Startups are inevitably faced with the topics of accounting and HR. Working with a trust and HR partner enables startups to have an optimal administrative setup and needs-based access to expertise. For this, the outsourcing partner must be as agile as a startup.
This article assumes that a startup has already successfully completed the first phase. The founders have already created a common vision, developed their business idea into a business model and found a legal form for themselves. The necessary financing for the establishment of a GmbH or an AG is available and the decision has been made to establish a GmbH or an AG. At the latest now, the question must be answered as to what the administrative setup of the new company should look like.
Gesetzliche Mindestanforderungen an Buchhaltung und HR
The first question is rightly “What do we actually need?”. The law defines the absolute minimum for the administrative setup: Legal entities (including AG and GmbH) are obliged to keep accounts in accordance with the provisions of the Swiss Code of Obligations. A balance sheet, an income statement and an appendix must therefore be prepared (summarized as a business report). The design must be appropriate with regard to the type and size of the company. All documents must be kept electronically or on paper for 10 years. As long as the company does not employ 10 full-time equivalents on average per year, the topic of auditing can be completely dispensed with.
A company is subject to tax (profit and capital tax). Therefore, the tax return must be completed annually on the basis of the annual accounts.
Companies that generate CHF 100,000 in sales are subject to VAT. If this limit is not reached, a company may voluntarily subject itself to VAT, which can be useful, especially if there is a higher investment requirement.
In addition to the topics surrounding accounting, an AG or GmbH cannot avoid the topic of employment contracts and social security. All persons working operationally for an AG or GmbH are considered to be employed. This applies even to an AG or GmbH with only one person (unlike in Germany). Every employer must join a so-called compensation fund for the settlement of AHV/IV/EO/ALV and take out accident insurance for the employees. Joining a pension fund is also (almost always) mandatory and taking out daily sickness benefits insurance almost always makes sense. All contributions to social security must be settled. Very often, startups cannot avoid the topic of withholding tax right from the first wage payment. A minimal payroll accounting is therefore necessary as soon as wages are paid out.
Although employment contracts can also be concluded verbally, employment law-compliant employment contracts protect against unpleasant surprises and create clarity for all parties involved about the important working conditions.
Minimal requirements must also be met in the area of governance from day 1. Depending on the legal form, a general meeting must be held once a year and board meetings must be held. There is an obligation to keep minutes of the meetings and decisions of the committees.
Zusätzliche Anforderungen ans Financial Reporting
In addition to the legal minimum requirements, various stakeholders have requirements for the administrative setup, which significantly influence the design of the accounting and the scope of HR. External investors, in particular, are usually not satisfied with a presentation of the annual accounts five months after the end of the last financial year. They usually require interim reports comparing actual figures with target figures from the business plan. The management team is also likely to have a thirst for information on key figures that are determined on the basis of data from the accounting department. The management team should therefore be clear about which key figures it needs to manage the startup. These decisions have an impact on the design of the accounting and HR management. From our point of view, the topic of liquidity management is essential. Systematic, realistic and up-to-date liquidity planning and correct reporting of cash flows, adapted to the individual business case, is absolutely central. Cash is the oxygen of a company – and without oxygen we are dead after 10 minutes!
Kostenvergleich zwischen Inhouse und Outsourcing von Buchhaltung und HR
Let’s assume that the founding team has come to a clear idea of what requirements the accounting and HR must meet. Now the startup is faced with the “Make or Buy” decision. Should the topics of accounting, payroll and personnel be outsourced or processed in-house? Many companies opt for a mixed form between in-house services and outsourcing to a trustee and HR outsourcing partner.
The biggest concerns about outsourcing are often the costs. And of course, costs are an important decision criterion. All too often, apples are compared with pears when comparing external with internal costs. If, for example, an industry-standard hourly rate of CHF 120 is charged for simple administrative work, the reaction is reflexively that this is much cheaper in-house. “We hire someone for this activity with an hourly wage of CHF 25.” In fact, the effective costs per hour are much higher! If we add the social security contributions, then we are at about CHF 28. Oh yes, we also have a holiday entitlement. As a cool startup, we are so attractive that we can afford the legal minimum of 4 weeks (weeks 5 and 6 are unpaid). Now we are at about CHF 30.30. Now come costs that are difficult to calculate, such as absence due to illness, recruitment, management of the employee (yes, this employee will want to participate in the All Hands Meeting and is likely to have only basic qualifications for this salary and therefore ask one or two questions in everyday work), onboarding, dependence on one person, fluctuation (empirically, fluctuation costs quickly amount to 2 monthly salaries), etc.
The effective costs per hour are therefore much higher! Conservatively calculated, we are more likely to end up at CHF 40 to CHF 45 per hour worked for the intended activity. We have not even considered that qualified employees for the topic of accounting and HR achieve a higher salary on the market than the CHF 25 per hour assumed here. Accordingly, the cost advantage of in-house service provision melts away again like ice in midsummer.
But more importantly, this employee does not owe any success, whereas the outsourcing partner does! The employee does not meet the expectations – that is the employer’s problem, because employees owe the work performance but not the success. In contrast, the outsourcing partner owes the agreed result! With the trustee, I can argue about the work invoiced if the service is not correct and demand the free rework. And who is currently sitting in quarantine does not have to interest me as a client.
Anforderung an den Treuhand und HR-Partner
The costs are only one side of the coin, because on the flip side are the benefits of outsourcing. A strong trust partner in HR and accounting enables flexible access to expert knowledge and the purchase of the amount of service that is effectively needed. In order for this flexibility advantage to actually come into its own, the outsourcing partner must be as agile as a startup itself. The outsourcing partner must be able to react to the operational needs of a startup at short notice and strategically support the development of the company. Processes and the optimal distribution of roles between the startup and the trustee change over time. In order for the advantages of outsourcing accounting and HR to be fully realized, a startup should ensure when choosing a partner that the trustee and HR consultant is looking for the optimal setup with the customer and not selling its standardized processes optimized for itself.
If the outsourcing partner has this customer-centric approach, then the startup can find the optimal mix between providing in-house services and purchasing services and continuously adapt this to the current development phase of the company. The startup benefits, ideally from day 1, from an individual and optimal setup in accounting and HR. This allows the founding team to concentrate on its core business.
As a trust and HR outsourcing partner with a focus on startups, we offer exactly the agility to adapt to the individual needs of a company. We call that “focus on your business2”. We focus on the needs of your business so that you can focus on your business. Book a non-binding initial consultation at www.trustwork.ch or write to roland@trustwork.ch.
