Getting Your Books in Order for a New Company
Kyle Murphy is a Technology CEO and investor in this video he discusses the importance of having your books in order when starting a company.
Getting your books in order in a new company is probably the last thing any entrepreneur wants to do and often knows how to do. But unfortunately, it’s one of the things that can really screw up a funding round whether it’s just an angel round or the big one later on. And so it’s important you get them right away in the beginning. It just makes life easier. It makes it easier to get everything done. So there’s three things. All right.
Accounting. Get an accounting system. QuickBooks Online, FreshBooks, there’s plenty of free solutions on it. There’s not many transactions. If you know nothing about accounting, just go get a freelancer for $25 an hour. They can do it in 2 hours a month normally but make sure you get that from day one because the first thing anyone investing is going to ask for is financial statements. You got to have them.
Legal. Get legal done. Make sure the company is properly documented. Again, this is simple. You can use LegalZoom or you can have a law firm that’s more complex depending on your stage but make sure it’s in order. It’s all in one book, your corporate documents, any IP right there so you can just hand it over to anyone for due diligence.
And lastly, HR. This is a place no one wants to deal with but it’s really important that can bring down a company in the future which is it only takes one unhappy consultant or employee to destroy a startup when you don’t have the capital. Make sure you’ve got your legal compliance posters up. Make sure you have an agreement with anyone you’ve hired if they’re consultant or if they’re employee, what are the terms of the agreement, and avoid some of the pitfalls of having an employment contract and make anything baked in stone for your employees.
So if you just deal with these three things. There’s plenty of freelancers out there that can help you achieve for accounting, legal, and HR to make sure when you’re going through that next level of funding or for sale that everything is in order and nothing holds up that process.