
Ask HN: How do you do accounting for your startup? - manas2004
Its tax time for our (bootstrapped) startup, and we&#x27;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&#x27;s experience.
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rahimnathwani
It's worth thinking about which of these services you need:

\- 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.)

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batoure
Hire a book keeper as a contractor. We went through this with our startup we
spent time researching various platforms considered automating some of our
processes our selves and then ultimately hooked up with a book keeper quite
accidentally. It changed our whole perspective on the process. Think of it
this way if you were a group of front end developers who turned out to need a
high powered backend database solution and hit a wall with internal
implementation you would immediately go out and find a dba to be part of or
advise your company on the path forward. Think about your books in the same
way. Accounting has purposeful redundancy built into it and many constructs
that will make a logical programmer want to cry. Getting setup in the right
way from the beginning will help you later.

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batoure
probably good to also point out the difference between book keepers and
accountants in the united states. A book keeper is pretty much a literal title
they are experts at going through and organizing your accounting. They are a
cheaper first step before eventually getting in front of an accountant. They
will generally also point out things you should take to an accountant. A book
keepers time is generally significantly cheaper than an accountants. To make
another example think a SQL developer could get you started with a plan and a
DBA would come in to do really deep low level work.

~~~
rahimnathwani
That's roughly the difference in the UK as well. My sister does accounts and
tax for a number of small-ish businesses. She provides a part-time book-keeper
for those businesses who don't do it themselves (either on-site or remote).
That way (i) the business is paying only the rate necessary for the service
they need and (ii) she has a decent starting point for remaining work
(accounts preparation, tax calculations etc.).

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DanBC
I've heard UK contractors forming a co-operative and employing an accountant.
The co-op is purely for the accountant, everything else is kept separate from
it.

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.

~~~
NAFV_P
> _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.

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DanBC
Some may say that. I couldn't comment.

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.

~~~
NAFV_P
Correcting reverse error entries:

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.

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NAFV_P
In the UK accountancy courses are subsidised, it might also be the case in the
US. This could be an option regarding a long term strategy.

At my accountancy course I learned that when Sage goes belly up, you resort to
double entry.

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rahimnathwani
I'm curious to know more about the course, e.g. the target audience,
objectives and content.

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.

~~~
NAFV_P
The government body:

[http://aat.org.uk/](http://aat.org.uk/)

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_.

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rahimnathwani
Thanks for the clarification. A few quick thoughts:

\- 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...](http://www.cimaglobal.com/Our-locations/UK/find-out-about-joining-
us/Im-an-AAT-student/)

\- 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](http://www.aat.org.uk/qualifications/funding))

~~~
NAFV_P
> _" 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 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.

~~~
rahimnathwani
Correct. I wouldn't expect someone to know about the rounding rules, as there
isn't just one rule which applies to all situations:

\-
[http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPort...](http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_CL_001596#P1493_117367)

\-
[http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPort...](http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&propertyType=document&id=HMCE_CL_000139)

~~~
NAFV_P
Cheers for the links.

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kirillzubovsky
Might not help you this season, but we use inDinero for all our accounting,
and as a perk of a full-year subscription, they also do our taxes. It's quite
convenient not to have to think about any paperwork.

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27182818284
Hired an accountant that specializes in startups so you don't get accidentally
hit with a surprise $30K tax bill like another startup I know just did :(

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malfario
Which country do you live in?

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manas2004
We're a US C-corp.

