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Setting up your accounting system  

Brad Feld:

To be successful, you need to know about a wide range of issues affecting your business. However, you do not have to become an expert on each and the degree to which you need to understand various issues evolves along with your business. It is easy to get caught up in all the administrivia of of forming a company, building a business plan, and developing financial forecasts that you fail to spend time building your product.

On my first two startups, being the technology cofounder, I didn't care about the accounting system, what transactions were going through, how they were classified, what the tax implications were...

I started a consulting company to handle some of the work that was coming my way, and even there, I thought that deeply understanding the accounting was below me.

That was a mistake (and in the case of the consulting company, it cost me cold, hard cash).

On GrantTree, I've made sure to be entirely on top of the accounts, to know every transaction, how it should be classified, how it will be taxed, etc. I supported this without hesitation by investing in a product like FreeAgent (note: this link includes a referral code; this one doesn't...) to make it a bearable and organised task.

As Brad states in this article, it's important not to get bogged down in things that don't matter (e.g. spending a week creating a spreadsheet model of your finances instead of selling or building the product). But the basic accounting stuff is the beating pulse of your company. Having a firm grip on that is, in my opinion, essential.

You can't even delegate that to an accountant. Make sure you understand at least the basics yourself. Otherwise, it's not really your business.

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