Ask HN: How do you do accounting for your startup?

https://news.ycombinator.com/item?id=7273286

by manas2004 • 12 years ago

7 20 12 years ago

news.ycombinator.com

Its tax time for our (bootstrapped) startup, and we're deciding the best way to do it. We have subscriptions that people pay for using stripe, and we offer discounts on longer duration signups. My ideal solution would connect to my stripe, and put things right, including prepayments, stripe fee, and refunds. Hoping to gain from the community's experience.

malfario• 12 years ago

Which country do you live in?

manas2004• 12 years ago

We're a US C-corp.

batoure2• 12 years ago

Hire a book keeper as a contractor. We went through this with our startup we spent time researching various platforms considered automating some of our processes our selves and then ultimately hooked up with a book keeper quite accidentally. It changed our whole perspective on the process. Think of it this way if you were a group of front end developers who turned out to need a high powered backend database solution and hit a wall with internal implementation you would immediately go out and find a dba to be part of or advise your company on the path forward. Think about your books in the same way. Accounting has purposeful redundancy built into it and many constructs that will make a logical programmer want to cry. Getting setup in the right way from the beginning will help you later.

batoure2• 12 years ago

probably good to also point out the difference between book keepers and accountants in the united states. A book keeper is pretty much a literal title they are experts at going through and organizing your accounting. They are a cheaper first step before eventually getting in front of an accountant. They will generally also point out things you should take to an accountant. A book keepers time is generally significantly cheaper than an accountants. To make another example think a SQL developer could get you started with a plan and a DBA would come in to do really deep low level work.

rahimnathwani5• 12 years ago

That's roughly the difference in the UK as well. My sister does accounts and tax for a number of small-ish businesses. She provides a part-time book-keeper for those businesses who don't do it themselves (either on-site or remote). That way (i) the business is paying only the rate necessary for the service they need and (ii) she has a decent starting point for remaining work (accounts preparation, tax calculations etc.).

matryoshka• 12 years ago

I agree that having a human who specializes in your kind of business accounting will make your life much easier down the road. That was one of first things I did when I started my business. Better be safe than sorry. You so don't want to mess with IRS.

DanBC2• 12 years ago

I've heard UK contractors forming a co-operative and employing an accountant. The co-op is purely for the accountant, everything else is kept separate from it.

Not sure about the US but in the UK accountants are trained, qualified, registered professionals. The tax and legal systems are complex so it's usually a good spend of the money. You either save money by knowing what is tax deductible (for example) or you avoid fines by not claiming for things that you shouldn't. It allows you to concentrate on the fun other bits of the business.

NAFV_P6• 12 years ago

It allows you to concentrate on the fun other bits of the business.

So wait up, what you're saying is that correcting reverse entry errors is dull and boring.

DanBC2• 12 years ago

Some may say that. I couldn't comment.

While I'm here I used to work for an electronic engineering sub-contractors.

They had an excellent paperwork system to run production, with Sage Line 50 (when it was Sage Sovereign) doing accounts and payroll. It was great. Everyone knew exactly what was happening with any component - it was in a kit; it was in stock; it was in goods-in; it was on order; or none of those. We could tell when it had been ordered and what for and when it was due in and etc etc. then we "upgraded" to Sage Line 100 and rolled it out to include the whole company - stores, production, ordering, goods in, etc etc. it sucked. We lost all that tracability we had.

kirillzubovsky• 12 years ago

Might not help you this season, but we use inDinero for all our accounting, and as a perk of a full-year subscription, they also do our taxes. It's quite convenient not to have to think about any paperwork.

NAFV_P6• 12 years ago

In the UK accountancy courses are subsidised, it might also be the case in the US. This could be an option regarding a long term strategy.

At my accountancy course I learned that when Sage goes belly up, you resort to double entry.

rahimnathwani5• 12 years ago

I'm curious to know more about the course, e.g. the target audience, objectives and content.

One of the reasons for my curiosity is that I'm unaware of any specific subsidies for accounting courses. Another reason is your comment "you resort to double entry".

Double-entry is fundamental to accounting, in the same way that memory is fundamental to computing.

NAFV_P6• 12 years ago

The government body:

http://aat.org.uk/

The government subsidises the courses.

I'm currently studying level 2 AAT, I missed out on level one. I believe it goes up to level four which is a hefty qualification. Because I receive jobseekers allowance I was waived on some fees, but I still had to pay for the books and the AAT membership. Overall this came to about £260. The membership must be renewed annually if you want to get a decent position, but it doesn't include the initial administration fee.

Regarding the content, it's mostly double entry. At the beginning of the year we were taught some basic business knowledge, like costing and professional ethics. In a few weeks we start SAGE. If I were to continue into the second year ... just double entry but far more complicated.

Double-entry is fundamental to accounting, in the same way that memory is fundamental to computing.

I couldn't agree more, but to get an entry level job, say purchase ledger clerk a lot of employers want experience with SAGE more so than paper T-A/Cs. One of my fellow students mentioned someone who works at a fairly high level in accountancy - almost completely ignorant of dub-entry, but was a whizz with SAGE. A look at a lot of job descriptions mirror this sentiment among typical employers. Using SAGE and the like contrasts sharply with the phrases some of my fellow students utter to remember the fundamental rules. My Zen Koan is: Debit the thief's A/C, credit the victim's.

27182818284• 12 years ago

Hired an accountant that specializes in startups so you don't get accidentally hit with a surprise $30K tax bill like another startup I know just did :(

rahimnathwani5• 12 years ago

It's worth thinking about which of these services you need:

- Book-keeping: Keeping track of paperwork, and movements in cash/bank. Ideally these are entered into accounting software monthly (or more frequently). Some small, cash-based businesses just put paperwork (receipts, and copies of issued invoices) in a shoe box, and give that box to their accountant once per quarter or once per year.

- Statutory accounts/tax filings: If you were a Limited company in the UK, these might include (i) annual accounts filed with Companies House, (ii) annual Company Tax Return filed with HMRC, (iii) quarterly VAT return filed with HMRC, (iv) PAYE (payroll tax) filings with HMRC.

- Monthly management accounts (for you and your investors)

- Planning and advice: at a minimum this would include planning to minimise tax (you can't leave it until compliance time) but may also include cash flow planning or broader business planning

There's more detail around each of these things. I'd be happy to go into more detail about any of these as it relates to UK-based companies.

(I am a qualified accountant but the above is general information and not advice.)

Ask HN: How do you do accounting for your startup?

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