

Ask YC: Do I need to have breadth on accounting and laws? - log0

Hi all,<p>I frequent here reading. I really value the opinions here, hence here I have questions that I felt best to post here.<p>1. Do I need to get some breadth about bookkeeping, accounting things myself? If yes, where can I get such resources if I decide to self-learn?<p>2. Do I need to get some breadth laws regarding startups? If yes, where can I get such resources if I decide to self-learn?<p>3. Do you do the bookkeeping (money) records yourself or hire somebody to do it?<p>I have completely no idea and am just reading business books. I am trying to get more sense and prepare myself some sort. Thanks a lot all!<p>Update : I'm China based.
======
ErrantX
I assume you are US based? In the UK there are govt agencies called "business
link" which will gve you free advice on startups and getting your business off
the ground. They can give you quite a bit of info related to laws and
accounting. I assume that in the US there are similar initiatives (though you
might have to pay).

As to employing someone?

I'd say it comes down to how much admin time you want to spend on the company
- or rather how much you can spare. If you find yourself becoming too much of
a manager and lose the ability to drive the project forward (IMO essential in
the opening stages of a startup) then it might actually be more beneficial to
employ someone.

Plus of course if you can employ someone experienced for 18 months then that
is 18 months where you get to see how it is done and pick up tips & tricks
from them. (after which it might then be economical to do it yourself).

I have been quite lucky. My father has run his own firm for a number of years
- which is quite small (so he does all the admin). As a result he knows a lot
about the books, accounting and legal aspects (if only on a small scale). In
the end I decided to go with an accountant - but only because I have a friend
qualified from university who is doing it on the cheap :) (if you don't know
anyone like that then go befriend them! :D)

------
bigthboy
Under standard circumstances, it's always important to understand where the
money is going and how it gets there :). Whether or not its your job to
constantly track it at every stop and all the related tasks is a different
situation. Generally, I feel its important that you know your basic accounting
and bookkeeping and be able to understand it to a sense that you can do it
during the early stages. Once you're founded, in the US, you do have financial
and tax responsibilities that you have to be aware of and you likely don't
have the money to pay an accountant to do it. Once you grow a little bit and
have the money to spend on a professional accountant, if you're not really
good at it (and even if you are) its generally best you get someone to do that
for you, just follow along with everything that's going on.

However, being you're in China I'm not even going to step in advising you on
how to go about your country's laws and financial regulations because I just
don't know. China is its own animal and can't easily be dropped into the
cookie-cutter systems of the US and UK. In my opinion and very limited
experience that is, anyways.

~~~
log0
I see. If I am to start, what would be common ways for self-learners? And yes
you are right, I don't think I am financed to pay an accountant at early stage
yet. Well... it's all just thinking right now. =)

I understand the systems in China will be quite different, hence I am only
asking for general advice.

~~~
bigthboy
For me, I learned by obsvering my mother who owns a small retail shop and how
she did accounting. I also took a course at my high school.

I've not really done much of online accounting research so I don't know where
would be the best place to point you. However, some of the major accounting
programs are rather simplistic to use and can, usually, step you through it.

The most important thing early on is to just keep a good record of who you
owe, how much, and why. If you don't have any employees that are paid yet you
really don't have much to worry about. Simple budgeting should get you
through.

When you start selling things and start having employees is when it starts to
get complicated. Other than that just keep a record of what you bought from
who and how much it cost.

 __I AM NOT A CERTIFIED ACCOUNTANT AND MY ADVICE SHOULD NOT BE TAKEN AS THAT
OF A PROFESSIONAL. I AM RELAYING INFORMATION BASED ON MY OWN EXPERIENCES.

~~~
log0
Yes. Thanks a lot. I will think about it.

And don't worry, I will digest the information and decide myself, and not just
directly dupe it into my brain. Thanks a lot. =)

------
log0
>>ErrantX

I am China-based. I assume I do not have a friend that can do the work, and
after all it seems a friend who will do cheap is very likely a close friend,
right?

That is great that your father is someone who has experience. I am walking my
own path. Do you have any titles to recommend?

I do not know if I will get bored of those manager things, and I have never
did it before. But then, I felt there is a need to do it sooner or later, if
we are to start anything.

>>Ram1024

I am trying to storm things out with a friend of mine. We are both developers.
No actual things coming out yet, but I believe if both of us are not having
ideas of how these things work, there's going to be a pain afterwards. I just
want to get some breadth in advance.

You are right, think it loud.

One of the questions we are troubled at is : if we failed and decided to
shutdown the startup we are trying, what if an agreement of 1 year payment is
signed, how can we get rid of liabilities and not be sued?

\--- Please pardon my unclear questioning as I am still not familiar with the
details of how things work. Thanks.

~~~
ErrantX
Hey,

Well my personal circumstances are by the by: they were an example :D My point
was really more that you should try to talk to people with experience (face to
face, not just here). A half hr to an hr conversation will probably get quite
a lot of stuff straight.

Considering your situation it's a bit hard to give advice. Do you actually
have a product to bring to market? Are you at a stage where you a) need
funding or b) can begin to sell. With my startup I worked with a team of
friends for about 2 years before we formed the actual company. We all had day
jobs or university and so we worked in our downtime bringing our idea into
fruition. Now we have an almost marketable product and are at the stage where
funding is essential: so recently we took the step of forming the company and
searching for funding.Until now it was an unecessary need.

If your not selling or bringing in cash for funds then I would advise avoiding
forming any legal entity. The only thing I would say is that it might be worth
signing some kind of partnership agreement between you and your friend. I'm
sure things will be fine but if you fall out (it's so easy) it is best to know
exactly where you stand in terms of what individually you can take away
(ideas, code, etc.).

As to the final part of that post - regarding getting out if the startup
fails. That is incredibly country specific. You will need to get some advice:
either from a lawyer or from a public body (if they exist) as to your exact
options.

In the UK you could, for example form a Limited Liability Partnership (where
if things folded you only have a small personal liability) or an full on LTD
company (where there is no personal liability). I _assume_ similar entities
can be formed in China (though I DONT KNOW).

I think the best advice is to hunt for someone locally who can tell you your
options in that case.

If your entering into contracts with other companies at this stage (note not
_just_ selling - actual contracted agreements) then you DEFINITELY need to
consult professionally. It shouldn't be too expensive and is worth it. If your
obtaining funding and are presented a contract ALWAYS ALWAYS ALWAYS take it to
a lawyer before signing. :)

Good luck!

~~~
ErrantX
One other point is how you plan to account as well. If you want to do it
yourself you'll either have to put together your own system (that is EASY to
use - trust me that is essential) or invest in a commercial package. That can
be expensive - so it might be cheaper to seek professional services.

If iti s only a small company you _might_ be ok just keeping a general book
(income, outlay, expenditure etc etc.) and keep all receipts. Then at the end
of the financial year take all that to an accountant and pay him to get it all
written up and submitted. That is how it works in the UK (and probably costs
around £400-500 depending on the amount of work involved) - I dont know if
that is the case in China but it is worth investigating. Usually there is no
formal requirement for a small startup to keep regulated books - just to have
some form of accounts the tax man can request at any time (it;s more complex
than that but, meh, essentially all that ya need to know :P)

------
cbrinker
I think you should ask the question, "Hey, should I know where my money is and
will I get sued?"

If those two points are relatively important to you, I would imagine spending
a little time understanding them.

1\. You should at least know the basics, how accounts work and how to balance
the books. Quarterly and fiscal reports are good to know so you can tell where
your business is at. Wikipedia.

2\. You will probably need to know about contract and IP law most in the tech
business world these days. Wikipedia.

3\. Yes, I use quickbooks. It's so easy to use that it has somewhat dumbed
down my understanding of accounting that I formally studied last year. Learn
accounting first.

Law is a huge deal. Maybe start off at Jurisprudence? :] I have formally and
vocationally studied many topics of law (I hope I don't switch from IT/Coder
to lawyer >.<) and it's a relatively abstract and complex subject. Basically,
learn the basics about contract and IP law, then just work in good faith. The
courts like people and businesses that work in good faith.

------
3pt14159
It also depends on your business model. If you are going to be invoicing
clients/tracking time you should check out something like freshbooks.com it
will really cut down on wasted time and improve organization. If your company
is ad-driven, email your favorite websites and tell them that you are new, but
love them and that you would like to put up an ad for them for $5 a month or
something. 2 out of 3 times they will happily do it.

------
ram1024
well it would probably help paint a clearer picture of what you need if you
explain to us what you're trying to do.

like for example:

"i am a coder, i am making so-and-so product (can be vague if you're worried
someone might steal your idea) for this field. i am currently partnered with
someone who does design and marketing right now and we're looking to start
full time work on this company in 2 months, what resources or skillsets should
i be researching?"

i get the feeling that even by fleshing this out you'll realize some of the
things you might need to look into.

let us know :D

