http://www.seravia.com/research Fri, 09 Apr 2010 15:27:15 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 http://www.seravia.com/research/balance-sheet http://www.seravia.com/research/balance-sheet#comments Tue, 06 Apr 2010 11:30:06 +0000 Kevin http://www.seravia.com/research/?p=1577 A company's balance sheet is the financial equivalent of an X-ray. Unlike the profit and loss statement, it doesn't narrate a period of activity. Rather, it provides a cross-section of your company at a given point in time. The balance sheet is a summary of all the assets and liabilities that your company has, and hence, how much your company is worth on paper. A balance sheet is split into three sections: assets, liabilities and equity. In a simplified world, assets are what the company owns, liabilities are what it owes, and equity is what the shareholders own. These three categories are further split into sub-categories, which can be further split into sub-sub-categories and so on, allowing you to pinpoint the strengths and weaknesses of your company, or see which bones are broken.]]> http://www.seravia.com/research/balance-sheet/feed 0 http://www.seravia.com/research/4-2-securities-exemption http://www.seravia.com/research/4-2-securities-exemption#comments Thu, 01 Apr 2010 11:30:25 +0000 Omario http://www.seravia.com/research/?p=1144 Starting a company is great. Ideas, people and energy all combine. Add money and you’re moving. Just when you're cooking, though, the government has a thorn to stick in your side: a set of complicated procedures to register the sale of your company's stock, also known as "securities filings." Securities filings create extra work for companies, entailing significant internal controls, complex federal and state filings and the individual responsibility of senior executives for corporate financial reports. Reg D filings might take up to 120 days now, might cost you half a million bucks, and new startups might easily cross thresholds of Rule 701. Luckily for the entrepreneur, there is a relatively easy way to obtain an exemption from registering and reporting the sale of securities...]]> http://www.seravia.com/research/4-2-securities-exemption/feed 0 http://www.seravia.com/research/capital-contributions http://www.seravia.com/research/capital-contributions#comments Wed, 31 Mar 2010 11:34:22 +0000 Alex http://www.seravia.com/research/?p=1444 When you start a company with co-founders, you might want to split up ownership in the company differently to reflect different levels of involvement. You might also want to contribute equal amounts of cash to the company to show your shared commitment. This doesn't raise any eyebrows in the startup world, and in fact happens quite frequently. Giving out different amounts of equity for the same amount of cash might, however, raise a red flag with the IRS. Here's why.]]> http://www.seravia.com/research/capital-contributions/feed 0 http://www.seravia.com/research/cash-vs-accruals-accounting http://www.seravia.com/research/cash-vs-accruals-accounting#comments Thu, 25 Mar 2010 12:30:38 +0000 Kevin http://www.seravia.com/research/?p=1379 Here's an accounting question for you. Say that you’re a graffiti artist and your customers pay you to go crazy and express yourself on their walls (one of the few jobs that's more enjoyable than doing taxes!). - In March, you billed your customers $50,000 for your services. They paid you $15,000 in March, and the remaining $35,000 in April. - You picked up $20,000 worth of spray paint in March and got to work, paying $12,000 up front, and the remaining $8,000 in April. When do you record these expenses in your books? The answer is: it depends. Welcome to the parallel universes of accruals accounting and cash accounting. These two methods have subtle but critical differences, as well as their pros and cons.]]> http://www.seravia.com/research/cash-vs-accruals-accounting/feed 0 http://www.seravia.com/research/loan-agreements http://www.seravia.com/research/loan-agreements#comments Tue, 23 Mar 2010 11:01:58 +0000 Zac http://www.seravia.com/research/?p=1435 Raising money through VCs and angel investors often means dealing with complex legal documents, such as convertible loans (also called bridge notes) and preferred stock purchase agreements. While there is a movement to simplify these financing options, they still come with a set of relatively complex legal documentation. In contrast, a loan agreement — which is really just an IOU — is far simpler. That’s not to say that raising money through loan agreements is easier. VCs and angel investors are investing for the big upside, not for returns on an interest rate, so it’s unlikely that you’ll find those kinds of investors who are willing to do a loan instead. However, your Uncle Bob or your best friend Smitty, who just want to help you get started or to expand, might be open to doing a loan. Here’s why a loan is simpler than other forms of raising money...]]> http://www.seravia.com/research/loan-agreements/feed 0 http://www.seravia.com/research/depreciation-for-startups http://www.seravia.com/research/depreciation-for-startups#comments Fri, 19 Mar 2010 09:29:08 +0000 Alex http://www.seravia.com/research/taxes/depreciation Many new businesses are formed with the idea that the founders can deduct the cost of everything that they buy to run the business. This is not the case. There is a tax concept called "depreciation" that says if you buy something that could be a deduction, but it lasts a really long time, the tax code will usually not allow you to deduct the full cost of the item in the year you buy it. You have some options for how to handle depreciation, which come with different sets of tax pros and cons. Here are the basics.]]> http://www.seravia.com/research/depreciation-for-startups/feed 0 http://www.seravia.com/research/spousal-consent http://www.seravia.com/research/spousal-consent#comments Wed, 17 Mar 2010 11:10:37 +0000 Zac http://www.seravia.com/research/?p=1357 Welcoming a new shareholder to the company is a lot like getting married. You’re not only getting a new partner; you’re also inheriting your partner’s family. And as any married person can tell you, in-laws are always a sticky subject. You’d like to assume the people that brought your beloved into this life will also get along with you, but that’s just not always the case. The same holds true in the context of your company. You’ve vetted your investor — now shareholder or member — and crafted an agreement specifying the shareholder’s rights, which protects your company in case the shareholder dies or tries to sell his or her shares. You also know your new shareholder is married and you’ve heard about the spouse, who you assume is great based on how much you like the shareholder. However, you’ve never actually met the spouse and you definitely are not sure you’d like the spouse to be a shareholder.]]> http://www.seravia.com/research/spousal-consent/feed 0 http://www.seravia.com/research/profit-and-loss-statements http://www.seravia.com/research/profit-and-loss-statements#comments Tue, 16 Mar 2010 10:47:53 +0000 Kevin http://www.seravia.com/research/?p=1464 The last time I had a health check, I, for once, had a proper read of the results. HDL levels? Platelet Count? None of the terminology made any sense. For all I knew, the report could have been an advanced application for a death certificate and I still wouldn’t have had a clue. Sadly, the report card you get from your company’s financial health check is probably just as incomprehensible. So let’s try and decipher some of the accounting-speak jargon that you’re likely to encounter.]]> http://www.seravia.com/research/profit-and-loss-statements/feed 2 http://www.seravia.com/research/trading-ip-for-founders-stock http://www.seravia.com/research/trading-ip-for-founders-stock#comments Thu, 11 Mar 2010 11:45:06 +0000 Alex http://www.seravia.com/research/?p=1295 ...Since Larry is technically selling his IP to the company for $2,000 worth of stock, he should have to pay tax when he receives the stock. Congress saw this as a big problem because they knew many new businesses would form corporations and not want to have to pay taxes, so they created something to help: Section 351 of the Internal Revenue Code. 351 basically says that if 80% of the owners of the corporation contribute cash or property (as opposed to services) in exchange for their stock, then these people will not owe tax when they get their stock from the corporation. However, the basis that they had in the things they gave to the corporation will transfer over to the stock. This means that, even though Larry won’t have to pay tax when he gets the stock from the corporation, he will have to pay tax when he sells the stock...]]> http://www.seravia.com/research/trading-ip-for-founders-stock/feed 0 http://www.seravia.com/research/stock-options-4-dates http://www.seravia.com/research/stock-options-4-dates#comments Wed, 10 Mar 2010 11:01:56 +0000 Zac http://www.seravia.com/research/?p=1187 As an employee at a startup, it is common to receive stock options as part of your compensation package. An option is the right to buy shares in a company at a set price after a certain date. Options are all about timing. Here are four dates you'll want to keep in mind to understand how your options translate into value over time.]]> http://www.seravia.com/research/stock-options-4-dates/feed 0