Entrepreneurial Services Center
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PricewaterhouseCoopers Start-up Checklist

Published on: Mar 4, 2016
Published in: Economy & Finance      Business      
Source: www.slideshare.net


Transcripts - PricewaterhouseCoopers Start-up Checklist

  • 1. Entrepreneurial Services Center Cambridge, MA 617) 428-8346 Checklist of Considerations for Start-up and Early-Stage Companies
  • 2. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention I. Professional Advisors A. Has the Company engaged: 1. Corporate attorneys/general counsel 2. Independent accounting firm 3. Patent attorneys 4. Banks 5. Insurance advisors 6. Employee payroll and benefits advisors 7. Consultants 8. Industry/technical experts 9. Venture capitalists/financing sources 10. Investment bankers 11. Underwriters 12. Advertising/public relations agencies 13. Real estate brokers 14. Board of Directors/Board of Advisors  External members to the company  Internal members  Technical advisors II. Organizational Matters A. Selection of the form of business 1. Has the Company selected a legal form? of business? (i.e. S Corp. or C corp.) 2. If a corporation, a.) Has founders stock been issued? i.)If so, summarize present capitalization Stockholder Shares Consideration ____________________________ ____________________________ ____________________________ ___ _____ ____________________________ __________ ____________________________ __________ ____________________________ __________ ____________________________ __________ 2
  • 3. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention b.) Have stock options/warrants been granted and/or exercised? i.) If so, summarize option granting activity: Optionholder Options Exercise Price ____________________________ ____________________________ ____________________________ ____________________________ ii.) Has fair market value (FMV) of stock been determined? iii.) Has appropriate basis for FMV been documented/approved by the BOD? iv.) If so, do the grants require the Company to record compensation expense? (i.e. options issued below FMV) v.) Has Stock Option Plan been documented and reviewed by legal/accounting? c.) Have stock options been granted to outside consultants? B. Basic information and operational requirements 1. Have the appropriate documents evidencing the Company’s organization been executed and registered with the appropriate regulatory authorities? a) Articles of incorporation and by-laws (if a C corporation or an S corporation)? b) General partnership agreement and partnership certificate (if a general partnership)? c) Limited partnership agreement and certificate of limited partnership (if a limited partnership)? d) Joint venture agreement and articles of incorporation or partnership agree- ment (if a joint venture)? 3
  • 4. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention e) Declaration of trusts if a business trust (in jurisdictions where business trusts are recognized as an entity different from partnerships)? f) Franchise agreement (if a franchise)? 2. Have the above documents been prepared by or reviewed by legal counsel for adequacy? 3. Has the Company complied with the following procedural and regulatory requirements: a) Holding of the Officers’ and Stock- holders’ meetings to adopt the by- laws, Articles of Incorporation and elect the Board of Directors and the Officers? b) Record keeping requirements (e.g. stock book, option book, minutes book, records required of a limited partnership, and others as may be required)? c) Financial or other reporting requirements (e.g. as required by Stockholder or Partnership agree- ments)? d) Filing of appropriate forms and compliance with other requirements to support the election or termination of the S corporation status? C. Selection of the state of incorporation/ registration 1. Has the Company selected a state of incorporation/registration? 2. In what state(s) is the Company doing business? _________________________________ _________________________________ 3. Have proper registration tax filings been made in each of these states? 4
  • 5. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention D.Selection of a year end 1. Has the Company selected and filed for an appropriate year end (calendar year, fiscal year, 52/53 week year)? 2. In the choice of a year end, has the Company properly considered business and practical effects (seasonally of the business, year ends adopted by other companies in the same industry, tax deferral/savings of the owners of the business, legal and tax requirements, etc.) E. Legal protection of assets 1. Has the Company adequately considered legal protection such as: patents, copyrights, tradenames, trade/servicemarks, trade secrets for formulas, patterns, devices or processes and intellectual property? F. Non-disclosure agreements 1. Has the Company properly considered the legal agreements (i.e. noncompetition, non-disclosure, etc.) which its founders/ officers, current and former employees may have had with former employers? 2. Does the Company have a contract with employees (either in its employment agreement or a separate protective agreement) whereby employees agree not to disclose to third parties certain confidential information involving the Company such as trade secrets, business plans, customers lists and others during or subsequent to their employment with the Company? 3. Does the Company have confidentiality agreements with its consultants, suppliers, or contractors, who may be in a position to acquire certain confiden- tial information in the ordinary course of their dealings with the Company? 5
  • 6. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention IV. Financial Matters A. Have the founders identified their long-range goals for the business (IPO, sellout, growth & retention, etc.) B. Business plan/Executive Summary 1. Does the Company have a business plan adequate for its operational and financing needs? C. Financing sources 1. Where the Company is in need of financing, is it in the area of: a) Starting a new business (seed money or risk capital)? b) Operating the business (working capital)? c) Expanding the business (growth capital)? V. Accounting Matters A. Personnel 1. Is a part time bookkeeper or outside bookkeeping assistance needed? 2. Has the Company considered hiring an accountant, and/or controller, and/or a chief financial officer? B. Accounting procedures 1. Has the Company established procedures surrounding transactions in: cash, accounts receivable and credit/sales, inventory, liabilities and equity, etc.? 2. Is a system of internal controls in effect which considers transaction authorization, validation, completeness, appropriateness of recording, segregation of duties, custodial arrangements supervision? 6
  • 7. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention C. Establishment of accounting policies 1. Has the Company established its accounting policies (e.g.: consolidation, revenue recognition, inventory valuation, capitalization/expense depreciation methods/estimated lives of fixed assets, product warranty pension costs, income tax accounting? 2. Are such accounting policies documented? 3. Have all key management positions been filled? D. Accounting/computer system 1. Has a temporary bookkeeping system been adopted during the initial stages of the Company’s operations to cover certain basics such as: cash receipts/ disbursements, petty cash, payroll, expense advance, revenue recognition, key tax data. a). Has the Company developed a chart of accounts? 2. Does the Company have a computer system/ software accounting package (i.e. Has system been implemented)? 3. Is the computer system adequate to handle projected growth and complexity of accounting policies/issues? a) Should the Company purchase a network computer system? If so, has it selected the appropriate software and hardware? b) Should the Company arrange with an outside service bureau for certain processing (i.e. payroll )? 7
  • 8. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention 4. Has an accounting system been installed and does it include a general ledger and appropriate subsidiary ledgers, journals and registers for: a) Cash? b) Investments? c) Revenues and receivables? d) Purchases and payables? e) Employee compensation and benefits? f) Productive assets? g) Other assets and liabilities? h) Stock and stock option records? 5. Standard accruals and monthly journal entries? E. Cost accounting system 1. Has the Company established a cost accounting system which tracks inventory purchase costs, provides a means to properly transfer these costs to expense, and allocates appropriate costs to remaining inventory, work-in-process and finished products? 2. If a standard cost system is not in use, does management have an adequate means of: a) Setting selling prices? b) Valuing inventories? c) Developing a profit plan? d) Preparing management reports? F. Monthly financial information 1. Are the following prepared periodically? a) Balance sheet? b) Income statement? c) Statement of changes in financial position (cash basis?) d) Profitability analysis (by product line, geographic region, customer)? VI. Risk Management 8
  • 9. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention A. Has the Company arranged for insurance coverage, as appropriate, for the following risks? 1. Fire, theft, disaster 2. Business interruptions 3. General liability (injuries, medical services, cost of defending lawsuits, etc.) 4. Workers' compensation damages 5. Group life, health and disability 6. Loss of key-man life 7. Professional liability 8. Product liability 9. Employee infidelity 10. Property damage and personal injuries 11. by Company-owned cars and trucks 11. Losses/disaster in transporting goods 12. Accidents during travel 13. Losses in overseas investment 14. Liability of directors and officers VII. Banking Matters A. Opening of corporate bank accounts 1. Has the Company opened its main disbursing and payroll accounts and lock box with banks approved by the board of directors? 2. Have the authorized check signa- tures for these accounts been designated and have the designa- tions and corresponding amounts been covered by a Board resolution? 3. Are all excess funds being optimally utilized on a daily basis via interest bearing accounts? B. Borrowing arrangements 1. Does the Company require a revolving/ open line of credit? 2. Should the Company arrange for term loans? 3. Are there any security arrangements made with banks? 4. Does the Company have any compen- sating balance arrangements with 9
  • 10. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention banks? 5. Have all of the above been made with the approval by the Board of Directors/ owners? C. Investment arrangements Does the Company have an arrangement or Resolution to invest cash on hand in excess of immediate working capital needs based upon Board Resolution and risk management of the Company? VIII. Operational Matters A. Temporary meeting space 1. Does the Company have a temporary meeting space where it can conduct its activities prior to commencing business? 2. Has the company anticipated space requirements commensurate with it's growth? B. Selection of business location 1. Has the Company selected an initial location for its principal operations? 2. Has the Company considered the details of the leasing arrangement (i.e. short term, long term, non-cancelable and sub letting terms)? C. Obtaining equipment, furniture and fixtures. 1. Has the Company decided on whether to lease or buy equipment, furniture and fixtures? D. Vendors 1. Has the Company contacted vendors prior to commencing business? IX. Personnel Matters 10
  • 11. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention A. Organizational structure 1. Does the Company have a planned organizational structure appropriate for its stage of growth and planned operations? B. Initial employment needs 1. Has the Company identified its initial employment needs (the positions to be filled and the number of employees to be hired) taking into consideration the Company’s short- and long-term objectives? 2. Has it considered which of these positions, if any, can better be handled by an independent con- tractor and if so, whether or not the arrangement can be construed as an employer-employee relationship? C. Compensation policies and rates 1. Has the Company established its compen- sation policies? 2. Has the Board of Directors approved Officers’ compensation and the adoption of benefit plans to its employees? 3. Are the compensation rates reasonable and competitive and have they been set with a consideration of the future plans of the Company? D. Establishment of employee records 1. Have appropriate employee records been established and retained such as: (employment application and acceptance, employment contracts, salary authorization, W-4 forms, withholding and benefit elections earnings and withholding records, performance evaluations, termination records, form I-9, employment eligibility verification)? 11
  • 12. Matter not Matter requiring applicable or Matter attention (within not requiring addressed next year) attention E. Fringe benefits 1. Has the Company established and documented appropriate fringe benefits, such as: accident, health and life insurance; holidays and vacations, retirement plans, stock ownership plans and 401(k) etc.? 12

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