I am a member of a club that is just getting started, and we
are not sure if we need a bank acct. We wanted to put our
cash in a online savings acct. to earn interest until we are
ready to start making transactions. However, we discovered
that although those accounts pay high interest, they only
deal with individuals. If two members open an account in
their names, there will be tax consequences to deal with.
Should we open a checking account and not worry about
interest? We really don't have any expenses, and the ones
we do we deal with in cash at our meetings. Is there
something ahead that we don't foresee?

Renee Hill-Sweet writes:
> I am a member of a club that is just getting started, and we
> are not sure if we need a bank acct. We wanted to put our
> cash in a online savings acct. to earn interest until we are
> ready to start making transactions. However, we discovered
> that although those accounts pay high interest, they only
> deal with individuals. If two members open an account in
> their names, there will be tax consequences to deal with.
> Should we open a checking account and not worry about
> interest? We really don't have any expenses, and the ones
> we do we deal with in cash at our meetings. Is there
> something ahead that we don't foresee?

Open only one account: a discount broker that is compatible with
AccountSync(tm). This is explained in detail in the The One Minute
Treasurer(tm) guide:

http://www.bivio.com/club_cafe/files/TheOneMinuteTreasurer.pdf

In our experience, keep your investment club as simple as possible.

If you have cash that's only going to sit around a month, it's
probably best to keep it as cash. Some brokers pay nominal interest
on cash, but on the typical investment club's uninvested funds, it'll
only be a few dollars a month. When you divide that among, say, 10
members, it comes out to be pennies. It's simply not worth the time
and effort of managing two accounts instead of one.

If you find that you have lots of uninvested funds most of the time,
you need to look at your decision making process, and consider ways to
speed it up. The worst thing in an investment club is to not be able
to make timely decisions. It's called "analysis paralysis", and is
never a good way to earn money.

Try things, make mistakes, and move on. :-)

Cheers,
Rob

Renee,

Rob's right. Keep your club accounting issues as SIMPLE as possible.
There is no need for two separate accounts anymore, nor is there a need for
petty cash or other suspense accounts. Every penny that goes into your
business (and that's what a club is) should go toward buying stocks AND
paying for incidentals. No need to separate those monies. The bivio program
will keep you organized.

Most broker accounts now have checking privileges. Look for one with no
minimums and no inactivity fees. Most clubs just collect the dues at the
meeting and the treasurer mails them in. Others have found the bivio method
of adding pennies to each members' payment an excellent way of tracking
payments that are sent directly, or automatically withdrawn from members'
accounts.

Here's how we deal with that extra money sitting around NOT drawing
interest...we don't! Our club believes, as many do, that our money should
be invested at all times. If fact, our operating procedures require us to
make purchases at least quarterly unless it would cause undo harm to the
club. That prevents that analysis paralysis that Rob talked about.

I've helped lots of new clubs get up and runnning, and I think the best
thing to do is choose a very stable, dependable stock--like Johnson &
Johnson, Pepsico, or Walgreen, etc., and start investing right away. It
will give the members ONE STOCK to watch and learn from while you figure out
how you want to build your portfolio.

Good luck to you!

Lynn Ostrem, VP
garbagecop@earthlink.net
Crow River Investment Club
www.bivio.com/crowriver
Our club has a bank account AND a broker account.
----- Original Message -----
From: "Rob Nagler" <nagler@bivio.biz>
To: "The Club Cafe" <club_cafe@bivio.com>
Sent: Tuesday, May 08, 2007 7:07 AM
Subject: Re: club_cafe: New club checking or savings acct?


> Renee Hill-Sweet writes:
>> I am a member of a club that is just getting started, and we
>> are not sure if we need a bank acct. We wanted to put our
>> cash in a online savings acct. to earn interest until we are
>> ready to start making transactions. However, we discovered
>> that although those accounts pay high interest, they only
>> deal with individuals. If two members open an account in
>> their names, there will be tax consequences to deal with.
>> Should we open a checking account and not worry about
>> interest? We really don't have any expenses, and the ones
>> we do we deal with in cash at our meetings. Is there
>> something ahead that we don't foresee?
>
> Open only one account: a discount broker that is compatible with
> AccountSync(tm). This is explained in detail in the The One Minute
> Treasurer(tm) guide:
>
> http://www.bivio.com/club_cafe/files/TheOneMinuteTreasurer.pdf
>
> In our experience, keep your investment club as simple as possible.
>
> If you have cash that's only going to sit around a month, it's
> probably best to keep it as cash. Some brokers pay nominal interest
> on cash, but on the typical investment club's uninvested funds, it'll
> only be a few dollars a month. When you divide that among, say, 10
> members, it comes out to be pennies. It's simply not worth the time
> and effort of managing two accounts instead of one.
>
> If you find that you have lots of uninvested funds most of the time,
> you need to look at your decision making process, and consider ways to
> speed it up. The worst thing in an investment club is to not be able
> to make timely decisions. It's called "analysis paralysis", and is
> never a good way to earn money.
>
> Try things, make mistakes, and move on. :-)
>
> Cheers,
> Rob