Startup and accounting
Within the past few years, the expression ‘Startup’ has established itself within the daily economical media landscape. But what exactly is a Startup? Not every newly founded company may be defined as such. Basically, two elements are to be fulfilled: for once a Startup usually peruses an innovated business model and secondly an over-average growth potential is anticipated. Because of that Startups are often to be seen within the internet or elsewise technological fields.
At the beginning of any Startup the liquidity management may be a central factor. Therefore, key employees are often paid via a stock (option) plan rather then cash. Any such plan needs to be carefully negotiated and ruled in terms of legal and taxation issues. Besides this, a detailed liquidity plan and continuous management thereof is necessary.
Flexibility / Exit Plan
In order to achieve an over-average growth a basic structures and culture needs to be implemented. Therefore, different areas, such as the legal setup, structure of the share capital, statutes as well as salary or rental contracts are to be evaluated in order to achieve above mentioned goals. Furthermore, during a growth phase any chosen setup may be reevaluated in order to prepare an exit strategy.
Tax Planning / Domicile
Like any other company, also for a Startup an optimized tax structure and plan may be vital. Since Startups have special tax burdens and requirements these issues need to be addressed at the very beginning. Because of this unique situation some tax authorities have been introducing new ways in order to tax Startups.
It needs to be determined, if certain accountings tasks shall be performed internally or if an external solution is more appropriate. Both approaches have their advantages, resp. disadvantages. TREUFiN Reuter AG provides several online based accounting platforms from which the clients may choose from. With such a platform accounting cost may be reduced and flexibility is secured.
Recommendation / Summary
Many of the challenges of a Startup are similar to any other company really. However, there are certain special areas to be considered which only applies to them. Every Startup is unique and therefore an individualized approach is certainly necessary.