Basic accounting tutorial for technical startup founders.

If you are a startup entrepreneur who is just getting started on your own company , or a startup product manager who is from a technical background it is important for you to understand some accounting basics so that you can make the head and tails of a startup’s balance sheet or a profit and loss (P&L) statement. Having some fundamental knowledge of accounting will also make your discussions with your CPA or book-keeper be way more productive and lets you have more deeper conversations with them about how to setup things like your ‘chart of accounts’ or ‘class tracking’ to give you meaningful insight into how the money is being spent throughout your company on various projects or how to get a (P&L) for each product line.

Not to mention, any curious technical mind would also like to understand something from first principles in order to fully grasp why something is the way it is. Cue… Elon Musk

For the past few days, I have been trying to wrap my head around accounting basics and went through all the youtube videos I thought had something of value to offer. I have compiled some of the best videos that I have found over here so that they can be a resource for me and others in the future.

Let’s start out by getting a very high level understanding of the finance function within a startup.

Let’s get the basics out of the way first and the below playlist does a wonderful job of arriving at a balance sheet and P&L statement from first principles by just using Excel.

Accounting Basics in an hour https://www.youtube.com/watch?v=cHA7xQJ5E18&list=PL-ao-8pxqJKKdYBHCu3yxuAYLBVOzZNvP

I then found the below video quite helpful in terms of what to have in a real chart of accounts in a startup

Finally, it is a good idea to get a good grasp of an accounting tool itself so you grasp the processes and can generate reports and such by yourself. If you need something light and fast then quickbooks online will work but if you want to look at something more hardcore then quickbooks desktop is the way to go. From what I could find online, Quickbooks is defacto standard when it comes to accounting as described by folks here, here and here.

Even if you start with Quickbooks online, you can switch later to Quickbooks desktop at any time by downloading your company data from quickbooks online. I would advice every one to initially start out with Quickbooks online as they have a good web and app combination which makes it easy to stay on track of your accounting work but if you have any special situations then quickbooks desktop may be the way to go depending on your accountant.

Here is a good tutorial series for quickbooks online

Quickbooks 2018 Webinar training series https://www.youtube.com/watch?v=INAwBhYHgU0&list=PLVxBmyedTVhRgHKze7HX-G_ZQ_TXokazh

I am not aligned with any of the companies that produced the above material or products and have no financial interest in this matter whatsoever. I just found these videos helpful and thought this could be a useful resource for other founders.

Finally, I want to give a special shout-out to the ‘Class & Location tracking’ in Quickbooks which is useful in understanding how your profit and loss statement across different dimensions of your business such as departments or product lines etc.

And there is no better way to finish up that with some good old best practices.

If you have found other videos that are helpful then please add them to the comments section below.