Key Accounting Differences Between myICLUB.com and Bivio
If you change from a Honda Civic to a Ford Explorer, you would rightly expect there to be a number of differences in the driving experiences of both vehicles, including how each operates, how you choose routes, and how the vehicle responds, though both will ultimately get you to (or close to) your destination.
Likewise, there are differences to be expected when switching to myICLUB.com. Please take a few moments to understand these key accounting differences between the two platforms.
Use of “rolling” valuations. Bivio uses a method that does not require a club to establish an official monthly valuation. Instead, each member deposit is applied at a unit value that is calculated automatically on the spot. On the other hand, myICLUB.com uses the BetterInvesting-recommended method of requiring an official valuation to be created each month; then each member’s deposit for that month is made using the unit value determined by the official valuation. While there is nothing “wrong” with using a rolling valuation system (after all, mutual funds and exchange-traded funds revalue their unit prices daily or even hourly), it does pose some problems for investment clubs.
First, if a club uses the BetterInvesting or ICLUBcentral sample partnership agreement, a single monthly valuation is stipulated. If a club uses a rolling valuation system and has not defined this method in its partnership agreement, the club could be considered in violation of the agreement signed by club members. Former members especially may find this troubling if their payout was reduced because of the use of a different method of valuing their payout than had been stipulated in the operating documents they agreed to. In addition, because of the market’s tendency to make significant moves up or down in short periods, two members who make member deposits into the club just a few days apart may see vastly different unit values applied to their unit purchases. Using a single fixed valuation is fairer for members since all members purchase units at the same price.
Annual allocation of income and expenses. For tax purposes, investing partnerships must distribute their earnings, income, gains, and losses to partners who then report their share of each on their personal tax returns. In myICLUB, once the club’s books have been “closed” for the year, the treasurer manually generates an Allocation of Income and Expenses that serves IRS requirements. In Bivio, this allocation is done automatically.
Handling of qualified dividends. myICLUB utilizes an intelligent “Qualified Dividends Identification” algorithm to determine if distributions paid by securities are non-qualifying or qualifying. With this system, the Security Type, the date of the transaction, and the ex-dividend date of the distribution are used to compute the qualifying status of a dividend. In this way, treasurers do not have to designate whether a dividend is qualifying or not, unlike as in Bivio. Treasurers should review distributions after they have been imported to make sure the ex-dividend dates and transaction dates are correct.
Options transactions. Options are not currently supported directly in myICLUB, in reports or in the Club Tax Printer. However, existing options transactions will be imported into myICLUB. It is the club’s responsibility to review and manage these transactions.
Short selling. myICLUB does not directly support short sales.
For more data, please see our chart comparing Bivio vs. myICLUB.com.