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 aspects related to accounting, an AG or a GmbH cannot avoid the topic of employment contracts and social security. All persons actively working for an AG or a GmbH are considered dependent employees. This also applies (unlike in Germany) to an AG or a GmbH with only one person. Every employer must join a so-called compensation fund for the settlement of AHV/IV/EO/ALV and take out accident insurance for employees. Affiliation with a pension fund is also (almost always) mandatory, and taking out daily sickness allowance insurance almost always makes sense. All social security contributions must be settled. Very often, startups cannot avoid the topic of withholding tax from the first salary payment. A minimal payroll accounting is therefore necessary as soon as salaries are paid.
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.
Minimum 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 conducted. There is an obligation to record minutes for the meetings and decisions of the bodies.
Zusätzliche Anforderungen ans Financial Reporting
In addition to the legal minimum requirements, various stakeholders have demands on the administrative setup, which significantly influence the design of accounting and the scope of HR. External investors, in particular, are usually not satisfied with a presentation of the annual financial statements five months after the end of the last financial year. They usually demand interim reports comparing actual figures with target figures from the business plan. The management team itself is likely to have a thirst for key figures determined from the accounting data. The management team should therefore clarify which key figures it needs to manage the startup. These decisions influence the design of accounting and HR management. From our perspective, liquidity management is indispensable. Systematic, realistic, and up-to-date liquidity planning and accurate reporting of cash flows, adapted to the individual business case, are 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 understanding of the requirements that accounting and HR must meet. Now the startup faces the “make or buy” decision. Should accounting, payroll, and personnel topics be outsourced or handled in-house? Many companies opt for a hybrid approach between in-house services and outsourcing to a fiduciary 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, when comparing external with internal costs, apples are compared with oranges. For example, if an industry-standard hourly rate of CHF 120 is demanded for simple administrative work, the immediate reaction is that it’s much cheaper in-house. “We’ll hire someone for this activity with an hourly wage of CHF 25.” In reality, the effective costs per hour are significantly higher! If we add the social security contributions, we are at approx. CHF 28. Oh yes, we also have vacation 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 approx. CHF 30.30. Then there are costs that are difficult to calculate, such as absence due to illness, recruitment, management of the employee (yes, this employee will want to attend the All Hands Meeting and, with this salary, will only have basic qualifications and therefore may ask a question or two 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.
More importantly, however, this employee does not owe success, whereas the outsourcing partner does! The employee does not meet expectations – that is the employer’s problem, because employees owe work performance but not success. In contrast, the outsourcing partner owes the agreed-upon result! With the fiduciary, I can dispute the invoiced work if the performance is not right and demand free rework.
Anforderung an den Treuhand- und HR-Partner
Costs are only one side of the coin, because on the other side are the benefits of outsourcing. A strong partner in HR and accounting enables flexible access to expert knowledge and the procurement of exactly the amount of service effectively needed. For this flexibility advantage to be fully realized, the outsourcing partner must be as agile as the startup itself. The outsourcing partner must be able to react quickly to a startup’s operational needs and strategically support the company’s development. Processes and the optimal division of roles between the startup and the fiduciary change over time. For the benefits of outsourcing accounting and HR to be fully realized, a startup should ensure, when choosing a partner, that the fiduciary and HR consultant seeks the optimal setup with the client and does not sell their own optimized standard processes.
If the outsourcing partner has this customer-centric approach, the startup can find the optimal balance between providing in-house services and purchasing services, and continuously adapt this to the company’s current development phase. The startup thus 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 fiduciary and HR outsourcing partner with a focus on startups, we offer precisely the agility to adapt to the individual needs of a company. We call this “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 here or write to roland@trustwork.ch.
