Accounting for Hardware Startups: The Ultimate Guide
This lesson is an article published by Puzzle.
Read the articleWhat you'll get
Puzzle, an accounting software company, explains how a product maker's books differ from a software company's: raw materials, work in progress and finished goods tracked apart, freight, duties and packaging counted in each unit's cost, tooling spread over the units it makes and a warranty reserve based on return rates. It is written for venture-backed hardware companies, so skip its fundraising advice and use the sections on unit cost and the gap between paying suppliers and getting paid.
Do this week
List the costs in one unit of your product beyond materials and labor, such as freight, duties, packaging, testing and scrap, and add them to your unit-cost sheet.