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The Role Outsourced Accounting Plays in Growing Your Startup

Posted by Melissa Hollis to Taxes, Accounting, Business Advice

Here’s a phrase you never thought you’d hear from a CEO who just raised seed funding: “Nobody told me how difficult success can be for a startup.”

 

This may not sound like much of a problem. But the more I thought about it, I realized that many early-stage businesses start out with blazing potential and burn out before they reach it.

8 Budgeting Tips for Surviving Seasonal Business Ups & Downs

Posted by Melissa Hollis to Accounting, Business Advice, Business, Budgeting

 

Seasonality is a common experience many businesses face when they’re building out their budget. There are obvious examples in the form of tanning salons and ice cream shops to tax firms and event space venues, but even a digital agency or SaaS startup can experience high and low points in cash flow throughout the year.


Here’s a few tips on how your business can plan for seasonal slumps and take advantage when business is booming.

Examples of Qualified Research Expenses That Prove the R&D Tax Credit Isn’t Just for Big Businesses

Posted by Melissa Hollis to Taxes, Business Advice, Startup Tips

 

One of the most momentous parts of business is nailing down what makes your product or service different. For some companies, like law firms, this can be the talent, experience, and expertise of your team, or even just your location. However, outside of professional services, many companies define their competitive advantage by identifying new problems to solve or coming up with new ways to solve them. So, it’s those innovative entrepreneurs whom I’d like to introduce to the R&D Tax Credit.

 

What is the R&D Tax Credit?

Since 1981, the United States federal government has offered the research and development (R&D) tax credit as an incentive for companies who research and develop new products. What started as a temporary, trial-based credit has recently become a permanent part of the federal tax code due to its success in stimulating job creation and helping to solidify the U.S. as an economic leader on a global scale.


But, its effects could be even greater.

Seed Investment: Comparing SAFE and Convertible Notes

Posted by Melissa Hollis to Investment, Business Advice

When it comes to seed investment, founders have options. Typically they prefer low interest which is where SAFE comes in as a favorable alternative to convertible notes, but there's much more to the picture. Every entrepreneur should understand his or her options and make sure that they align with their long-term strategic fundraising plans.

 

Definition of Convertible Note

A convertible note is a type of debt that has the right to convert into equity when you hit an agreed upon milestone. FundersClub explains convertible notes as an investment vehicle that is structured similarly to a loan. However, as TechCrunch points out, this type of debt automatically converts into shares of preferred stock upon the closing of a Series A round of financing. The overall consensus about convertible notes is that they are known to be complex and therefore, finicky or glitchy.

 

Definition of SAFE as Seed Investment

SAFE is an acronym that stands for “simple agreement for future equity” and was created by the Silicon Valley accelerator Y Combinator as a new financial instrument to simplify seed investment. At its core, a SAFE is a warrant to purchase stock in a future priced round.

 

There are some similarities between SAFE and convertible notes investments. Both act as a viable way to help startups overcome their current big hurdle in growing or scaling to reach the milestones that warrant a Series A round. Also, both options carry a discount on the next round (or current round for convertible notes), so neither presents a clear advantage. With those in mind, looking at the differences will help an entrepreneur consider their pros and cons when determining their preferred seed investment terms.

Navigating the Financial Waters of a Friends and Family Funding Round

Posted by Melissa Hollis to Investment, Business Advice, Business, Funding

Early in his company’s history, entrepreneur Greg Vetter achieved a seemingly impossible feat: he convinced Whole Foods to distribute his family’s line of salad dressings on a national level.

Although the green light from Whole Foods provided an incredible opportunity, Greg knew it meant he needed capital—fast. So, he liquidated his and his wife’s 401(k)s, maxed out his credit cards, and even used his parents’ home as collateral to secure a bank loan. Then, he raised an additional $1 million from about 30 friends and family members.

What Investors Really Want to See for a Series A Funding Round

Posted by Elise Fajen to inDinero Academy, Business Advice

As someone who spends all day, every day, listening to entrepreneurs share the challenges they face, I’ve learned a few things: Every business may be unique, but business owners have a lot in common.

Lately, I’ve been hearing a lot of anxiety from founders of SaaS companies and other rapidly growing startups as they approach their series A fundraising round.

The Internet is full of great advice for approaching a series A funding round. Most of them emphasize a few basic points:

[Checklist] Making the Switch from Cash or Accrual to GAAP Accounting

Posted by Daniel Reji to Accounting, Business Advice

One of the most thoughtful and hardworking CPAs I’ve ever met once told me that businesses are like fingerprints—each one is unique and has different ways of tracking and sharing financial information internally.

 

I was brand new to inDinero, and she was helping me understand why GAAP is so essential for so many of our clients. GAAP, or generally accepted accounting principles, has become the guiding light for financial professionals preparing public-facing reports for companies in the United States. Accountants use these principles to create statements that give outsiders an easy-to-understand window into your business’s financial performance in order to compare it alongside other businesses, while still maintaining the individuality of each company’s financial profile.

Your Small Business Can Afford to Offer Retirement Plans—Here’s How

Posted by Damian Davila to Investment, Business Advice, Budgeting, Startup Tips

In the past, many small business owners have thought that providing a 401(k) plan wasn’t realistic for their employees. Perhaps they felt they were too small, that the plans were too expensive, or that the administrative burden was just too high.


Luckily, this is no longer the case, and not only is it possible—and affordable—for companies of any size to start providing a savings plan, but getting an early start is also advantageous from a tax-saving perspective


Consider this:

  • A recent Glassdoor employment confidence survey found that 31% of workers value a 401(k), retirement plan, and/or pension over more than a pay raise.
  • Approximately two-thirds of workers not saving for retirement say they would be likely to save for retirement if their employer used automatic paycheck deductions at either 3% or 6% of salary.
  • In 2018, workers can make tax-deductible contributions of up to $18,500 to a 401(k).

The other good news is that in this tight job market, offering a workplace retirement plan is a great way to make your business stand out from the competition. However, it’s not just employees who can draw huge benefits: as it turns out, employers can also reap some incredible tax credits and deductions for providing a 401(k).

Is There a Right or Wrong Time of Year to Outsource Your Business's Accounting?

Posted by Tyson Yoon to Accounting, Business Advice

Maybe you hate spending your Saturdays in spreadsheets, or maybe you hit a few major milestones and are outgrowing your current system. Regardless of what’s driving you to outsource your accounting, there are a few factors you must take into account during this transition.

In addition to a few other key considerations—such as the impact on other vendors or operational processes—the time of year can drive when to bring on a new system. Here are a few times that are ideal to start outsourcing your accounting.

 

What Do Different Industries Spend on Marketing?

Posted by Tim Brown to Accounting, Business Advice, Budgeting, Startup Tips

There’s lots of advice out there about what companies should spend on marketing. Most commentators claim businesses should spend around 6-12% of their revenue on marketing, but it’s important to remember that’s when they’re speaking to a wider audience. If you’re trying to decide how much you should spend to generate revenue for your business, there is a lot more information you should consider.


One of the biggest factors you need to account for when setting your company’s marketing budget is your industry. Take a consumer goods company for instance. In today’s competitive digital landscape, they could spend 12% of their revenue on online advertising alone. That’s going to look much different than a transportation company who is likely to spend much less than 6% because so much of their business depends on existing relationships and campaigns.


So let’s start by taking a look at how much money marketing teams have to play with based on their industry.

Success starts when you take charge of your finances.

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