Startups require a thorough understanding of financial fundamentals. If you’re seeking funds from bankers or investors essential startup accounting records such as income statements (income and expenses) and financial projections can convince others that your business idea is worthwhile to invest in.

Startups’ financials often boil down to a simple formula. You have cash in your bank or you’re in debt. Cash flow can be difficult for businesses that are just starting out. It is important to keep an eye on your balance sheet, and not overextend yourself.

You’ll need debt or equity financing to expand and make your startup profitable. Investors will be looking at your www.startuphand.org/2020/09/09/financial-startup-basics-by-board-room/ business plan, the projected revenue and expenses, and the probability of getting a return on investment.

There are a myriad of ways to fund your startup. From getting a business card with a 0% APR introductory period to crowdfunding platforms, there are a myriad of options. However, it’s important be aware that using debt or credit cards can impact your personal and business credit score. You should always pay off your debt promptly.

You may also take out loans from family and friends who are willing to invest. While this might be an excellent alternative for your startup, you should write the terms of any loan in writing to avoid conflicts and ensure that everyone understands the implications of their contribution to your bottom line. If you offer someone shares in your business you are deemed to be an investor. Securities law is applicable to this.