I'll be happy to share with you what I do. I use Quicken (not Quick Books which I have tried but is much more complicated). As I place a trade, I enter the trade in Quicken (takes about 10 seconds). If I'm shorting or selling a long I include the SEC fee with the commission (to keep it simple). This can be calculated by taking the gross trade and multiplying by .0000334 and rounding to the nearest cent. This way, every time I want to I can get a P&L or a balance. I use AB Watley and I reconcile with them every morning. Takes about 3-5 minutes. This is no lie-- in the last month, Watley's balance has been wrong 14 times! This month they have been wrong all 5 days! They are no different than most firms. Generally it is caused by using a wrong closing price or even a closing price on a stock that ends in a sixteenth. Their clearing firm (so they say) who is Penson truncates numbers with 3 decimal places in stead of rounding. If you have 2000 shares that amounts to a $10 discrepancy. About half the time that is the problem, however there are many times when I am charged wrongly for data fees, double charged for commissions, etc. Believe me, they are not going to find these problems for you. And I've been with four other brokers and they all had similar problems. It's your money. You really should balance every day. If you use Quicken, it's easy.
As for the end of the year accounting, let me offer a suggestion. I have Quicken print out a capital gains report (which lists each trade, my basis, my profit, commissions, etc.). I then attach that to the return and enter the totals on the form as one trade and in the blank for the name of the security, I put "various-- see attached list". This is perfectly fine with the IRS and will save you a tremendous amount of work. When I reconcile my brokerage statements, it takes me about 10 minutes and once again, I've had the brokerage over charge me on numerous occasions.
If you would like any more details as to the specifics of using Quicken, I'll be more than happy to answer any questions you (or anyone else reading) may have. I spent a couple of years doing tax planning and consulting for a financial planning firm. I've used all of the major accounting software packages (some well known and some proprietary accounting firm specialty packages) and Quicken is the simplest and most trouble free. If you know how to use it, it will do just about everything. I've used it for options, stocks, online banking, on-line bill payment, on-line bank reconciliation and much more. And no, I don't have any financial interest in Quicken or Intuit. <g>
Matt |
