Nelly Caetano and Raymond Dorge, partners Walter France, demonstrate how good accounting management, social and legal can open the doors of financing to start-ups in the launch or development phase.
This good management requires compliance with simple rules, but you still need to know them. First of all, a single pay slip for a researcher corporate officer. It is indeed common for the corporate officer of a start-up to have operational functions.. It is therefore very important to issue only one pay slip., with two lines, the first specifying the remuneration as a corporate officer, the second specifying the remuneration as research director, For example. This allows you to justify not being subject to unemployment contributions and to be able to claim the JEI social exemption. (young innovative company) on the entire salary. Applying JEI exemptions to the entire salary of the agent allows you to reduce charges and therefore increase cash flow. (be careful, however, that the majority of working time is devoted to R work&D). Another imperative : remuneration must be approved (on both sides) during the annual general meeting and include it in the minutes.
Request a JEI ruling upon creation and keep timesheets
When a start-up considers applying for young innovative company status (IF), which will allow it to benefit from tax and social exemptions, she has every interest in asking the administration for a ruling, from its creation, or at the latest when the first employee is hired. The ruling consists of asking the administration to position itself on the eligibility of the company to benefit from JEI exemptions, taking into account several criteria mainly relating to the work of R&D. The rescript is not obligatory, but very highly recommended. It allows you to benefit from social exemptions with peace of mind from the payment of the first salary of staff eligible for exemptions.. otherwise, upon arrival of the first employee, the start-up will have to set up time sheets. These time sheets must prove that the said employee devotes the majority of his time to research., criterion making it possible to justify the application of the exemption from social charges on salary.
Take good care of equity
Equity capital consists of share capital, of the share premium, reserves, of the results of the financial year and investment subsidies. However, at European level, investment subsidies are not taken into account in the calculation of equity ! Which can put certain start-ups in difficulty in the European financial sense and deprive them of the granting of subsidies. The ratio of companies in difficulty in the European financial sense indicates that equity must not be less than half of the share capital increased by the share premium.. But it is common that, the first years, start-ups post an accounting loss. And the most classic way to affect this loss, during the vote on the allocation of results during the annual general meeting, consists of allocating it to retained earnings, which then makes the company in difficulty. A legal tip, often overlooked, can remedy this situation : if the company has already raised funds, the loss for the financial year can be charged to the share premium. In this case, the issue premium is lower, but the ratio can be respected when it was not by allocating it to retained earnings. So, the financing door will remain open.
Put the costs relating to fundraising on the assets side of the balance sheet
During a fundraiser, the costs generated mainly concern consulting expenses, formalities and communication.
These costs can be accounted for using three different methods :
• allocation to the share premium ;
• in expenses over the accounting period (but these charges will deteriorate the operating result and therefore the shareholders' equity) ;
• on the assets side of the balance sheet and amortized. The method chosen will have an impact on the presentation of the financial statements and in particular on the result for the financial year and shareholders' equity.. Each case is different. The general trend in the world of start-ups is the optimization of equity, that only one of these solutions allows. This is the third method : recognition as fixed assets on the assets side of the balance sheet. This asset must then be amortized over a maximum period of five years..
Account for production as fixed assets
As soon as the start-up develops an intangible project (software, algorithm, platform, etc.) or bodily (physical good), the question arises : should the expenses be expensed or capitalized? ? According to the same logic as before, the entry in fixed assets is essential if the conditions are met, because it allows the company to maintain a good level of equity, essential for creditors and financiers.
Prioritize investment subsidies
When the start-up receives a grant, this can be considered either as an operating subsidy, either as an investment subsidy. This last option should be favored, because it immediately improves equity. Generally, the grants obtained finance R works&D who have been immobilized. In order to align the often partial financing of this work, it is interesting at the accounting level to recognize these subsidies in equity. This improves the amount of equity. In all cases, extremely rigorous monitoring of expenses incurred for the project must be the absolute priority of startupers, as well as good management. Daily monitoring allows you to know where the budget consumption is and allows you to make requests for installments or balances earlier and therefore to collect subsidies more quickly..
