Individual member expenses on bivio

Philip Hayman on

Hello!

I see the option for an expense if the money is allocated amoung all members (either by percentage or equally), but I don't see an option to do an expense for an individual member. For example, some of the members of my club live out of town and do not attend meetings. I printed and bound some educational information for the year and passed this out to only members who attend meetings regularly. I don't think the members who are not getting this information should be made to pay for it.

How do I allocate an expense (not a fee) to an individual member?

Thanks!!

Steve Hayman
Pascagoula, MS

Lynn Ostrem on

>...some of the members of my club live out of town and do not
> attend meetings...I don't think the members who are not getting this
> information should be made to pay for it.

Wow. Here's my question for YOU. Who voted to allow out-state members, in
the first place? This is the cost of having extra dues to invest without
having all the outside decision makers. Seems to me you made your bed and
now you need to lie in it. It's not fair to go back and charge them now.

> How do I allocate an expense (not a fee) to an individual member?

You estimate the average annual cost of postage and envelopes and have each
out-state member pay into "the kitty." Bivio has a Suspense account. Just
credit the money there, and charge the account for the supplies. Since the
Suspense account shows up on every valuation statement, along with the
broker and bank accounts, you'll know when it's time for them to pay in
again.

Lynn Ostrem, President
garbagecop@foxinternet.net
Crow River Investment Club
www.bivio.com/crowriver

Frank D. Novotny on

Lynn Ostrem wrote:
> >...some of the members of my club live out of town and do not
> > attend meetings...I don't think the members who are not getting this
> > information should be made to pay for it.

We have nine out of state members. What information are you
talking about?
P.S. All nine participate in the Club.
>
> Wow. Here's my question for YOU. Who voted to allow out-state members, in
> the first place? This is the cost of having extra dues to invest without
> having all the outside decision makers. Seems to me you made your bed and
> now you need to lie in it. It's not fair to go back and charge them now.
>
> > How do I allocate an expense (not a fee) to an individual member?
>
> You estimate the average annual cost of postage and envelopes and have each
> out-state member pay into "the kitty." Bivio has a Suspense account. Just
> credit the money there, and charge the account for the supplies. Since the
> Suspense account shows up on every valuation statement, along with the
> broker and bank accounts, you'll know when it's time for them to pay in
> again.
>
> Lynn Ostrem, President
> garbagecop@foxinternet.net
> Crow River Investment Club
> www.bivio.com/crowriver

John R. Munn on

Lynn...

I think you may be jumping to conclusions. Just because partners are
out of state doesn't mean they're not all local. Not all of us live in
Alaska or Hawaii! I'm in an area where you can be in three states
within ten minutes. Also, your answer to deposit funds in the suspense
account doesn't solve the problem since that account is part of the
partnership's assets and any expenses into or out of that fund are
treated no differently than any other account, so the suspense account
doesn't help to make a specific person responsible for specific costs.

To disroportionaltely assess fees against a partner in NAIC's desktop
software, I would pay for the expense through the Petty Cash account and
apportion the payment for the expense at the time the partners
responsible for the bill makes their capital contribution. So, for
example, a partner's $50 monthly contribution may be approtioned to
reimburse the petty cash account for the expense and what's left goes
towards their monthly contribution. Of course, this expense would
then not be treated as a partnership's tax deductible expense. However,
I am not sure how bivio treats Petty Cash since we don;t use the
account. I don't know whether it's an on the books or off the books
account, and this approach would not work it bivio does not allow off
the books accounts.

Another approach might be to charge the partner a fee when contributions
are made. In this way, the expense is paid by the partner but the
expense in this case would be credited to each partner's capital account
either equally or proportionaltely to their equity. This matters at tax
time since the expense would not be fully credited to the repsonsible
partner from a tax deductibility perspective. However, this approach
would insure that the cost for this expense is borne by the responsible
partner and no others since that partner would have been charged a fee
to cover the cost.

John Munn

Lynn Ostrem wrote:

>> ...some of the members of my club live out of town and do not
>> attend meetings...I don't think the members who are not getting this
>> information should be made to pay for it.
>
>
> Wow. Here's my question for YOU. Who voted to allow out-state
> members, in the first place? This is the cost of having extra dues to
> invest without having all the outside decision makers. Seems to me
> you made your bed and now you need to lie in it. It's not fair to go
> back and charge them now.
>
>> How do I allocate an expense (not a fee) to an individual member?
>
>
> You estimate the average annual cost of postage and envelopes and have
> each out-state member pay into "the kitty." Bivio has a Suspense
> account. Just credit the money there, and charge the account for the
> supplies. Since the Suspense account shows up on every valuation
> statement, along with the broker and bank accounts, you'll know when
> it's time for them to pay in again.
>
> Lynn Ostrem, President
> garbagecop@foxinternet.net
> Crow River Investment Club
> www.bivio.com/crowriver
>
>

Rip West on

Hi John,

Lynn...

I think you may be jumping to conclusions. Just because partners are out of state doesn't mean they're not all local.

Maybe you missed the original message, where the sender said certain members had moved away, so they don't attend meetings anymore, and the reports have to be sent to them.

Also, your answer to deposit funds in the suspense account doesn't solve the problem since that account is part of the partnership's assets and any expenses into or out of that fund are treated no differently than any other account, so the suspense account doesn't help to make a specific person responsible for specific costs.
>>

And maybe you missed my response to Ira, where he took somewhat the same position you are taking. In fact, though, Lynn's solution does solve the problem. The out-of-town members are actually paying in for their share of the expense. These payments are credited to the suspense account. The club debits these members' shares to the suspense a/c, thus taking no deduction for them. So you are left with the situation, where the members have borne their share of the expenses, but no one has taken a deduction for them. This is solved by telling those members to take the deduction on their individual returns. I much prefer this to your solution of using the old-time off-the-books petty cash accounts. There is no reason to do that any more. One set of books is a great plenty for most treasurers<g>.

If you read my post, you will find I do agree with your other solution to have the members pay in their share, record them as fees, and have the club pay for all the expenses. One caveat, though, these expenses should not be allocated equally. That, combined, with recording the payments as fees, really results in disproportionate values for the out-of state members.

Regards,

Rip West
Saint Paul, MN

John R. Munn on

Hi Rip...

Good to hear from you. I read the original post this morning and forgot
the details.. but now that you mention it, I do recall that members
moved away. And that's not good for the partnership... I think we are
universally in agreement that it'ss bad for a club to have folks with no
involvement who leave management and decisions to the rest. It's not
fair to the remaining partners to carry the load of non-participants.
But I digress...

I read your response to Ira, but I didn't really follow it completely.
I think we're in agreement that where contributions are made to the
suspense account, the contributing partner is purchasing units unless
the funds are treated as a fee, in which case the funds are debited to
cash and an expense is credited to that partner's capital account. This
has the effect of raising all partner's unit value but not changing any
units.

You wrote:

".... The out-of-town members are actually paying in for their share of
the expense. These payments are credited to the suspense account. The
club debits these members' shares to the suspense a/c, thus taking no
deduction for them."

OK.. Now... when the expense is paid from the suspense account, there
is a credit to suspense but what is the offsetting debit? Normally the
expense is ultimately a debit of partners' units, either allocated
equally among all or according to equity interest. In this case, the
expense is paid by the partner responsible for it, but the expense is
approtioned to all partners instead of the payor and the partnership's
books and the K-1s will be incorrect. If you tell the payor partner to
claim all the expense without adjusting the other partners' K-1
statement then the partnership is overstating expenses by the amount of
the fee.

I guess I don't follow your explanation completely... especially where
you write "...The club debits these members' shares to the suspense
a/c..." since I don't see how members' shares can be directly debited
unless shares are sold for cash.

I agree with you about the petty cash account! I dislike having two
sets of records to manage and then reconcile. much better to have
everything in one complete system.

John Munn

Rip West on

John,

I think we're in agreement that where contributions are made to the suspense account, the contributing partner is purchasing units unless the funds are treated as a fee, in which case the funds are debited to cash and an expense is credited to that partner's capital account. This has the effect of raising all partner's unit value but not changing any units.
>>

No. When the expense assessments are received from the partners, they are recorded by making a transfer from Suspense to Cash. This makes the cash balance, and creates a liability account in Suspense. No Units are awarded, and no one's value changes by this entry. Then, when the club wants to expense the out-of-town members' share, a negative expense is posted using the suspense a/c as the bank account. This works to relieve the suspense a/c until it gets down to zero, as Lynn said. The club has already expensed its copying, postage expenses so this credit entry will reduce those expenses by the amount applicable to the out of towners. The result is that the additional copying/mailing expense applicable to these members is not reflected on the income statement, those members have borne the expense, and no one has received a deduction for it. Those members will be entitled to take a deduction for the amounts so contributed on their individual returns.

BTW, bivio does not allow the old-type petty cash a/cs, and that is a good thing.

Let me know if you still have questions.

Rip West
Saint Paul, MN

Lynn Ostrem on

I posted something last night, but haven't seen it appear on this board yet. Looks like Rip has pretty much made my points, though.

I'm of the mind that my club's expense account is for club expenses. If a member incurs an expense that is his alone, then let him pay for it! That goes for individual NAIC dues. We prefer not to have all this petty ante crap running through the books because it makes it a nightmare to audit at year's end. KISS.

And by the way, I said "out-state" not "out-of-state." There's a difference! <G>

Lynn

Mail