Ask HN: How do you do accounting for your startup? 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. |
- 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.)
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.
So wait up, what you're saying is that correcting reverse entry errors is dull and boring.
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.
At my accountancy course I learned that when Sage goes belly up, you resort to double entry.
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.
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.
As an example, some idiot (it's easily done) posts a credit entry as debit. All error corrections are posted to the Journal A/C, usually situated in the General Ledger, with the corresponding double entry in the A/Cs which contain the errors.
To correct the error without taking the Journal into account, one post restores the A/C to its original balance prior to the error, then another entry is required to kick the balance into its correct value. If the error originally occurred in a memorandum account, the error will trickle down to the General Ledger, so another couple of entries are required.
I think that a reverse error entry in the Sales or Purchase Ledgers that is discovered after the end of the financial period requires eight entries to correct it.
In theory some compound errors may require dozens of entries to correct.
- Most/all of the UK professional accounting bodies recognise AAT level 4, and will give you exemptions from some/all of the first level of their own exams, e.g. http://www.cimaglobal.com/Our-locations/UK/find-out-about-jo...
- Totally agree, practical experience of accounting software is more important for a book-keeper than a deep understanding of double-entry. However, you've got to understand enough to be able to reverse/fix transactions when you/someone screws up.
- I've met candidates who claimed >1 year experience doing book-keeping, but couldn't answer this simple arithmetic problem (with a calculator): "If I buy a mug from the pound shop (for 1 pound), and the VAT rate is 20%, how much of what I paid was VAT?".
- I don't think AAT is a government body. (But I see the info on government subsidies for AAT courses: http://www.aat.org.uk/qualifications/funding)
I calculated it as 16p, but I think if you are presented with a bill that requires paying VAT, the actual amount of VAT should be explicitly stated. VAT is always rounded down, so an implicit sum has lost some information, unless the total number of pennies is divisible by six.
> I don't think AAT is a government body.
Whoops, poorly worded.
- http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPort...
- http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPort...