral Inc. – All rights reserved April Pre-meeting wizard Post-meeting wizard Make sure you’ve filed your taxes! Backup club’s data Go to Club Accounting

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

48. © 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

49. © 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 Form 1065 - Schedule K-1

50. © 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

51. © 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

52. © 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/

53. © 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

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

55. © 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

56. © Copyright 2004 ICLUBcentral Inc. – All rights reserved Thank You from Your BetterInvesting Chapter and ICLUBcentral for your Participation