Mighty Digits

Mighty Digits is a consulting firm specializing in Accounting and Finance services for early stage startups. Services include Financial modeling, Month end Close, AP / AR Management, Payroll, Compliance Filings and more.

CEO and Founder

Graphite Financial

Senior Associate - Strategic Finance

Skill Silo

•	Co-founded and led an investment backed startup that pair’s language professionals with students via live 1-on-1 sessions of video conferencing.
•	Built out entire Accounting processes. Established best practices for reporting, managing, and forecasting Finance / Accounting.
•	Prepared and filed tax returns, extensions, and K-1’s.
•	Recruited, hired, and managed 50+ contractors.
•	Led the company through our first investment via a tech accelerator.
•	Designed and implemented sales and marketing strategy to acquire both consumers and businesses.
•	Delivered multiple presentations in front of investors, and audiences in excess of 800 members.

Co-founder and CEO

KPMG

•	Reviewed income tax provisions for accuracy and completeness of client’s estimate of total income tax liability for each quarter, determined and noted items that required revision, and communicated to client recommended updates to calculations
•	Prepared quarterly estimated tax payment calculations, federal and state extension calculations and extension forms, and federal income tax returns including Form 1120 and Form 1065on a consolidated basis 
•	Delegated work and supervised projects involving first and second year associates.
•	Prepared presentations and trainings to teach first and second year associates the nature of certain tax engagements.
•	Provided support to KPMG Audit practice on various occasions and assisted with tying-out financial statements and footnotes, performing cash confirmations and conducting final analytics to discover and address any errors and inconsistencies
•	Participated in numerous recruiting events involving seeking new talent, as well as maintaining relationships with prospective employees.

Associate in Global Banking- Tax Group

Intern in Global Banking- Tax Group

I live and breathe 2 things...Finance & Accounting + Startups

I am at the perfect intersection...
Being a CPA...
and having run my own startup for 2 year...
Leaves me uniquely positioned to solve complex Finance & Accounting issues for startups

I help startups SCALE with incredible Finance & Accounting support with:
- Fundraising & Board reporitng
- Bookkeeping
- Enhanced Financial Reporting
- Smooth Accounting operations


I also love teaching, and sharing my passion with the world

Hope you enjoy my content, and be sure to drop me a note to say hi
Or you can email me at josh@mightydigits.com

Everything you need to know about 1099s 👇 

We're halfway through January! 

That means the deadline is approaching for year end close, 2023 budget refreshes, and perhaps most importantly...

Filing your 1099s

First...

➡ What are 1099s?

1099s are a form that the IRS requires to be filed every year to report certain types of non employment income

This form needs to be filed both with the IRS, and provided to the eligible recipient

The way I interpret it...the IRS likes to collect taxes whenever money is being made (think payroll tax, sales tax, income tax)

When it comes to employees, the IRS requires that you file a W2, which is typically done through your payroll provider, showing all the wages & taxes withheld for each paycheck

When it comes to non employees- the process is a bit more complicated. 

Here, the IRS is looking for a record of who you paid so that they know to look out for the same information on their tax return to ensure the proper taxes are collected

While there are many forms of 1099s, we'll be focusing on the most common - form 1099-NEC

➡ When is form 1099 - NEC due?

1099s are typically due to be sent to the vendor on the last day in January, or if that day falls on a weekend, the next available business day. In 2023, the due date is January 31st

➡ Who is exempt from filing form 1099-NEC?

Not everyone who your business paid needs to receive a 1099-NEC. Here are some of the most common exceptions

🙅‍♂️ Payments of less than $600
🙅‍♂️ Payments to a corporation (including S corps, or LLCs who elect to be taxed as C corps)
🙅‍♂️ Employee Reimbursable expenses
🙅‍♂️ Payments to Non U.S. Persons

You can validate many of these details by requesting a W9 from your vendors, which will show the details behind many of these exceptions

➡ How do you file form 1099-NEC?

You can always file this form manually via paper...but why bother with that approach? It's 2023!

My favorite software is Track1099, which was recently acquired by Avalara.

Quickbooks online is another viable option

As with filing any form with the government, there are many complexities and exceptions that you'll want to be aware of - I've done my best to summarize the details in this post, but I encourage you to read the full details on the IRS's website

If you need help filing form 1099, drop me a note below and I'd be glad to assist.

What else would you add to the topic of 1099s?
Join the discussion in the comments below 👇 

#finance #startups #accountingandaccountants

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Josh Aharonoff, CPA

Had a great time chatting with Graham Stanton from Avise on fundraising & accounting

For those of you who don't know, Graham is a former cofounder of Peloton, and has tons of wisdom to share!

What are Prepaid Expenses?

This is one of my favorite questions to ask in an interview

It's also one of the most common adjusting journal entries that are booked in a month end close...

And it may be one of the simplest to understand

➡ What are Prepaid Expenses?

Prepaid expenses are amounts paid for goods or services to be benefitted from in a FUTURE PERIOD

It is an asset, since it's an economic benefit that you have yet to use

➡ What are some examples of Prepaid Expenses?

It can really be anything...here are 2 common examples that come to mind:

1️⃣ A 12 month subscription

Here, you'll record the purchase as a prepaid, and then amortize the amount each month as you use the subscription

2️⃣ A conference or event that takes place in the future

Here, you won't be amortizing the amounts over a set period of time, but instead may amortize the full amount in a future period when the event takes place

➡ How are Prepaid Expenses booked?

In the 1st example above, you would classify the amounts to Prepaid Expense upon purchase 

DEBIT: Prepaid Expense $12k
  CREDIT: Cash $12k

Each month, as you use the subscription, you would then amortize 1/12th of the amount, as such:

DEBIT: Software Expense (or whatever the category is)
  CREDIT: Prepaid Expense $1k

The key with prepaid expenses, and any adjusting journal entry for that matter, is to have clean workpapers that show all of your details & calculations, allowing you to trace back from the ending balance on your balance sheet

What else would you share on what a prepaid expense is?

Join us in the discussion in the comments below 👇 

#finance, #startups, #accountingandaccountants

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We live in a divided world

There has been a war between 2 cities since the dawn of time…

I’m talking about the war between 

ACCOUNTING 
and 
FINANCIAL PLANNING & ANALYSIS(FP&A)

I’ve seen this story at dozens of startups…

➡️FP&A Requests data from Accounting, and gets frustrated when the data takes too long to generate.

➡️Accounting doesn’t like being micromanaged, and thinks FP&A doesn’t understand the true pain in closing the books, and all other operational items

➡️FP&A presents a forecast that is disconnected from the numbers that Accounting feels are accurate, and both get blamed

Your Finance & Accounting function NEEDS PEACE between both sides It is VITAL that they COMMUNICATE with one another… and to work in UNISON 

The challenge is that these departments are siloed, when they shouldn’t be.

The VP of finance is often times the savior, uniting both cities, allowing them to work in harmony with one another.

The best VPs of Finance are ones who know enough about both sides.

I’ve seen many VPs of Finance know how to put together a detailed board report, but stumble when trying to understand what adjusting journal entries are.

But it doesn’t have to stop with the VP of finance

A good controller knows just how impactful it can be to their career if they get more involved in the modeling & analysis side of things

A hungry staff / senior accountant knows that the possibilities are endless if you can learn both
And a CFO…well…A CFO has no choice but to know them both

Got any other thoughts on the divide? 

I’d love to hear so in the comments below 👇

Everything you need to know about how fundraise with proper Finance & Accounting 👇 

Over the last 5 years, I've helped dozens and dozens of startups raise over $400m in capital from investors

There's nothing that excites me more than hearing that the investors found all of the financial data to be CLEAN and CREDIBLE

First...

➡ What does the fundraising process look like?

While the process may vary depending on where our startup is in it's journey, and who you are raising capital from, it typically follows this pattern

1️⃣ Pitch deck 

Here, a pitch deck is reviewed by the prospective investors, which covers your product, team, market, and much more

2️⃣ Due diligence 

it's here that VCs will review all sorts of details that you send them, often times forwarding this information to the analysts on their team. 

Here is where the real test comes! 

Don't forget that you're data will be reviewed by a team of people with strong knowledge in Finance & Accounting 🤓 

3️⃣  Term Sheet

Made it this far? Congrats! The next step often is a term sheet, where investors will outline the terms of the investment.

It's here that they will outline what valuation, amount, and investment instrument they are interested in making

Once the term sheet is signed on both sides, the next and final step is...

4️⃣ Execution by legal, and money transfer

Here, both legal teams will sign off on any additional information, and the money will be transferred

Congrats! You just raised capital

Know that we know what the process looks like...

➡ What Financial data can you expect to share throughout the process?

The most common items that I've seen are 

1️⃣ Your Financial Statements

This shows all the details on where you've BEEN, and is the foundation to all of your financial reporting

2️⃣  Your Use of Proceed Model

This is a big one! Investors often times aren't as interested in where you've BEEN as they are in where you're GOING

It's here that you'll want to show the full details for how you will scale, raise capital at higher valuations, and eventually return the ROI they've been looking for

3️⃣ Your Cap Table

Here, investors will want to understand who else invested in your startup, along with the details surrounding each shareholder

4️⃣ Other Metrics

VC's love metrics! Here are a few popular ones:

📊 Customer Acquisition Cost
📊 Customer Retention
📊 MRR / ARR
📊 Gross Profit / Gross margin
📊 Cash Burn

For more information on VC metrics, check out the comments below for my guide on VC metrics

What else would you add to the fundraising process?

Join us in the discussion below 👇 

#finance #startups #accountingandaccountants

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This waterfall is something I include in ALL of my financial models 👇 

To me, it's one of the many FOUNDATIONS needed to master when creating a 3 statement model

What exactly is a waterfall in a financial model?

It's a table that allows you to AMORTIZE a value over multiple periods

It would look something like this for a 3 month amortization

        ------------------
12k |  4k, 4k, 4k
15k |  -,   5k, 5k, 5k
30k |  -,    -, 10k, 10k, 10k

Here are a few specific examples:

BOOKINGS➡ REVENUE

Often times, you'll want to show how a bookings where cash is collected UPFRONT for the year...

but revenue is being spread out EVENLY over each month

RECEIVABLES ➡ COLLECTIONS

Do your customers pay net 30? net 60?

With the right waterfall in place, you can easily show how an amounts invoiced translates into cash in the bank over a certain amount of periods


INVENTORY ➡ COGS

Before you can sell your product, you'll need to ensure that you have the proper inventory to support the sale

Here, inventory is acquired months before a sale takes place, allowing you to build in proper LEAD TIMES before the inventory gets converted into COGS

RAMP PERIODS 📈 

It's common for a sales rep to take a few months before they can start hitting their quota. Here, you can show how a new employee who joins slowly ramps up in your waterfall table to the point where they are able to fully deliver against their targets

There are SO MANY more usecases for creating a waterfall in a financial model...

To me, it's one of the many foundations that you must master in order to deliver the utmost value in a financial model

It is my hope that this video helps you master this crucial concept

Got anything to add?
I'd love to hear your thoughts in the comments below 👇 

PS: Skip the tutorial and download this free template in the comments below 👇 

#finance #startups #accountingandaccountants

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Here's my 80+ pg MEGA GUIDE on Month End Close 😝 👇 

Month End Close is one of the most common tasks for an accounting function. 

➡ What Exactly is a Month End Close?

While many may define this differently, to me, a month end close is a RECONCILIATION & SIGN OFF on a company’s financial statements
 
➡ What are the Steps in a Month End Close?

Here are my preferred steps:

1️⃣ CLASSIFY ALL TRANSACTIONS TO GL ACCOUNTS

All of your bank & credit card transactions should automatically flow through to your accounting software, allowing you to easily start classifying to your General Ledger accounts

When classifying accounts, keep these tips in mind:

⏩ Include a vendor / customer name on all transactions to allow for further reporting & analysis

⏩ Bulk classify transactions for the same vendor that belong to the same category to save time and stay efficient

⏩ Put all transactions you are unsure of to uncategorized expense / income, and revisit at the end. Don't let it hold up your month end close!


2️⃣ RECONCILE ALL BANK & CREDIT CARD ACCOUNTS

Bank reconciliations are IMO the most important piece of a month end close - without it, you don't have any credibility on the numbers being presented

Bank recs are a matching of the balances / transactions from your bank & credit card statements to your general ledger balances

3️⃣ BOOK ADJUSTING JOURNAL ENTRIES

Here comes the real work in a month end close - adjusting journal entries. 

Common ones are Prepaid expenses, Deferred Revenue, Depreciation....the list is endless

The key here is to have rock solid workpapers, typically in excel, helping you both validate & calculate the adjustments / balances

4️⃣ CONFIRM ACCURACY & FINAL REVIEW

Here, it's time to zoom out and review all of your work - this is an important step!

I like to first start by scanning the month over month P&L, Balance Sheet, and Cash Flows for anomalies

🤔 Do any accounts show large swings in balances?
🤔 Are there any new accounts that can be merged with existing accounts?
🤔 Do any accounts have missing values?

From there, I'll do a final review on all transactions posted to ensure everything is coded correctly

Once you've completed the steps above - you're all set! 
And you can then move onto distributing the financials, performing analysis, and so much more

Those are my tips for closing out the month - everyone does it differently

What has been your experience?
Join us in the comments below and let us know your thoughts : 👇 

PS: Check out my chart of accounts template in the comments below to start off your month end close on the right footing

#finance #startups #accountingandaccountants

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Do you know what a Balance Sheet is?

Most CEOs that I work with are clueless...

After all...
isn't cash flow what's most important?

Or profitability?

Actually, if you were to ask me... it's the most important of the 3 statements

Why? 

Because a Balance Sheet is the one statement that gives you visibility into ALL 3 statements

OK...first, let's define what a Balance Sheet is

A Balance Sheet tells you:

➡ How much the company OWNS (Assets)

➡ What the company OWES (Liabilities)

➡ And how the company has been FUNDED (equity)

To put extra correctly, Liabilities and Equity BOTH show you how a company has been funded, but liabilities are CAPPED, while equity is UNCAPPED

So how does a Balance Sheet tell you about profitability?
Or Cash flows?

You can learn the profitability of a business by understanding the NET CHANGE in RETAINED EARNINGS / NET INCOME on your Balance Sheet

If those 2 numbers are growing...the company has been posting a positive net income! 🤑🤑🤑 

..and you can learn about where CASH is going by taking the difference in all other Balance Sheet accounts (roughly)

So as you can see - the Balance Sheet gives you the most information!

What else would you add as for what a balance sheet is, and why it's so important?

Join us in the conversation in the comments below 👇 

#finance #startups #accountingandaccountants

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Be a FULL STACK Finance & Accounting professional

Your career depends on it

I’ve seen these mistakes so many times:

😩 A Controller who continues to focus on what’s happening, but can’t explain where the business is going

😩 An FP&A manager who knows all of the ins and outs on the financial data it is presented with, but is clueless on how accounting compiled that data

😩 An AP clerk knows how to process payables efficiently and reliably, but can’t understand the ins and outs on how an adjusting journal entry works

😩 A VP of Finance who owns the forecast an reports to the board of directors, but has no idea how a journal entry affected the 3 statements

It doesn’t have to be this way.

You have a choice

Continue to focus on what you know
Or step out of your comfort zone to learn both sides of FP&A and Accounting

Here’s what happens when you learn both

✅ Your job prospects greatly improve

✅ Your compensation, which is a reflection of the value you bring, goes up exponentially

✅ You start to understand the full picture, allowing you to perform each function better

✅ You perform higher level, more challenging tasks that stimulate your mind

✅ You get to work with many great people in unison

But that’s not where the value ends.
The value also gets magnified to the company that you work for

When FP&A and Accounting work together..

🤝 Projections are way more defensible

🤝 Timeliness of reporting is improved

🤝 Resources are used efficiently

🤝 Greater insights are gained

Got anything to add?
Let me know in the comments below 👇

#finance #startups #accountingandaccountants
_________________
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Everything you need to know about Bank Reconciliations 👇 

Bank reconciliations to me are possibly the most important part of a month end close

➡ What is a Bank Reconcilation?

A Bank Reconciliations is a matching of the transactions on your bank / credit card statements to the transactions in the general ledger

It allows you to confirm that the balances for your bank accounts & credit cards in your general ledger match to you the actual statements on the banks website

➡ Why are Bank Reconciliations so Important?

If a Bank Reconciliation isn't completed, I wouldn't trust anything that I'm reading on a company's financial statements

Why?

Because there's no way to validate that the transactions used to compile the numbers shown on the general ledger

There would be no way to confirm that there are no mistakes in the numbers being used, or even worse, that there was no fraud

➡ How are Bank Reconciliations performed?

Bank Reconciliations are performed by entering in the ending balance shown on your bank / credit card statement, and confirming that the transactions in your accounting software + the beginning balances shown = the ending balance on your statement

If the amounts don't match, it can either mean a mistake in the data being used, or certain exceptions which can be valid

➡ What are Some Common Reasons for Why a Bank Reconciliation May Show Different Ending Balances Between Your Bank and General Ledger?

Here are a few usecases

❌ There are duplicate transactions in your general ledger ➡  action here is to remove these duplicate transactions

❌ There are missing transactions in your general ledger ➡ action here is to add back these transactions

✅  There are transactions that haven't cleared the bank yet, such as checks that have not been cashed ➡  this is an acceptable reason, and should be monitored each month to ensure accuracy

✅  Transactions posted on a cutoff date ➡ often times, transactions will be posted in your general ledger on the same date in which the period ends on your bank / credit card statement. When that happens, it is common for some transactions to be shown in your general ledger that haven't yet cleared the bank. In this instance, you'll want to ensure that next month these transactions are cleared

Those are a few of my thoughts based off of my experiences working with startups, and closing out their books.

What would you add from your experience?

Let me know in the comments below so we can all learn 👇 

#finance #startups #accountingandaccountants

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Calculate & Forecast Headcount with INSANE accuracy 🤯 👇 

Calculating & forecasting headcount spend is HARD...
But it's also crucial to do correctly

Why is calculating & forecasting headcount spend so vital?

Because your headcount spend will almost always be your #1 expense

And it will also be your most challenging cost to control once you've hired someone...

When calculating & forecasting headcount, consider these questions

🤔 What if someone starts in the middle of the month?
🤔 What if someone gets terminated mid month?
🤔 What if I want to give someone a raise?

In this video, I walk you through my preferred method for calculating all of these usecases with precise accuracy

The best part? You can skip the tutorial and download this template for free in the comments 👇 

#finance #startups #accountingandaccountants

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Everything you need to know about EBITDA 👇 

EBITDA just may be the 6 most notorious letters in Finance & Accounting

There is so much emphasis on this metric, yet it is so often misunderstood

Let's start with:

➡ What is EBITDA?

EBITDA's literal definition is 

Earnings
Before
Interest
Taxes
Depreciation
Amortization

➡ How is EBITDA calculated?

Like the name implies.. 

Take your net income
[+] Interest Expenses
[-]  Interest Income
[+] Taxes
[+] Depreciation & Amortization

➡ Why is EBITDA so important?

Well.. a number of reasons...the 2 biggest being:

1️⃣ EBITDA is commonly used to value businesses

2️⃣ EBITDA is commonly referenced on a number of ratios

In the guide below, I've worked with the well known EBITDA expert Chris Reilly to go into more details on EBITDA, and share common misunderstandings, and other forms of EBITDA

If you aren't following Chris's linkedin, I highly suggest you do - his daily insights are gold, and he's been a huge inspiration in my journey as a linkedin content provider

Got anything to add to the topic?
Let me know in the comments below 👇 

#finance #startups #accountingandaccountants

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A cheers to surpassing 25k followers on linked! 🥂 

I started posting Finance & Accounting tips on linkedin once a week back in November 2021, and eventually ramped up to posting everyday

Yesterday, I hit 25k followers, which has been a huge milestone for me

This guide goes over every step of my journey, from barely any impressions or engagement for the bulk of my journey, to reaching over 5m impressions over the last 90 days

Here are my 4 "aha" moments on my journey:

👉 Finance and Accounting Professionals are my Audience

I started out thinking my audience was the same as those who pay my bills, IE startups (I run a Finance & Accounting consulting firm)

It wasn't until way into my journey that I realized just how powerful it was to provide content to other Finance & Accounting professionals.

I used to think that anyone who did even remotely close to what I did was my competitor

I couldn't have been more wrong, and am so grateful to have such an amazing community of likeminded individuals

👉 Engage with others > post content

When I started out, I spent about 95% of the time producing content, and 5% of the time engaging with other people's content.

Another big mistake

Through my experience in engaging with other people's content, I have learned so much, and have built some amazing relationships.

I now realize that my ratio was flipped, and the real method to growing an audience is to spend much more time engaging with others than you do posting your own content

👉 Hire a coach to fastrack your success

Throughout my journey, I got to know a number of amazing linkedin content creators --> 2 of them specifically being Paul Barnhurst and Nicolas Boucher.

I hired each of them for a month to pick their brains on all of the questions I had about my strategy, content, and so much more

To me, hiring a coach is the quickest way to fast-track acquiring knowledge in whatever you're looking for.

The lessons that I learned from each of them returned my investment 10x, and I'm incredibly grateful to have them each in my network

👉 The people love guides

I find it interesting that different social media platforms favor different forms of content

Tiktok is all videos
Twitter is all short text
....and linkedin loves guides

I came across another amazing Finance & Accounting content creator, Chris Reilly, and saw that he had some amazing success posting guides...

So I gave it a try

Yesterday I released a guide with Chris on EBITDA that has already surpassed my all time record on any other piece of content I've provided

That's been my journey on linkedin. What's in store for 2023?

While I won't spoil the surprise, I can promise you:

- More content
- More quality
- New templates
....and so much more

For everyone out there who has been following along on my journey, even if this is your first time reading my content...

Thank you from the bottom of my heart for your support

Here's to an amazing 2023 🥂 

Finance and Accounting MUST avoid this critical trap…

Your Finance & Accounting function just may be the most sensitive function in your startup

Here’s what happens when your Finance & Accounting is siloed

❌ Large variances in planning
❌ Delays / errors in reporting to management and investors
❌ Department heads have lack of clarity on spend or performance
❌ Large strain on time & resources in other departments
❌ Lack of visibility into how the organization is performing as a whole

Think of all of the stakeholders that Finance & Accounting needs to remain in constant coordination with…

🤝𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 (𝐂𝐄𝐎, 𝐂𝐎𝐎, 𝐂𝐓𝐎 𝐞𝐭𝐜.)

The executive team needs to provide updates to Finance & Accounting on key upcoming initiatives, and to remain well informed on what’s happening in the business

🤝𝐁𝐨𝐚𝐫𝐝 𝐨𝐟 𝐝𝐢𝐫𝐞𝐜𝐭𝐨𝐫𝐬

Your board of directors are the last people on earth that you want to piss off…they have the power to remove you, and it’s never pretty when they do. Your board needs transparency into how the business is doing, where the business is struggling, and where the business is going

🤝𝐃𝐞𝐩𝐚𝐫𝐭𝐦𝐞𝐧𝐭 𝐡𝐞𝐚𝐝𝐬

Your startup is made up of multiple departments (G&A, Sales & Marketing, Engineering, Customer support etc.). These department heads operate best when they are giving clear visibility into what’s happening, and should be your close ally when it comes to planning for the future

🤝𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬

Fundraising is never ending in a startup - while you go through busier moments than others, it’s key to understand your cash position and plans for when you’ll be raising capital again. And when it comes time to raise capital, give yourself a buffer - atleast 90 days. When you start conversations with investors when you are 2 weeks away from not being able to make payroll, you are more desperate for a deal, often resulting in lower valuations

What other areas do you feel Finance & Accounting needs to coordinate with? Let me know in the comments below 👇

#finance #startups #accountingandaccountants
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Do you know what an Income Statement is?

If you don't, you should

An Income Statement (Profit and Loss) is one of the most fundamental reports to understand for any business

and it's actually not too hard to understand...

Let's do a deep dive:

📄 𝐈𝐍𝐂𝐎𝐌𝐄 𝐒𝐓𝐀𝐓𝐄𝐌𝐄𝐍𝐓 

This represents everything in terms of what you are EARNING...

...as well as the expenses you are CONSUMING

It in essence allows you to understand profitability at multiple levels (Gross profit, Net Operating Income, Net Income)

Here are the major sections:

⚫ REVENUE - what is being earned via sales

⚫ COGS - the cost to deliver your product or service

⚫ GROSS PROFIT -your profitability in carrying out your product or service (Revenue - COGS)

⚫ OPERATING EXPENSES - All other costs that relate to your core business, but aren't necessary to carry out your product or service (IE not COGS). Common items are rent, and payroll costs

⚫ NET OPERATING INCOME - Gross Profit less Operating Expenses

⚫ OTHER EXPENSES - expenses that are incurred that are not core to the business. Common ones can be depreciation and interest expense

⚫ OTHER INCOME - money earned that is not core to the business. Common ones can be interest income, or cash back from credit cards

⚫ NET INCOME - Net operating income - other expenses + other income

What else would you add?
Let me know in the comments below 👇 

__________________
PS: I'm Josh 👋 , and I'm a fractional CFO for startups. 
I post Finance & Accounting tips & advice everyday that I've learned from working with 100+ startups in my career

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Build a Financial Dashboard in under 4 minutes 🤯 🤩  

Working in Finance & Accounting, your job goes WAY beyond just crunching numbers

HOW you present your data is just as important

Your audience will thank you when the data is presented in a way that's easy to understand, and visually appealing

In this video, I walk you through how to create a dynamic financial dashboard in just a matter of minutes

Here are a few key details to keep in mind:

✅ Organize your data in a way that's easy for a machine to understand - that means in a table, and with each field being a header of the table

✅ Outline your dashboard over many rows & columns, and shrink each cell. This will make it easy to merge cells and maintain full control over your design

✅ Define variables. This will make it easy for you to compile your formulas, and for your audience to understand what you set up

✅ Create a table to show the aggregation method for each KPI. For example, your ending cash should be calculated as of the end date that you select, while your total revenue should be calculated as the sum of values between your start and end date

✅ Design your dashboard in a way that's simple to take a screenshot and include in a pitch deck, or presentation

What are some other suggestions you would add for generating a financial dashboard?
Let me know in the comments below 👇

PS: Skip this tutorial and download the free excel template via the link in the comments 👇 

#finance #startups #accountingandaccountants
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Congrats on surviving the first week of what just may be the most hectic month for Finance & Accounting professionals

January has been a notorious month for me...

🤕 YEAR END RECONCILIATATIONS

It's time to finalize your books for 2022 - that means all those projects you've been pushing off each month now need to be wrapped up

🤕 2023 BUDGET

Out with the old, and in with the new. Once you finalize your books for 2022, it's time to work on finalizing your gameplan for 2023

🤕 1099 Filings

The IRS requires you to file 1099s by January 31st. 

That means confirming who is eligible to receive a 1099 Ensuring you have a W9 on file for them
And filing with the IRS

To make things even more challenging, many of these tasks are dependent on one another, and not available to be finalized until Jan 1 the earliest

The biggest bottleneck is ensuring your books for 2022 are closed out --> which you'll need to wait till Jan 1 23 the earliest to ensure you have all bank statements & transactions posted

Then, only once your books are reconciled can you truly finalize your 2023 budget, and confirm your 1099 filings

Mix that with the hangover from the holidays, and you have one fun month to forgo sleep & free time 😵 

What else are you working on this month?

Had a great time with Chris Ortega, MBA of Fresh FP&A on the podcast discussing the future for CFOs and what they can do to stay ahead of the game

Watch the episode here: https://lnkd.in/eZVeC5uZ

Read the episode takeaways here: https://lnkd.in/eFCp4aQT

Many thanks to Collectiv, The Power BI Experts, for having me on their awesome show!


Everything you need to know about the Statement of Cash Flows 👇 

Do you know what a Statement of Cash Flows is?

I've heard many people feel that this statement is the most important of the 3 financial statements...

and I can totally understand why

First...

➡ What is the Statement of Cash flows?

This statement shows you all of the details that makes up the MOVEMENTS in your CASH BALANCE on the Balance Sheet. 

It is one of 3 of the Financial Statements - the others being your Income Statement, and Balance Sheet

➡ Why is the Statement of Cash flows important?

While the answer here is subjective, it brings about an important point - your CASH is KING.

It can add a lot of value tracking exactly how this is moving, in addition to all the other financial metrics to track in your company

➡ How do you compile the Statement of Cash Flows?

2 ways:

1️⃣ the INDIRECT method

This method is calculated easily by taking your

Net Income 
➕ adding back your Depreciation & Amortization
➕ adding back the difference between each of your balance sheet account

This method is the most common method used because of it's simplicity in creating

The challenge though, is that it can be tough to understand for someone without a Finance & Accounting background (which is most business owners)

2️⃣ The DIRECT METHOD

Here, the information is presented in a much more legible format..

Common lines you'll see here are:

- Cash received from Customers
- Cash paid to vendors
- Cash proceeds from line of credit

But the challenge is the ease of producing, as you wouldn't be able to do so with only the data found on your Income Statement and Balance Sheet

Unfortunately, many accounting software's also don't give you the ability to prepare this report...though I have seen some that do


➡ What are the sections of the Statement of Cash Flows?


It is comprised of 3 sections

⚫ CASH FROM OPERATING ACTIVITIES
This section shows all of the cash flows from activities related to operating the business

⚫ CASH FROM INVESTING ACTIVITIES
Here you show the cash movements from long term assets that are purchased that will be depreciated over time.

⚫ CASH FROM FINANCING ACTIVITIES
Here you show the cash from all equity investments and debt injected / paid out from the company

This is all just a high level overview of the Statement of Cash Flows...there's a lot more to the topic

What would you add?

Join the discussion in the  comments below👇

PS: Check out my free 3 statement model that will help you create a real life cash flow via the link in the comments below

#finance #startups #accountingandaccountants

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What is the role of a Bookkeeper in a startup?

A Bookkeeper is often times the first hire that I see in a startup's Finance & accounting function

Most of the time, I see a lot of issues resulting from this..

But it's not because Bookkeepers are not a good hire to make

They can be an excellent option... if set up properly

First...

➡ What exactly is a Bookkeeper?

There's no literal definition, but it's often used in reference of a junior hire who primarily works on the accounting side of things

Common alternate names can be staff accountant, AP / AR clerk, and countless other variations

➡ What are some of the pros of hiring a bookkeeper?

Because a Bookkeeper is often times a junior hire, it often times means the most cost effective solution

A good Bookkeeper is reliable, and can follow instructions well, resulting in a good bang for your buck


➡ What are some of the cons of hiring a bookkeeper?

As with any junior role, there needs to be both direction and supervision. 

You can't expect a Bookkeeper to be able to easily identify issues before they arise, and propose effective solutions - it just may not be the level of experience that they have

Additionally, Bookkeepers rarely have FP&A experience (atleast from the experiences I've had)

This can cause a large strain on the founders time, and a gap in the output needed for your Finance & Accounting function

➡ Would I hire a bookkeeper?

You bet

But it's also a bit different for me...

I am familiar with what needs to be done on the Finance & Accounting side, so directing a Bookkeeper wouldn't be too tough for me

But if I was the CEO of a 50+ person startup, I can't imagine being able to give the proper attention needed to guide a Bookkeeper to keep our Finance & Accounting function in check

As with everything, if you know what you're getting yourself into, the experience is much easier to manage

What do you think about hiring a Bookkeeper?

Let us know your thoughts and join the discussion in the comments below 👇 


#finance #startups #accountingandaccountants
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