#startup
Startup
Essential accounting and finance guidance for startup founders
Revenue Recognition for Usage-Based SaaS Billing: A Founder's Guide to ASC 606
Under ASC 606, usage-based revenue is recognized as customers consume the service — not when they pay. How the stand-ready obligation, variable consideration, and the right-to-invoice practical expedient apply to metered API and SaaS pricing, with journal entries for prepaid credits, overages, and unbilled receivables.
Your Convertible Note Just Converted. Is That a Gain, a Loss, or Neither?
FASB's ASU 2024-04, mandatory for fiscal years beginning after December 15, 2025, defines a three-part test for whether settling a sweetened convertible-note conversion counts as an induced conversion (expense only the sweetener) or a debt extinguishment (gain or loss against carrying value) — a classification that can swing reported expense by hundreds of thousands of dollars on the same transaction.
Delaware's New Safe Harbor for Founder Deals: What the Section 144 Ruling Means for Related-Party Notes and SAFEs
On February 27, 2026, the Delaware Supreme Court's Rutledge v. Clearway ruling upheld the 2025 SB 21 amendments to DGCL Section 144, confirming a safe harbor for related-party deals — including founder bridge loans and insider SAFE participation — approved by disinterested directors or a majority-of-the-minority vote. Here's what founders must document to qualify.
FASB ASU 2025-12: How to Calculate Diluted EPS in a Loss Year with Options, Warrants, and Convertible Notes
FASB's ASU 2025-12 clarifies that a net loss does not automatically make options, warrants, and convertible notes antidilutive: companies must test the combined numerator-and-denominator effect, apply the fix retrospectively to all prior periods presented, and adopt it for annual periods beginning after December 15, 2026.
FTC 2026 Clayton Act Section 8 Thresholds: When Interlocking Directorates Become Illegal for VC- and PE-Backed Boards
The FTC's 2026 Clayton Act Section 8 thresholds are $54,402,000 in capital, surplus, and undivided profits and $5,440,200 in competitive sales. With regulators now counting board observers, investment funds, and LLCs, here is a practical checklist for VC- and PE-backed boards to spot illegal interlocking directorates.
Texas R&D Franchise Tax Credit Jumps to 8.722% — and Becomes Refundable for Small Businesses in 2026
Effective January 1, 2026, Texas SB 2206 raises the R&D franchise tax credit from 5% to 8.722% (10.903% for university-partnered research), makes it refundable in cash for businesses under $2.65M revenue and new veteran-owned businesses, aligns definitions with federal Form 6765, and repeals the R&D equipment sales tax exemption.
FASB ASU 2025-12: The APIC-Only Method for Retiring Shares in a Co-Founder Buyout
FASB's ASU 2025-12 (Issue 10) codifies a third method for retiring repurchased shares — charging the full excess over par value to additional paid-in capital, as long as APIC stays non-negative. Here is how the APIC-only, retained-earnings-only, and allocation methods change the balance-sheet impact of a co-founder buyout, and why the choice matters for loan covenants and dividend capacity before the December 15, 2026 effective date.
FASB ASU 2026-01: How Startups Must Now Measure PIK Dividends on Preferred Stock
FASB's ASU 2026-01 requires PIK dividends on equity-classified preferred stock to be measured at the stated contractual rate — not fair value — effective for annual periods beginning after December 15, 2026, with early adoption permitted. Here's what venture-backed startups with PIK preferred provisions should do before their next audit.
Cap Table Mistakes Before Series A: The Option Pool Shuffle, Vesting Traps, and Stacked SAFEs
Before a Series A term sheet arrives, founders should check three specific cap table failure points — a pre-money option pool shuffle that dilutes only founders, missing or over-vested founder equity, and stacked SAFEs with unmodeled conversion terms — each of which can delay or derail a raise.
SOC 2 Type II Audit Cost: A Small SaaS Company's Complete Budgeting Guide
A first-year SOC 2 Type II report for a 10–50 person SaaS company typically costs $25,000–$80,000 total, with the audit fee itself covering only about 40% of that — internal labor and readiness work make up the rest.
LLM API Costs Are COGS, Not Overhead: A Gross Margin Guide for AI Wrappers
LLM inference is a variable cost of delivering your product, not software overhead — ICONIQ's 2026 data puts AI product gross margins at a 52% industry average, well below the 70-80% typical of traditional SaaS.
Carta vs. Pulley vs. Ledgy: How Startup Founders Should Choose Cap Table Management Software in 2026
Carta, Pulley, and Ledgy are the three leading cap table platforms in 2026, differing mainly on annual pricing ($1,200–$20,000+), US-only vs. multi-jurisdiction equity compliance, and 409A valuation turnaround time.