Here’s how I’m dealing with it. First, take a look at Brad Feld’s Finance Friday article from 8/12. Next, if you want more investment money, show what you did and how much you accomplished with the last money you got. This is just common sense. If you turned it into a working prototype, used it for travel and meetings with potential partners, great. Capture all of it. Break it down by what your expenses were. Show exactly what you’re paying your developers, sales teams or creatives. If you get a check from your investor(s) for the business, it goes into a business account. Do not mix your personal expenses and your business expenses. It’s called commingling of funds and when legal action happens (and it will) can cause you to lose your personal protection under corporate status. In other words, your personal assets could be at risk. Seek competent professional opinion if you need more on this subject. If you don’t have an operating account then BB&T can set you up in about 20 minutes. Bring ALL of your partners and bring your articles of incorporation as well as your EIN from the IRS. Know in advance who can withdraw money from the accounts as you will be asked for that.
Now, if you followed Brad’s advice and got a copy of Quick Books, also get a copy of Quick Books for Dummies and it will walk you through the nuts and bolts of the accounting software. Have your EIN when you do it. This will suck at first but it is the administrivia that goes along with a startup. Ten minutes a day and it will be manageable. It’s way better than an investor ready to discuss handing you cash and it takes you a week to figure out how to pull a balance sheet together. By then, they’re gone.
