June 5 2020 - New York, NY
Personal Reimbursements: Michael Tannenbaum
In Brex in the Black, we discussed financial operations with Brex's CFO, Michael Tannenbaum. And today we're going to talk about personal expenses and personal reimbursements. Michael, onto you.
Thank you. Look, I get this question a lot from early stage startup founders, which is, I've been spending money on my personal card because I haven't had my business set up and I've incurred all these expenses, how do I actually go ahead and reimburse myself? And so it's actually pretty easy, but it's not necessarily intuitive. I just wanted to walk through the steps that you do. What you need to do is first get your accounting ERP and general ledger set up. You need to make sure that you've mapped your income statement and your balance sheet to a general ledger. If you haven't done that, see a different podcast, and you need to get some help quick. But once you've done that and you have this, basically what do is if your business was operating at that time, you treat it like that those expenses happened on the days that they happened and you run them through your books according to the categories of the expenses that were incurred, mapping to your GL. If your business wasn't operating, just book them all on the day the business opened. And so you book those expenses to the income statement as expenses with an offsetting entry to accrued liabilities. And this liability is just owed to you personally. Basically these expenses happened. Somebody else paid for them, that's why they're liability. They were a source of cash to the company because somebody else paid for it and the business got the benefit. Then you add all that up and basically pay yourself, and then you reverse that liability and reduce cash. I know this is a pretty tactical lesson, but I think it's important because a lot of people have this question. It's probably the question I get asked the most by people is, how the hell do I do this? There you go.
Should this be included in a credit card policy from early on? Is it acceptable to do if you follow these steps?
Yeah. Look, I think that, for me and many people, pretty surprised at how easily we transitioned to work from home. Obviously, this environment's not good for people. There's a lot of negative public health implications, but just from a office strategy perspective, I think it's been probably surprising to the upside. What I've been doing is trying to think more about working in an office as a perk, actually. That's the framework I've adopted, meaning working in an office as an expense. And I think what I now ... It's not a God given right. It's not necessarily something that everybody even wants. So, I've started reframing my approach, and how I'm doing the planning for the rest of 2020 and '21 from a financial and company perspective is to start to treat the office like a perk. For a lot of startups, you compete with big tech and you compete with other startups for talent, and that's still true today. Offices may be something that are status quo and everybody has, but if you start to think of them as a perk, I think that's going to help you more accurately plan and also make sure that you're getting the value you want out of them. We can talk a bit more about that, but that's the overall framework that I think is a pretty different shift versus assuming that offices were required and standard, to now thinking of them as a benefit to employment.
All right, Michael, thank you so much for your insights on personal reimbursements.
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