Client Spotlight: Data Analytics Startup
Does this sound familiar?
Tyler and his two partners were so busy that first year making their dream into an actual company, they didn’t have time to set up accounting processes or even learn how to do a lot of the basic things required for keeping the books in order.
The company had been growing steadily since they were founded, but each month, Tyler wasn’t entirely sure if they’d made a profit or not. Sometimes he didn’t know who was invoiced or paid and who still needed to be.
Things were a mess, to say the least.
Do Your Job and Let an Accounting Professional Handle the Numbers
As majority owner, Tyler had been handling all the day to day himself, juggling books, accounts, payroll, invoices, registrations and more in addition to his duties as CEO and hardware engineer for the company.
He realized he was spending 10 hours a week or more on administrative duties and getting increasingly behind and disorganized about it.
The business was also attracting private equity investors, who would soon require regular financial reporting and verifiably accurate numbers.
He needed help, and he was about to need a whole lot more.
Luckily, a friend recommended Rialto, a local Atlanta bookkeeping and accounting firm that specializes in working with startups.
Cleaning Up Your Financial Statements
The first thing that needed to be done was catch up accounting for the past year to put all the books in order. Our team made this a priority.
We went through and collected all the receipts, invoices, payments, tax documents and payroll records and reviewed all the entries against them.
Our team then reconciled bank and credit card accounts with the recorded data to make sure nothing had been missed.
It was a big job, but it was necessary because we caught several instances of missing information and were able to rectify multiple recording errors.
Now, Tyler and his investors have a clear view of their business for the first year, and they know that the numbers the company will measure growth and profitability on are correct from the very start.
The best part is that they don’t have to worry about things going in the wrong direction again.
We set up processes and software to make it easier to enter, code and organize the data going forward.
Plus we’ll be handling the books from now on, and we can do that job better now that we’re starting with a solid and error-free foundation.
Atlanta Full-Service Accounting Firm
Being new to the business world, Tyler knew they needed insurance but wasn’t sure what kind or how to find it. He also worried that he wasn’t registered with the right state agencies – and it turns out he was correct on that.
We got the business registered properly and set up tax payment schedules to ensure they were in full compliance with the law.
Our team also helped them find suitable general liability insurance and budget for all the costs.
Clearing Up HR and Payroll Confusion
The startup had a few new hires and more coming soon, so we set up the structures for a streamlined onboarding process.
Their payroll system was pretty bare bones, too, as they had only three employees – just Tyler and the two partners – up to that point.
They’d managed to set up direct deposit and withhold the appropriate payroll taxes, but had no idea how to actually pay those taxes or where to send them.
We set them up on an appropriate payroll software program to handle that and all their payroll needs. We’re filing the necessary monthly, quarterly and annual payroll returns for them, too.
They won’t have to worry about administering payroll or recording it in the book anymore – we have that covered and can keep an eye on it to make sure everything continues to run smoothly.
How to Handle Account Receivables as a Startup
In the process of poring over the historicals, we noticed an alarming issue – it turned out that one client hadn’t been invoiced in almost 7 months!
There was no clear invoicing process, just an ad hoc system where they’d create an invoice manually and send it off.
The system meant that it was easy for documents to get lost or never get created at all since everyone was so busy multitasking, and somehow this one customer hadn’t been billed at all for the duration.
The first thing we did was call the customer ourselves and explain the issue and apologize. We worked with them to figure out an appropriate arrangement for the back payments and assure them that this was an irregularity that would not occur again.
In order to make good on that promise, we set up an accounts receivable system that works for our startup client’s product and processes.
We’ve also assumed control over accounts payable to avoid similar problems on the payment side.
What Types of Reports Should Your Accountant Provide?
The business has private equity investors that require specific reporting on a monthly and quarterly basis. The reports are specific to each investor and provide the investor an update on the company’s growth, strategic plan and detailed forecast for the upcoming four quarters.
Rialto now prepares those reports along with owner reports that help Tyler and his partners gauge the health and growth rate of their business. We sat down with all three of them to show them how to interpret the big three financial reports as well as other important financials we prepare.
We have a standing appointment to go over everything in detail once a month, plus regular contact every week or so to talk about important financial matters. They know they can call and consult with us anytime they need guidance, and that we’ll contact them to talk about the things that matter most for the business.
Atlanta’s Best Accounting Team for Startups
All of the systems we’ve put into place for Tyler and his partners are fully scalable, so they can grow with the company as it evolves.
Rialto’s role can grow with the business, too, providing complex accounting, budgeting and forecasting and financial modeling services as the need for them arises.
We can also take on outsourced CFO and controller duties, help them raise capital, and serve in a fuller business advisory role as the company becomes bigger and more complex.
Our extensive operational and financial experience means we can handle or assist with whatever this startup may need.
Tyler says he’s relieved he can finally focus on serving his clients and making his data analytics platform the best that it can be. He’s got those 10+ hours a week back and no longer stays up at night worrying about his company’s profitability, taxes, compliance or investors.
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