For an overview of the treasurerís job, your primary goal is to record all transactions, preferably in the order they occur, in the proper category.† At the end of each month, or the time specified in your partnership agreement, you create and save a Valuation of the clubís account, and print out Member Status reports, Valuation report, and a Journal report of the last couple of monthís transactions to give to the members and keep in your treasurerís notebook.†† On a monthly basis, you are also responsible for getting the deposit in on a timely manner.
Year end is a bit longer, as once youíve finished the normal month end tasks, you then do a Distribution of Earnings, (do an audit first if you use NCA) which prepares the clubís data for the tax reporting.†† You will also print out a year end copy of most of the reports in the software for the treasurerís books, and individual contribution records of the year for each member.†
Tax reporting is not the bugaboo you might think.† NAIC sells a Tax Printer adjusted for each yearís IRS requirements.† When everything is entered, verified by the brokerís 1099, and distribution done, it is just a matter of filling in club address information, punching a few buttons, and your printer spits out all the K-1ís and other documents you need to give to the members and send to the IRS. †The most time-consuming part of the deal is getting all those sheets printed.†† †
The only other infrequent task is to handle a member withdrawal.† Again, the software does it, you just want to be sure you enter it correctly.
For reporting at the meeting, not too much needs to be said beyond announcing the amount of cash available for purchasing, any upcoming expenses, and perhaps comment on the overall value of the club.†
Most banks/brokers give you deposit slips to use, and the address to which checks should be sent, follow their directions for how the checks should be made out.† Usually they will want your account number on the checks.† Make copies of the checks and deposit slip to keep in the Treasurerís notebook.† Be sure you understand your bank/brokerís procedures in clearing funds for check writing or stock buys, some have a hold from 7 to 10 days.† You do not want to make purchases or write a withdrawal check if the funds havenít cleared yet.†
In the software, there is a choice for posting money from members, go to either Accounting/Members/Deposit, or Accounting/Members/Member Fee.
There is a definite difference.†† Money entered to Members/Deposit buys units for that member.†† Money entered as Members/Fee does not.† The only times you should use Fees is for a penalty that applies to that member, for instance, a bad check or late fee if your club uses them, or Startup/initiation fee for a new member, if your club assesses one.† †While this money does not buy the member any units, it does raise the value slightly of all units held by all members.†† Payments are entered as of the meeting date at which they were received, even if you may not get it sent right away, or hold it up for a straggler.† As long as it is received by month end, it makes no real difference.† One warning; do NOT post member payments on a valuation date, or any other member transaction, like a withdrawal, on a valuation date.† It messes up the unit values if you do.† Unless your partnership agreement specifies differently, a suitable valuation date is the last day of the month.† This makes it easier to reconcile your brokerís statement with your records.
As a general note it is not advisable to use either petty cash or suspense, except suspense on rare occasions.† If you do have a separate bank account, then of course you would enter payments, expenses and income according to where it originated. †If there is an imbalance from previous entry errors, you can do a transfer in the software between bank and broker to reconcile.† †In the case of two accounts, your cash balance will need to be reconciled using both statements.
Dividends from securities are received usually every month from one company or another.† Dividends fall in two categories.† They can be Securities/Reinvested, or Cash Dividends.† †Cash Dividends are simple, go to the Securities screen, (not Cash), select the correct stock, use the date the broker received it, use the choice Dividend from the menu, and enter the amount.† You will note there is a field for the ex-dividend date.† You can click on the ĎWhatís this?í for a fuller explanation.† This determines whether or not that particular dividend payment qualifies for the reduced tax break for stocks held over 60 days before or after the ex-dividend date.† The brokerís activity statement does not give it, it gives you a date referred to as Shs Record date.† The ex-dividend date is actually two trading days earlier than the Shares of Record date.† You can either look at a calendar, or go to Yahoo Financial site, select Historical Prices, and select prices for Dividends for the stock in question.† The date shown there is the actual ex-dividend date.†† Itís rather immaterial if the dividend is on a stock youíve had a long time, and still have.† It makes a difference if you happen to sell a stock on the ex-dividend date, or if you buy and sell it without holding it over 60 days around that time.† It is best to get in the habit of putting it in regardless.
On Reinvested Dividends, there are more fields, and the information needed is found on the brokerís statement.† Besides date received, stock, dividend, amount, and ex-dividend date, you also need to fill in the fractional share of stock that this dividend purchased.† There are usually no fees or commissions for these transactions.†† The price will pop in automatically as you go.†† There are other types of returns on stocks shown on the menu. ††If the instructions are not clear, write the Club Treasurerís list.
While on the subject of Dividends, you will note a comment about Ďforeign tax withheldí. †If you hold a stock in a company that originates in another country, tax is withheld from the dividend they pay. †Go ahead and record the Reinvested Dividend as you would any other.† If you are doing it from the brokerís history on line, the amount they show as cash received is what you enter.†† If you are doing it from the statement, which shows the entire transaction, you will note the dividend is 10% more than received. †(Credit less debit on the statement) You record the lesser amount on the Reinvested Dividend screen, as that is the actual amount of money received.†† You enter the amount of tax only on the Securities/Foreign Tax Pd screen. †If you are using NCA, they ask for the combined amount. ††
Money Market Income
Another source of income, though small, is the interest/dividend on your money market accounts. The return from money markets can be considered either interest or dividend.† What they call it is what you post, as IRS treats them differently, and they report it to the IRS also.† Go to Cash Accounts/Interest or Cash/Bank-Money Market Dividend to post this income.† Be sure you donít go to Securities/Interest.†
Buying and Selling Stock
When you get the confirmation of a stock purchase or sale, available on-line, you will need to print out a copy for the treasurerís book.† In the software, go to Securities/Buy.†† Enter the date as of the Trade Date of the transaction found on the confirmation sheet.†† It is the same as the date you entered the order, and it is important that your records be the same as the broker in this regard.† Just fill in the fields as called for on the screen.†† Where Total Cost is called for, that is the figure shown as Net Amount on the confirmation, which includes charges.†† You may need to fill in a little on a security profile screen if itís a new stock, not just adding to a current stock.† Itís pretty self-explanatory.†
Entering a sale is pretty much the same.† The screen first asks for the Gross Proceeds, same as Gross Amount on the confirmation.†† The SEC fee referred to may be called Regulatory Fee on the confirmation, it is just a few pennies.††† You will find if you sold completely a stock that had a fractional share, the sale of it is reported separately, with no fees.† Just enter it as a separate sale.† If you are selling part of a stock that has been held for a while, with additional purchases or dividends, you will be shown a screen showing all the blocks we currently hold of it.† In general, select the oldest first to make up the amount sold.†
One other occasional entry is when a stock splits, or a company has a spin-off or merger.†† These sometimes require a little extra help.† Study carefully the instructions, and if you have questions, write the Club Treasurerís List at the NAIC Better Investing website.† From the home page, click on Help, then click on the ďI want to talk to other club treasurerísĒ sentence, this will take you directly to the sign in.† ††
Go to Accounting/Cash/Expense, and follow the instructions.† Any expense on behalf of the main business of the club is deductible.† If it is not, it shouldnít be in the books.† Hospitality and Social expenses should come out of your hospitality fund and never impact the books. The other choice is one that you want to be sure you select properly, about Distribution Method.† All general club expenses should be distributed by ownership share.† This includes the NAIC yearly renewal fees, even though the same amount goes in for each member, brand new or old, do it by ownership share.† Here is the reasoning.† Expenses reduce the value of each unit, so everyoneís value gets reduced the same percentage, even if some balances are much smaller than others.† If you distributed it by member, each memberís value would go down an equal amount.† There is very little the club spends that isnít for the benefit of the entire club for its record keeping, NAIC fees, training supplies, or portfolio.† For instance, our new members this spring had already paid a $100 fee that did not buy them units, but which increased the value of all shares held by all the members.† If you turned around and distributed NAIC fees per member, they would get a double whammy.† The whole club got the benefit of their initiation fee, so the whole club should share in their NAIC renewal.† This question of distributing various expenses by ownership share versus by member gets hashed over on the Treasurerís List frequently.† The more experienced voices say use ownership share throughout.†
Reports are easy, just go to the Reports Tab, select the report you want, and then where requested fill in the date span you want it to cover.†† The one twist to this is the Valuation Report.† You can look at and print a valuation report for any date you want, even on a daily basis.†† However, there should be a created and saved valuation only as of the date specified in your partnership agreement.† This saved valuation adjusts the unit value for the next monthís purchases, and is also used for a memberís value when they withdraw.† To create a valuation, go to Reports, select Valuation Report, on the screen you will see a line ĎTo create a new valuationí.† Click on that, fill in the proper date, then it takes you to a listing of your stocks, with prices popped in for the date you select.† Once in a great while, one or two stocks might be a penny or so different from the price shown on your statement for the end of the month.† You can manually change the price to agree with the broker, if you wish.† Then submit, and that saves it on the valuation menu.† From then on, you can look back at any monthly statement from this menu.† You should have only one each month.†† If you inadvertently create one at some other time, you can delete it, just select the Edit/Delete valuation choice under Securities, and check the delete box by the prices shown on incorrect dates and submit to delete.†
You can choose to add the Compound Annual Return or not, on both this and the Memberís Status Report.†† No matter when you go to do them or print them out for club records, use the appropriate valuation date.† If you just want to see how it stands on any given day, just ask to view it for that custom date, that doesnít save it.†
Most likely your PA calls for a withdrawal to be submitted for acceptance at a meeting, then it will be carried out following the upcoming valuation date.† NOCA has recently streamlined the withdrawal process.† Go to Members/Withdrawal, select the member and whether it is a full withdrawal, or they are just taking out part of their money.† You are asked to fill in an Announcement date, and a Payout Date.† Neither of these dates should fall on a valuation date.† †The most logical announcement date would be the first day following the effective valuation date.† The payout date will be whatever date you write the check and/or conclude your request for stock transfer.† The amount the member gets is fixed as of the values of the effective valuation date.††
On all cash withdrawals, you are taken to a screen to enter any withdrawal fee or percentage applicable.†† If there are any expenses, say if you sold stock rather than transfer, these expenses would also be included.† Then you just click submit, and the deed is done, you can to Reports/Withdrawal, select the memberís name, and print out two copies, one for her, one for the treasurerís book.† Then you write a check, provided the money is in the account, if not, complete whatever sales were voted on to get it and write a check when those funds have settled.†
On stock withdrawals, make that selection on the first screen, and you will continue on to a screen showing your portfolio to select which stocks, as voted upon by the club, will be transferred.† You will have to change the price shown back to the price on the previous valuation date.†† Regardless of what the price is today or next week, the number of stocks she gets is based on their value on the last valuation.† The difference will be paid by check.† Until you enter a payout date, the amount due the partner will appear in the WD liability account.† Even if your PA may allow for up to 60 days to do a payout, there is no valid reason to delay, this is the partnerís money, and they are entitled to it as quickly as the club can act.†
Transferring stock for a withdrawal rather than selling is considered a wise move, provided you choose stocks that have made a nice gain, as it defers the tax liability on that particular gain for the remaining partners until they withdraw.† Your broker will need to advise you on what will be needed, probably a notarized letter from the club signed by the agent detailing which stocks to transfer, and the routing number, name and account number of where it is to go. †If your member does not have an individual broker account and does not want to open one, you may not be able to do this easily or cheaply, use your clubís judgment.
Iíve touched on unit values, which can be a bit difficult to wrap your mind around.† Letís assume we have a new club with 10 members who each put in $100 each, using the basic starting value of one unit for $10.† Therefore the club is worth $1000, each member having 10 units.† The next month, they still buy units for $10, because nothing has been either spent or earned.† Now you have a club worth $2000, each member having 20 units.†† However this month they spend $200 to get their software.† The club is now worth $1800.† At the end of the 2nd month, they still all have 20 units, but the value of those units is now only $9.†† With me so far?†† The third month their $100 doesnít buy 10 units, it buys 11.11111 units.†† ($100 divided by $9).††† So now they each own 31.1111 each units, the club is now worth $2800, and they spend $2000 to buy a stock.† By the end of that 3rd month the value of that stock shot up to $3000 when they did their valuation.† The club is now worth $3800, the $800 cash they had left, and $3000 worth of stock, for their 311.11111 total units.† Now their unit values jump to $12.214285.† ($3800 divided by 311.1111) Therefore the fourth month, their $100 only buys them 8.18713 units each.† ($100 divided by $12.214285) give or take.
Iím sure that got confusing. †I checked it out, though, in a dummy test club.† Basically, what it means is when you have an expense, or your stocks lose value, unit prices go down, and your monthly payment buys more units.†† When stock values go up, your unit values also go up, and your monthly payment buys less units.† One reason NAIC clubs are usually set up with at least a minimum monthly payment is to keep investment funds coming in at a predictable rate, and over time, it evens out fluctuations in the market.† It is not possible, long term, due to withdrawals and new members, to maintain equal shares with equal units, so donít bother trying.† Require a minimum payment, but allow extra deposits if members wish.† If some members want to put in extra cash to help pay out a withdrawing member, fine, the withdrawing member takes out her old units, the others buy new ones at todayís price.†
This wonít cover every possible situation, but it touches the most common, basic ones.† There are help screens all along in the NOCA and NCA programs which provide some guidance, and there is always the Club Treasurerís List.††