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14.10.27 cclk deck
- 1. 1 Accounting &Finance for Seed & Startup Cos. Justin McLoughlin, Founder & President airCFO
- 2. 2 Intro &Talking Points Finance Forecasts Budgeting Cash Burn Accounting Bookkeeping Basics Profitability Software Inventory Methods Tools Taxes Types Resources Help
- 3. 3 Projections &Forecasts • Why: Business Plan, Investors, Planning • When: • Budget • Forecast • How: • Twelve month Budget • Three Year Forecast • Top-Down or Bottom-Up • Cash Needs and Burn Rate • Keep it Simple Budgeting & Forecasting • Pen and Paper, Spreadsheet, QB • Schedule time each month or quarter Actual B2A Analysis
- 4. 4 Accounting •Why: Compliance, Budget-to-Actual, Forecasting • When: Closing Schedule • How: • The most essential needs • Basic Statements and Ratios • Gross and Net Profit • DIY or Outsource • Software: • Cloud based • Subscription • Quickbooks, Xero, Wave
- 5. 5 Inventory •Why: Accrual Accounting, Gross Profit, Ordering • When: • At Sale (perpetual) • At Close (periodic) • How: • Software • Sync Inventory & Accounting • Analyze Gross Profit • Inventory Controls
- 6. 6 Taxes •Why: No Reward for doing it right, but penalties and interest for doing it wrong; personal liability • When: • Monthly, Quarterly, Annual, Payroll • Types: • Sales Tax • Payroll • Income • Dependent on Org Structure • Misc. • State • Municipal • Misc. Licenses and Permits
- 7. 7 Resources •Cloud, Paperless DIY Accounting: • Quickbooks http://quickbooks.intuit.com/online/ • Xero https://www.xero.com/ • Wave https://www.waveapps.com/ • Freshbooks http://www.freshbooks.com/ • Add-ons (payroll, payments, inventory) • http://quickbooks.intuit.com/addons/ • https://www.xero.com/u/add-ons/ • Misc Accounting: • Accounts Payable www.bill.com • E-Receipts www.shoeboxed.com • Employee Reimbursements • www.expensebot.com • www.expensify.com • Taxes, Fees, Doing business in Ohio: http://www.sos.state.oh.us/Businesses/BusinessInformation/starting.aspx • OH File & pay: https://ohiobusinessgateway.ohio.gov • Reporting New Hires: www.OH-NewHire.com • Bureau of Worker’s Comp www.bwc.ohio.gov • Ohio DJFS https://unemployment.ohio.gov/wp/wps/myportal • Research Separately Municipal Fees, Registration and Taxes • Federal – EFTPS.gov and IRS.gov
- 8. An accounting partnerfor startups Justin McLoughlin, Founder & President 8
Editor's Notes
- #3 My bio – Cleveland, San Francisco, airCFO, Startup CFO bridging gap For many of you, this overview holds some of your worst nightmares I’d like to cover these at a high level, but truly encourage questions along the way. At a high level, Finance and its elements are similar to looking forward, through the windshield of a car while Accounting is looking in the rearview. Each are important for different things.
- #4 Projections and Forecasts at a Seed Stage our difficult. Become easier once you have actual data, so that you can use actual instead of theoretical to drive revenue, costs and profitability That said, you need to start somewhere. Why When – Budget now, Forecast as needed How One year budget (internal) is pretty standard, whereas Three Year forecast (external) is good for potential investors, banks Top-Down – start w/ overall market and carve out your niche and project sales (optimistic) Bottom-Up – start w/ your current sales or customer base and build up (more conservative) Focus on meshing your goals and milestones into the plan Research Industry, Talk with People, Be Conservative,
- #5 Accounting is not just about keeping receipts and doing your taxes. Why: Compliance is the reason most people do it, but smart business owners realize there is great value and insight that can be extracted from all the data. Budget-to-Actual Analysis, Forecasting When – Set a closing schedule you can commit to How: Most essential needs are separate business accounts, a hard start date, a receipt and system for keeping tabs on transactions. Different measures and ratios you can extract that will help you manage cash, and you can use to benchmark to other companies in your space. Examples are Gross Profit, Net Profit, Inventory Turnover (Sales/Inventory) , A/R Turnover (net credit sales/Avg A/R) Gross Profit is Sales minus Cost of Food, Net Profit is bottom line after operating expenses, taxes, interest expenses, etc… THE GREAT THING is that even the most basic accounting software will do all of this for you. My views on cloud based and applications out there
- #6 An inventory tracking system will allow you to do accrual accounting (vs. just cash accounting), identify gross profit and re-order points Two methods, at sale or at accounting close, but at sale is preferred and easy to-do if you set it up correct Many inventory management softwares, the key is to find one that syncs w/ accounting software; by doing that you will take out hours and hours of manual data entry and calculations Analyze gross profit - by line of business, by food line, time of day, day of week, time of year, etc… Inventory controls – having a basic set of controls such as having more than one person involved and separating certain tasks (inventory count, inventory ordering, approving bills to be paid) will lessen the likelihood of errors, and is a good anti-loss measure
- #7 Why – Personal liability, regardless of corporate structure follow some taxes such as payroll and sales tax; essentially even if the business goes under, these tax liabilities will follow you as the owner. When Types Sales, Food and Restaurant Taxes – dependent on your particular venture Payroll Tax – including both taxes withheld from employees but also, the taxes that the business is responsible for such as Social Security, Medicare, Unemployment (ODJFS) Income Tax is very different depending on structure (e.g. LLC vs. C-Corp) Misc – In Ohio, I suggest to file w/ Sec of State, get an EIN, then research your state and muncipal tax liabilities.