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Startup Accounting and Financial Forecasting
Startups face challenges in balancing the creation of products and managing accounting and financial strategies. Establishing a solid accounting foundation pre-funding and enhancing financial infrastructure post-funding are crucial for growth, which includes managing cash flow and ensuring compliance. Effective systems for accounts payable and receivable, tax obligations, and accurate financial forecasts are essential for the sustainability of the business.
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Startup Accounting and Financial Forecasting
- 1. Startup Accounting andFinancial Forecasting Simplifying and Getting It Right 1 David Ehrenberg Founder and CEO Early Growth Financial Services
- 2. 2 “Startups face ahuge burden in today’s economy, often having to choose between funneling resources toward creating their goods and services or managing the often complex accounting, tax and financial strategy planning necessary to run a successful business.” ~ David Ehrenberg, Founder and CEO Early Growth Financial Services
- 3. www.earlygrowthfinancialservices.com Good accounting Good understandingof the health and wellness of your business
- 4. Pre-Funding - Setup a low-cost, accrual-based accounting structure that can grow with you • Open business banking account • Separate personal and business expenses • Keep records of receipts and invoices • Be mindful of tax obligations • Collect payments • Select payroll provider • Stay on top of stock records www.earlygrowthfinancialservices.com
- 5. Post-Funding – Financialstrategy deepens and you’ll gain better understanding of your business • Set foundation for future growth • Build financial infrastructure • Clarify funding objectives • Manage cash-flow • Create clean financials for investors • Hire professionals to help company become GAAP compliant (Generally Accepted Accounting Principals) www.earlygrowthfinancialservices.com 3
- 6. Accounts Payable Formalize yoursystem for keeping track of business expenses • Set up system early • Choose best tracking system for company needs • Helps maximize cash flow • Create essential financial reports • Enter every expense • Establish invoice AP schedule • Place vendors on net 30 payment terms • Build reputation of financial stability www.earlygrowthfinancialservices.com
- 7. Accounts Receivable Improve cashcollections • List all open invoices and balances • Create “friendly” invoices (and print hard copies) • Put payment terms in writing for new clients • Establish credit guidelines • Create collection timeline www.earlygrowthfinancialservices.com
- 8. Taxes • Select correctlegal entity for company • Understand federal, state, and city tax obligations; regional fees; and registrations • Separate business and personal finances • Deduct business expenses • Pay quarterly taxes • Stay on top of payroll taxes and 1099s www.earlygrowthfinancialservices.com
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- 14. Cash Burn Forecast 14www.earlygrowthfinancialservices.com •Current Assets taken from balance sheet • Average daily operating costs from income statement and cash flow statement. Current Assets/Average daily operating costs = Burn Rate
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- 17. Top Down Projection- Market Opportunity 17www.earlygrowthfinancialservices.com
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Editor's Notes
- #3 We offer outsourced financial services to small to mid-sized companies Accounting, CFO, tax, valuation 350+ successful, venture-backed clients nationwide across all industries Ancillary value – connect you to our network of investors, give fundraising advice, etc.