a ccounting for emerging startups amy yue, cpa, cma, quickbooks proadvisor (510) 580-8166...
TRANSCRIPT
![Page 1: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/1.jpg)
ACCOUNTING FOR EMERGING STARTUPS
Amy Yue, CPA, CMA, QuickBooks Proadvisor(510) 580-8166
[email protected] November 12, 2014
![Page 2: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/2.jpg)
2
Disclaimer• This presentation is intended to provide general
rules of US GAAP and US tax. Nothing contained in this presentation was intended to be used or can used by any taxpayer for the purpose of be avoiding penalties under the Internal Revenue Code of 1986, as amended. A taxpayer should seek advice of a qualified professional with respect to any transaction or matters contained in this presentation. The content is intended to be a general overview of the subject matter covered and is educational and informational only.
![Page 3: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/3.jpg)
3
AgendaSection 1 - Financing• Business Plan• Financial ProjectionSection 2 - Hiring• Independent Contractor vs. Employee• Payroll TaxesSection 3 - Accounting• Capital Assets• Intellectual PropertiesSection 4 - Q&A
![Page 4: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/4.jpg)
4
Section 1 - Financing• From Ideas to Success
Idea
Startup Growth
M&A/IPOFinancing – Seed, Series
A, B, C, etc.
![Page 5: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/5.jpg)
5
Business Plan• Executive Summary• Company Description• Industry Analysis and Trends• The Target Market and the Competition• Marketing Plan and Sales Strategy• Operations• Management and Organization• Development, Milestones & Exit Plan• The Financials
![Page 6: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/6.jpg)
6
Financial Projection
• Business Plan Assumptions• Start Up Cost• Sales/Operating Expenses• Balance Sheet• Income Statement• Statement of Cash Flows
![Page 7: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/7.jpg)
7
Section 2 - HiringIndependent Contractor Vs. Employee
Company controls the results of the work; Work is done by worker without daily supervision
Behavior Company controls what worker does and how worker does his/her job
Worker invests in facilities and tools
Financial Company provides tools, equipment, material; work place is company’s office
Project based engagement; No benefits provided by the Company
Type of Relationship Work is part of regular business; continuous working relationship; employee-type benefits
![Page 8: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/8.jpg)
8
Payroll Taxes
Wage Limit Employer Pays Employee Pays Total Max AmountFederal Taxes
FICA - Social Security Tax $117,000 for 2014 6.20% 6.20% 12.40%$14,508 for
2014FICA - Medicare Tax no limit 1.45% 1.45% 2.90% N/A
FICA - Additional Medicare Tax
Wages > $200k for Single;Wages > $250k for
Married Filing Jointly - 0.90% 0.90% N/A
FUTA - Federal Unemployment $7,000 0.6%
+credit reduction (0.9%) - 1.50% $105 FIT - Federal Income Tax no limit - IRS withholding Table N/A N/AState Taxes
SUI - State Unemployment Insurance $7,000 3.4% new employer - 3.40% $238 ETT - Employment Training Tax $7,000 0.10% - 0.10% $7
SDI - State Disability Insurance $101,636 for 2014 - 1% 1%$1,016 for
2014PIT - Personal Income Tax no limit - CA withholding Table N/A N/A
![Page 9: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/9.jpg)
9
Section 3 - AccountingFinancial Statements Vs. Tax Return
Reports for Management and Investors
Audience Reports for IRS and State tax authority
Present the performance of the operation & book value of the Company
Purpose Pay the lowest amount of taxes allowable by law
GAAP (Generally Accepted Accounting Principles)
Applicable Rules Internal Revenue Code; State Revenue and Taxation Code
![Page 10: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/10.jpg)
10
Capitalization vs. ExpenseAsset Expense
Useful life is more than 1 year Regular cost of keeping business
Will generate benefit in future years NA
Capitalized as Asset in Balance Sheet; Depreciate over the useful life
Recorded as Expense in Profit and Loss Statement
Example: Business vehicles, equipment, furniture, etc.
Example: Rent, Utility, Office Supplies, Professional Fees, etc.
![Page 11: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/11.jpg)
11
Accounting for FA & IP• Fixed Assets
– Provide economic benefit for a period greater than one year– Costs include Purchase price, Sales tax, Import duties, Freight and
shipping insurance, Installation and setup costs, testing and reconditioning, etc.
– Useful life– Depreciation
• Intellectual Property– IP – Patent, Copyright, Trademarks, Trade Secrets, Computer Programs– R&D are expensed as incurred regardless of the success of the R&D– Capitalize spending on Intangibles evolved from the result of R&D.
(example: Capitalize Legal fees for obtaining a patent).
![Page 12: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/12.jpg)
12
Example– On January 1, 2014, Company A Purchased a Research
equipment at $10,000; Sales tax $950; Shipping $150; useful life 7 years with 0 Salvage value.
Accounting Treatment:Machinery & Equipment - $11,100 (=$10k+$950+$150)Depreciation Expense - ($1,586)(=$11,100/7)Net Asset Value - $9,514 (=$11,100-$1,586)Tax Treatment:Section 179 Deduction $11,100
![Page 13: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/13.jpg)
13
Example– Company A Paid a lawyer $20,000 for patent
filing; Company A also paid employee salary of $100,000 to develop the patent.
Accounting Treatment:Patent (Intangible Asset) - $20,000 R&D Expense - $100,000Tax Treatment:R&D Deduction $120,000
![Page 14: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/14.jpg)
14
Accounting & Tax ComparisonAccounting Tax
Revenue $200,000 Revenue $200,000
Depreciation Expense ($1,586) Section 179 Deduction
($11,100)
R&D Expense ($100,000) R&D Deduction ($120,000)
Profit $98,414 Taxable Income $68,900
![Page 15: A CCOUNTING FOR EMERGING STARTUPS Amy Yue, CPA, CMA, QuickBooks Proadvisor (510) 580-8166 amyyue@cpainsight.com November 12, 2014](https://reader035.vdocuments.us/reader035/viewer/2022062407/56649dd25503460f94ac8b9f/html5/thumbnails/15.jpg)
Email: [email protected]
THANK YOU!
CPA Insight, Inc.www.cpainsght.com
Amy Yue, CPA, QB ProAdvisor Tingting Pan, CPA(510) 580-8166 (408) [email protected] [email protected]