When and how should you start with accounting?

Sarah Lerche / November, 2017

Description

Sarah Lerche, President, CFO Services, Escalon explains the first steps towards setting up your accounting – “Don’t see it as an administrative burden, but as a tool to manage your future”.

Video Transcript

When and how should you start with accounting?

I recommend that you start from day one because time flies quickly and suddenly you have six months of transactions to catch up, and you never have time to catch up. It is the most cost-effective and efficient to start from the beginning. You can probably do the first stage yourself by finding QuickBooks online or something equivalent. Linking it to your bank and at least record your transactions. 

I recommend that you deal with an accountant, as you get towards the end of your first year. Because unless you know accrual accounting you do want to have gap financials. If you at least got recorded all your transactions. At some point, you’ll need gap financials. and then you’ll need more professional help.  Once you start getting so busy that you’re behind. That’s a good signal to say ‘I need help to stay on top of things.’ Because the other reason you want to keep your financials in order is as you plan for managing your cash. Knowing how long do you have left is really critical. Unless you know what’s your accounts payable. You’re going to get surprises. Don’t see it as an administrative burden. See it as a tool to manage your future. If you’re not up to date you will get a surprise, and they are typically not good surprises. 

If you’re just a sole founder, as you are in your first year get to the end of the year, engage with a finance team, because even if you’re not pulling payroll you might want to put in deferred compensation. You want to make sure that your cap table is recorded correctly. It’s not only about money in and spent out. It is also your whole equity portion and anything that you want to put on as an accrual towards the end of the year. If you’re not pulling pay you still probably want to have something on your balance sheets. 

Once you start engaging to get payroll. There I would pull in professionals. You do need to make sure you have an employee handbook. It’s just a lot of little things that you want to make sure that you’re not putting your company at risk, and that you’re keeping it professional from day one. In a lot of organizations, you can make that scalable.

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QUICK INFO

  • Sarah Lerche, Escalon
  • November, 2017
  • 2:51
  • Finance & Operations, Finance

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