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Start Raising Capital: Understanding Investment Due Diligence

Getting a startup company off the ground requires you to have the right business model, hire hard-working, smart employees, and dedicate a significant amount of time towards tweaking the solutions you provide to your customers. At some point, whether you're at the angel or growth stage, you may decide that raising capital is required to help with operations. Pitching your business model and plans for the future to investors is going to require you to have the appropriate bookkeeping completed. Investors will need to analyze your financial figures by completing due diligence on your accounting. Completing this essential task is crucial when raising capital. Avoiding errors shows you've got your act together and are worthy of receiving six or seven figures. Getting assistance with the due diligence process is typically safer and more efficient when you utilize the expertise of an experienced CPA.

Safeguard Your Bookkeeping From Accounting Errors When You're Raising Capital

Handling the bookkeeping requirements for raising capital and the due diligence process may not be easy to complete on your own if you want to ensure it's done correctly. Completing what may seem to be straightforward transactions may actually be incorrect, especially if you are dealing with complex situations. For example, listing a bank loan as a liability will likely be correct. However, where you can run into trouble is when you have an instrument that should be classified partly as equity and partly as a liability due to an equity conversion option. Having an understanding of the terms is often a key element in classifying an instrument correctly. Thus, getting assistance with this from an experienced accountant may be highly advantageous. A good accountant will understand how to complete these transactions the right way. When your accounting is in the order it may help build trust with investors in the due diligence process.

How You Handle Your Tax Planning Is Also Essential During the Due Diligence Process

Having a sound tax planning strategy put in place early should make it easier to pay your tax liabilities when they are due. It can also assist you with the due diligence process when raising capital. Here at Fusion CPA, our accountants have a vast knowledge of best practices for tax planning. Our team has experience utilizing the figures provided accounting to help give our clients accurate estimates for tax expenses. Having your taxes in order before you begin raising capital is highly suggested. A seasoned accounting expert should help make sure your tax computations are correct and you have proof of tax compliance for investors. What’s more, outsourcing these tasks should provide you with more time to work on other aspects of due diligence, such as presenting an overview of your product.

Raising Capital Smarter: CFO Business Advisory Services

Going through the due diligence process with investors when raising capital will likely be easier if you get professional assistance with your financials. Here at Fusion CPA, we offer CFO business advisory service to help give you an unbiased insight of your financials before you decide to pursue funding. Having a knowledgeable financial adviser assist your company by helping prepare financial documents may be invaluable. Partnering with a financial adviser who understands the financial metrics investors want to see should make the due diligence process less stressful and possibly quicker. Anything you can do to make the due diligence process fast may get you one step closer to raising the capital you need. Whether you're working with an accounting specialist from our team or utilizing our CFO business advisory service, we are dedicated to helping you highlight your financials correctly to interested investors. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!

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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.