Startup founders need some accounting skills.

Here’s a list of skills to bring to your startup:

Accounting vs. bookkeeping – bookkeeping is entering revenues and expenses into the proper accounts. Accounting is generating the income statements and balance sheets, along with filing tax returns.

Accounting methods – know the difference between cash vs. accrual accounting.

Cash-based accounting recognizes revenues when it is received, while accrual accounting recognizes it when it is earned. 

Recurring revenue businesses need to watch for this as annual subscriptions should be recognized over each month the service is provided.

Record keeping – you should be able to enter transactions, reconcile accounts, pay vendors, and review outstanding invoices.

Have an accountant set up the system with the chart of accounts, but know how to run the system and read the reports.

You should be able to calculate your runway, cash burn, and cash balance at all times.

Payroll taxes – you should know how payroll taxes work and how they impact your cash flow.

Income taxes – you should know the taxes you’re required to pay and when and how that impacts your cash flow as well. 

Workforce commission – you should know how the workforce commission works for your area and the laws around it.

Basic accounting is important in understanding how to generate and read the documents that show the health of your business. 

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.