Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

All businesses must pay taxes, including startups.

Taxes include payroll and social security taxes which are based on the salary of employees and paid monthly.

Even if your business is not yet profitable you still must pay these taxes. 

Contractors pay their own payroll taxes and receive a 1099 Form from you at the end of the year. 

Income taxes are taken from the results on your profit and loss statement.

You can check with the IRS on the current tax rates. 

You can carry forward losses from one year to the next. You’ll need to set up a separate tab in your spreadsheet to track carryforwards. 

Check with your accountant about setting up quarterly tax payments if you are running profits.

If you file as an LLC and take an S-Corp designation, then your business taxes will be transferred to your personal taxes.


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Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Any financing you have must also be accounted for in the financial statements.  

You’ll need to set up a tab in your spreadsheet to capture the details of a loan, or other types of financing such as accounts receivable financing.

This includes the terms of the loan, the principal, and the interest to be paid. 

Include in your profit and loss statement the payments of the loan under operating expenses.

For revenue-based funding, set the payback calculation off of the monthly revenue. 

For line of credit financing, calculate the amount needed from the profit and loss row and add that into your monthly payments.

Equity investments will go into the cap table and will not show up on the profit and loss statement.

It’s not unusual to have several forms of short-term debt financing and it’s important to review each to see which one fits your business needs.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

For sales forecasting, begin with your current sales funnel and revenue history.

The more you know about your sales process -- lead generation, conversion, and time in funnel, the more accurate the forecast will be. 

Use your current sales process for the first two years and then switch to your growth initiatives in years three to five. 

If you are in a space with competitors with similar businesses, you can look at the ramp rates for those businesses to find the ballpark of sales growth you may achieve.

If your business has a core driver such as number of design-ins, then you can use this to drive the sales forecast. 

If you have multiple products, you can list each product separately with its own revenue stream.

If you have a recurring revenue business, then you can start with your current customer base and add new customers at your current growth rate and include the churn rate.


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Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In setting up for your financial projections model, personnel is straightforward to forecast. Each employee has a salary, benefits, and payroll taxes.  

Payroll taxes are a calculation off of the salary. 

Commissions need to be included but are variable expenses related to sales.  

Benefits include things such as healthcare, retirement plans, and the like, and are defined by your providers.

As you grow headcount, it’s clear how much the budget will increase. 

Those related to the product production and delivery will go into the COGS section. 

Those related to sales, marketing, research and development, and administration, will go into the operating expenses.

You may want to divide the personnel into divisions such as sales, marketing, and product development.  You can keep the contractors in a separate category as well.

For part-time employees, compile them into an FTE or full-time equivalent employee for the calculation. 

A key metric is revenue to number of employees. Check your number against your industry standard.

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Let’s go startup something today.
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Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Cost of Goods Sold, called COGS forecasting, represents the cost to build and deliver your product or service.

This includes the cost to build the product or hours to deliver the service. 

In most cases, COGS is a function of sales. The more sales, the more COGS.

If you have a unit that drives your sales forecasts such as a physical product or service program, then you can calculate what it costs to deliver on each one.

An interesting KPI will be Gross Margin which is the amount of revenue left over after subtracting out the COGS. This is often expressed as a percentage.

For recurring revenue businesses, there are hard costs such as hosting, customer support, online payment, and other related costs. These costs must be incurred to deliver the product or service. 

For consumer product goods, a healthy gross margin is 40% or greater. 

For recurring revenue, a healthy gross margin is 70% or greater.

For businesses with multiple products, you may want to split out the COGS by product line.

For businesses with one product, you may want to forecast COGS on the total revenue level.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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