NewsStartup Accounting: A Sneak Peek of New Course
Joshua Lance and Curt Mastio pulled the curtain back on bookkeeping and building a financially sustainable business in their accounting seminar called “Failing to Startup: Where Startups Run Into Trouble.” The two accounting veterans served up a starter course on the financial footwork of the startup world—a brief sneak peek of what to expect in their upcoming class “Startup Accounting.”
In the full-length course, students will take on early stage companies as clients and help them navigate the numbers of business.
“We’ve seen the good the bad and the ugly and we’re here to talk about our experiences,” Mastio said. He first got into the start-up scene when a friend at Cornell University launched a storage and moving company and asked for help on the back-end.
The clinic tackled the different legal identities of businesses and how they affect a company’s finances, why accounting matters, how to find and then appropriately manage funding, and how accounting is related to building the right team.
Lance and Mastio started by charting the art of choosing the right tax payment structure to advance your company. The constantly changing nature of tax code, they said, feeds the accounting lifecycle – or a continual loop of understanding, implementation, optimization and compliance.
On the importance of accounting, which most people undercut to a simple annual tax calculation, they said: “Without accounting, you are flying your business blindly. Accounting is more than just tax compliance.
Accounting drives strategic business decisions that can make or break a start-up. As a prime example of smart tax navigation, Farley Center co-director Mike Marasco brought up Amazon. The shipping company didn’t start paying interstate commerce taxes until their business model had already edged out competitors.
Another motivation for keeping your books straight? “Investors and lenders want to understand how you are using their cash,” they said. At all times, an entrepreneur must be conscious of his or her burn rate (how much longer before the cash runs out?), pricing strategies (how to best protect margins? What role does the business play in the larger market?), and cash flow management.
But to have money to sift through, you need to fund your startup first. Lance and Mastio talked bootstrapping (it’s a misconception that you need to raise a lot of money to start something, they said), bank loans (if you need to purchase a big asset first), friends and family (avoid this), crowdfunding and equity financing.
Finally, the duo talked team-building—not in terms of dynamics but accounting considerations. If you understand your team’s strengths, you can outsource help. When you do find the right people, do you want to secure them as employees or contractors, after considering employee costs and benefits, payroll taxes, workers’ compensation and more?
Ultimately, they contend, accounting is the critical back-end of any business that keeps an entrepreneur’s vision alive and growing. Sign up for their fall class, Startup Accounting, to learn more.