| ICLUB Insider |
December 15, 2004 |
THE LATEST NEWS ON
NAIC SOFTWARE BUILT BY ICLUBCENTRAL INC.
Summary
First, relax and enjoy your New Year's celebration! The
paperwork required to close your books won't be in your
hands for at least a few weeks after December 31 --
financial institutions are required to send you your Form
1099 by January 31, so you won't have the necessary
information until sometime around then. As a result, you
shouldn't plan to close your club's books much before the
beginning of February.
When you have all the statements, balances, and reports for
December, here's how to close your books for the year:
- Make sure that your version of NAIC Club Accounting (NCA)
has been upgraded to version 2.5. The update to version 2.5
is free for clubs with a current Support Agreement. Visit ICLUBcentral's web site for
information on bringing your copy of NCA up to date.
- Correctly identify all mutual funds, REITs, and "other"
(Limited and Publicly Traded Partnerships, etc.) securities
in the Security Section > Edit/Delete Security Profile
screen. Enter the ex-dividend date for each dividend your
club received in 2004 in the Accounting > Security Section >
View/Edit Delete Security Transactions screen. The ex-dividend date is the first date following the declaration of
a dividend on which the purchaser of a stock is not entitled
to receive that dividend payment.
- Enter all data up to 12/31/04.
- Reconcile your Club Accounting records with bank, broker
and all DRP statements. Wait until you have received all
1099s from companies, and then print a Transaction Summary
Report for the full year. Don't forget to add any Charges
Paid by Company as necessary.
- Match the total reported on Form 1099 received from
company to the total entered in your books.
- Verify all members' addresses and Social Security
numbers, and your club's Tax ID number.
- Enter a Valuation for all securities as of 12/31/04. Use
the closing prices for the last trading day of the year, but
always use the 12/31/04 date.
- Run the Audit Utility.
- Run the Distribution of Earnings utility.
- Print a Distribution of Earnings Report for all members.
- Run the 2004 NAIC Club Tax Printer program for the
required IRS filings (Form 1065 and Schedule K-1), and your
state filings, if applicable, using the 2004 Club State Tax
Printer. You can obtain the 2004 Club Tax Printers from ICLUBcentral.com.
Remember, because of the changes to the 2004 tax forms, you
cannot use any earlier year's tax printer software to create
this year's filings. And you must order before 12/31/04 to
receive the $30 NAIC member discount on the software.
- Print two copies of Form 1065 (one for IRS, one for the
club's permanent records).
- Print three copies of Schedule K-1 for each current
member and any former member who withdrew during the year.
Attach one Schedule K-1 for each member to Form 1065 for IRS
filing, give one copy of his/her own Schedule K-1 to each
member or withdrawn member (along with the K-1 instructions)
and keep one copy with the club's copy of the IRS filing in
the club's permanent records.
- Mail Form 1065 to the IRS before April 15. Note that
non-filing and late-filing penalties are calculated per
month and per member. Be sure to send it to the IRS via
Certified Mail, return receipt requested.
- Attach Return Receipt to the Club's copy of the IRS
filing.
- Finally, arrange for your club's Verification Committee
to review the club's books for the years. (This may be done
at any convenient time, preferably after end-of-year
closing).
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Every investment club treasurer is responsible for filing
their club's Federal Tax Forms and for giving each club
member an official Schedule K-1 for personal tax filings.
There is no escaping the IRS -- all investment clubs with
any income or expense are legally required to file tax
returns, even if the club lost money or didn't make any
trades during the year. And that's just for the Federal
Government. Many states also require their own returns for
the club and each member.
The 2004 NAIC Club Tax Printer makes the task of filing
taxes easy and error-free. The software helps you produce
"ready-to-mail" Federal Tax Forms for your club and each
member. Just print the finished Form 1065 for your club,
plus a Schedule K-1 for each member of the Club active in
2004, then review and sign them. Send them off and you're
done!
The 2004 NAIC State Club Tax Printer is also available once
again this year. The State Club Tax Printers were a big hit
last year, and NAIC is once again offering software to print
state tax forms for a select group of states: AZ, CA, GA,
MA, MD, MN, MO, and NY. This software generates the required
state tax forms for the club and for each member for
submission to your state's tax agency. The 2004 NAIC State
Club Tax Printer is available in a Desktop Version for use
with Windows-based PCs, and can be used with NAIC Online
Club Accounting (NOCA) as well as NAIC Club Accounting for
Windows.
WHAT TO ORDER AND HOW TO DO IT:
If your club uses the desktop NAIC accounting software (NAIC
Club Accounting version 2.5), both the State and Federal Tax
Printers are available on CD and by download. For CD orders ONLY, you can call toll-free 1-877-275-6242,
extension 0.
If your club uses the online NAIC accounting software (NAIC
Online Club Accounting, NOCA), we suggest that you purchase
the Online Tax Printer for NOCA by logging in to your NOCA
account and clicking the red "Taxes" tab. This will take
you to the appropriate purchase site. Alternatively, you can
also purchase by selecting the "Online" Tax Printer at the ICLUBcentral web site.
NAIC MEMBER DISCOUNT!
Remember, until December 31, 2004, NAIC members get a $30
discount off the regular price for each 2004 NAIC Tax
Printer. After that date, the NAIC member discount will be
$20 off the non-member price, so don't wait too long to
place your order! For non-NAIC members, the price is $79. To
receive the discount, simply enter your NAIC member number
and click the "Save $30" button at the ICLUBcentral store
before placing your order.
We anticipate the 2004 NAIC Club Federal Tax Printer will
ship and be available for downloading in early January, and
the 2004 State Tax Printers to be available later in that
month. Be sure to place your pre-order today in order to be
among the first to receive the Club Tax Printer!
You can learn more about the 2004 NAIC Tax Printers at http://www.iclub.com/taxes.
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When looking for stocks to purchase, make this your key
thought: Invest only in well-managed quality growth
companies that are fairly valued. The crucial words in the
above statement are "well-managed, growth, quality, and
value." Let's review each of these important investment
characteristics.
First, let's discuss growth.
A growth company is one whose sales (or revenue) and
earnings per share (EPS) are growing at a rate higher than
that of the overall economy. Growth of sales and earnings
causes growth of dividends and stock price. Over the long
term, sales and earnings growth should produce comparable
growth in dividends and price appreciation. In a "bear"
(i.e. down) market, the company may grow sales at the
historic rate but the share price may stagnate or decline.
In a "bull" (i.e. up) market, the price may increase more
than the company's sales or earnings growth. This shows how
investor "sentiment" moves the stock price.
A quality, well-managed company will achieve consistent
results year after year. Sales and earnings will grow
steadily. Return on Shareholders' Equity and Pre-tax Profit
on Sales will also be consistent and superior to peer
companies. Such performance indicates that a company has a
good management team – a very valuable asset. It is very
informative to compare the company with competitors in the
same industry. Companies that are industry leaders are
usually well-managed, quality companies with good potential
for growth.
Selecting a company which is "fairly valued" is very
important to achieving your 15% portfolio growth rate over
the 5 year period. If you expect to benefit from price
appreciation over time, it is crucial that you buy the stock
when the price is reasonable.
One way of describing value is using the Price-Earnings
ratio. The PE (Price-Earnings) ratio tells how much
investors are willing to pay for each dollar of earnings. As
earnings increase, the price will typically increase. If a
company's earnings fall, many investors will sell and cause
the price to fall.
Historical high and low PEs show the range of value
investors have given a company. Comparing the current PE to
historical PEs shows whether or not the stock is currently a
good value.
To identify a good value, look for a current PE ratio below
the historical average PE. This will allow room for the PE
to expand to its historical average or higher. This PE
expansion, plus the effect of growing sales and earnings,
cause price appreciation.
Many people think that the stock market is a very risky
place to put their money. However, every type of investment
carries some type of risk. In the stock market, investing in
well-managed, quality growth companies that are fairly
valued decreases risk. Such companies grow their sales and
earnings more consistently than most and often this means
that their price movements may be more predictable.
A company's debt load has a bearing on the safety of the
investment. With a reasonable level of debt, a company can
take advantage of opportunities. It will also be able to
withstand difficult periods when the general economy is in
recession.
Of course, examining all these characteristics is just the
task that all of NAIC's Software has been built to
accomplish. Whether you're getting started with NAIC Take Stock,
learning the SSG with NAIC Classic Plus, building a portfolio
with NAIC Investor's Toolkit or going beyond the basics with
NAIC Stock Analyst, you've got the tools available to evaluate
any company to see how it stacks up in these four critical
areas.
For more information on NAIC Software, including
downloadable demo versions, please visit:
http://www.iclub.com/products/.
Read past newsletters, subscribe, or unsubscribe at:
http://www.iclub.com/newsletters/
Copyright 2004 ICLUBcentral Inc. All rights reserved.
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