A cap table is a ledger showing ownership and financial standings for a company. Individuals can have car tables as well. For example, an investor who has ownership in a few different companies will track this ownership on their cap table.
Every business owner has a cap table whether they know it or not. Making mistakes in your cap table management can be both expensive and time-consuming. The following are the most common mistakes people make when managing their cap tables:
Human error can account for a few different cap table management issues, such as; not documenting changes, entry mistakes, or incorrect info. Documenting changes in the cap table can seem something of less importance or that there are more pressing tasks to be done. This is a big misconception. If your cap table is not up to date on even the smallest of information, your company could be subject to liability.
The same goes for manual entry mistakes or incorrect information. Careless mistakes can lead to miscalculations and the loss of financial stability and security.
Not having a centralized cap table is the most detrimental cap table issue a company can have. First, let's cover what it means to have a centralized cap table and how to obtain this. A centralized cap table acts as a single source of truth. There are no different versions of it floating around the company that anyone can change what they want. This is important to avoid any confusion or legal suits later on.
Equa offers a platform to store your cap table and financial documents so you can easily have a centralized system and establish a single source of truth for yourself or your company.
If you would like to read more information about cap table management, check out Equa’s blog.