The Importance of Financial Reports for Startups

One of the reasons why many startups or startups find it difficult to get capital is due to the lack of complete financial statements they have. As a new company that is still trying to find a market and validate products, startups are indeed vulnerable to budgets or operational costs, most of which are still minimal, but on the other hand they need additional capital to accelerate business growth.

In this week's #Tuesdaystartup session, DailySocial the arrival of two resource persons from financial consulting services, PT Marline Anugrah Cemerlang, who explained the points that startups must pay attention to.

Financial reporting for startups

By definition, a startup or start-up is a corporate organization designed to seek repeat business models and scalable. Startup also refers to a company that has not been operating for a long time. These companies are mostly newly established companies and are in the development and research phase to find the right market.

As a new company, most of which have not been able to earn large revenues, startups must be able to have complete financial records. Summarize all expenses and income so that they can later be used as financial statements.

The accounting process provides benefits for start-up companies to determine business conditions. Startup itself can be categorized as an entity that does not have significant public accountability. The purpose of issuing financial statements is for the benefit of third parties, for example a tool for applying for credit loans, both to banks and to investors.

Ensure that financial reports are made transparently and include correct data. Don't do mark up or overstating expenses or income. This will have a risk when the financial statements will be examined (audited) or accounted for.

Determine the type of company organization

No less important for startups when starting a company is to determine in advance the type of company organization. In general, the types are divided into three categories, namely individuals, partnerships, and corporations.

The advantages of individually owned companies are that they are easy to set up and low management costs. While the disadvantages are limited financial resources and unlimited liabilities.

Next is a partnership that is owned by two or more individuals. The advantages of partnerships are greater financial resources and additional management personnel. While the lack of partnership is unlimited liability.

The last one is a corporation or PT. PT is formed under government regulations as a separate legal entity. The advantage of PT is that it is able to obtain large amounts of resources through the issuance of shares, but the drawback is the imposition of double taxation.