#55 Audit, Tax Deadlines & The Ultimate Year-End Checklist for VC CFOs

March 22, 2023

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Welcome to the new members of @TheFundCFO crew! Every M/W/F, we bring you actionable tools, real-world experiences, and insider insights for #VC CFOs and fund managers, #LP investors, and general industry enthusiasts/people who want to learn :).

Checklists (Again) - Every Month, Quarter, Year :)

We’re almost at the end of March! Given that, it’s time once again to review our monthly, quarterly, and annual checklists and playbooks.

Yes it’s a bit boring but the checklists + the playbooks help us stay organized and continue to execute as we close out the third month of the year and the last month in the first quarter!

We’ve written a lot on checklists previously, most notably in the following posts:

The Ultimate Year-End Checklist for Venture Capital CFOs

For VC CFO’s, we’re still finalizing year-end items! A well-organized year-end process can save you time and prevent costly mistakes. This blog post will outline the key steps and provide a comprehensive year-end checklist for VC CFOs to follow.

  1. Financial Statements and Reporting (due 4/15)

One of the main responsibilities of a VC CFO is to ensure that financial statements are accurate and up-to-date. At year-end, make sure to:

  • Review and reconcile all general ledger accounts

  • Prepare and finalize year-end financial statements (balance sheet, income statement, and cash flow statement)

  • Verify and update portfolio valuations

  • Analyze financial performance and present findings to the management team

  • Ensure timely submission of financial reports to limited partners (LPs) and other stakeholders

  1. Compliance and Regulatory Requirements

Keeping up with compliance and regulatory requirements is essential for VC firms. Before the year ends, ensure that you:

  • Review and update your firm's policies and procedures

  • Ensure compliance with SEC regulations and other relevant laws

  • Prepare and file required regulatory reports (e.g., Form ADV)

  • Assess the effectiveness of your firm's anti-money laundering (AML) program

  • Review and update your firm's cybersecurity policies and procedures

  1. Tax Planning and Filing

To avoid any surprises, make sure to:

  • Work closely with your tax advisor to identify tax-saving strategies and opportunities

  • Gather all necessary tax documents and financial records

  • Calculate taxable income and capital gains for the VC fund and its portfolio companies

  • Prepare and file federal, state, and local tax returns

  • Ensure that all tax liabilities are settled on time

  1. Budgeting and Forecasting

As you close the books on the current year, it's time to plan for the upcoming one. Take the following steps to create a solid financial plan for the next year:

  • Develop a comprehensive budget for the VC firm, including operational expenses and potential investments

  • Update your firm's financial model and forecasts

  • Set fundraising goals and create a plan to reach out to potential investors

  • Review and adjust your firm's investment strategy as needed

  • Monitor industry trends and identify potential investment opportunities

  1. Human Resources and Compensation

Managing human resources is a key part of a VC CFO's role. Ensure a smooth year-end process by:

  • Reviewing employee compensation and benefits packages

  • Conducting performance evaluations and providing feedback to employees

  • Planning for any necessary staffing changes in the upcoming year

  • Ensuring that all payroll taxes and withholdings are accurate and up-to-date

  • Staying informed about any changes to employment laws and regulations

Conclusion

As a VC CFO, the year-end process can be demanding, but it is essential for the success of your firm. By following this checklist and staying organized, you'll be better prepared to tackle the challenges of the upcoming year. Remember, proper planning and preparation are the keys to ensuring a smooth year-end process and a strong start to the new year.

That’s all for today folks! Thanks for your support and spreading the word! Share this on Twitter or LinkedIn to help grow “the crew!”