Building Financial Infrastructure for Your Startup

Building Financial Infrastructure for Your Startup

Building a financial infrastructure for your company may not be high on your list. When you’re just starting out, most startups don’t give much thought to the financial aspects of growing their business. That’s a mistake.

The thing to keep in mind is that financial infrastructure isn’t just about tracking expenses and paying bills. It’s selecting the right tools and putting into place the systems and processes that will help you to manage all of your finance needs—but also position you to take your company to the next level.

While each company is different and has unique financial needs, there are some things that all companies need to consider when creating their financial infrastructure. Perhaps most importantly, you need to take into account your current situation. There are big differences in your financial strategies depending on whether you are pre- or post-funding.

Pre-Funding Financial Strategy

Prior to funding, your company is in a state of serious development. You want to keep things as simple and low-cost as possible as you set up your basics. There are a few key items for you to focus on at this time:

And, most importantly of all: do not do your own accounting. I repeat: Step away from Quickbooks…quick! Hiring a professional accountant is a worthwhile investment that will save you time, infinite hassle, and, down the road, money.

Post-Funding Financial Strategy

Post-funding, your financial strategy will shift and deepen. You’ll still need to focus on the basics from your pre-funding days, but you’ll face new financial concerns as well. Now that you have investors, they will want to see clean financials. Starting clean saves you from the herculean task of future clean-up, and allows for accurate tax reporting. This isn’t just a nice-to-have: it’s also necessary for 409A valuation. Post-funding you’ll want to:

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