For both public and private companies alike, quarterly earnings results can have an outsized impact on setting investor expectations. They also can expose weak points in the company’s growth outlook. Public companies must file quarterly reports with the Securities and Exchange Commission (SEC) on a Form 10-Q.

Private companies do not file quarterly results with the SEC. But startups that aim to eventually go public should maintain good recordkeeping practices. They should understand the quarterly reporting requirements that public companies face. In that way, they will prepare for their first Form 10-Q after an initial public offering (IPO).

Additionally, prior to the IPO, the startup will have to file a Form S-1 registration statement with the SEC. The Form S-1 is the primary disclosure document that potential investors and the SEC receive. The form shows a comprehensive overview of the company’s performance. The SEC requires disclosure of financial statements from the most recent eight quarters on the Form S-1.

Form 10-Q Quarterly Filing Deadlines

The fiscal quarters for a company most commonly end on March 31 (first quarter or Q1), June 30 (second quarter or Q2), September 30 (third quarter or Q3), December 31 (fourth quarter or Q4). However, not all companies have fiscal quarters that correspond to calendar quarters.

Companies must submit a Form 10-Q within 40-45 days after the end of their fiscal quarter. The SEC classifies some companies as “large accelerated filers” and “accelerated filers.” These companies must file their Forms 10-Q with the SEC within 40 days after the end of their fiscal quarter. A “large accelerated filer” is a company with a public float of $700 million or more. An “accelerated filer” refers to a company with a public float of $75 million or more, but less than $700 million. Public float represents the portion of the company’s shares held by public investors.

If a company is categorized as a “non-accelerated filer,” it must file a Form 10-Q within 45 days after the end of its fiscal quarter. A “non-accelerated filer” is a company with a public float of less than $75 million. Many startups and emerging growth companies fall into this category.

Key Sections of Form 10-Q

The Form 10-Q is divided into two parts, referred to as Part I and Part II. Broadly speaking, Part I relates to financial data and Part II relates to non-financial information.

One of the main items featured on a Form 10-Q are the company’s quarterly financial statements. The company’s financial statements typically include its Balance Sheet, Statement of Cash Flows, and Statement of Operations and Comprehensive Income. The “Notes to the Financial Statements” will come directly after the various financial statements. A section called “Management’s Discussion and Analysis of Financial Condition and Results of Operations” often ties back to the financial statements. Part II includes disclosure updates pertaining to the company’s risk factors, legal proceedings, and unregistered securities.

Companies defined as “smaller reporting companies”, meaning they have annual revenues of $100 million or less, are able to take advantage of scaled back disclosure obligations. For example, “smaller reporting companies” do not need to provide information on material changes to their risk factors since their last Form 10-K, or annual report, filing.

Pre-IPO Best Practices for Startups

Private startups that do not have adequate internal controls and procedures in place for organizing company financial data and other records may have a rough time with SEC reporting requirements once the company goes public.

Luckily, there is a way for a startup to avoid a giant headache in putting together the company’s first Form 10-Q for filing with the SEC—the startup can simply act like a public company far in advance of its IPO.

This can be easier said than done. In order to implement a consistent practice of collecting and organizing the types of information that would be reported on a Form 10-Q, a startup needs discipline. This means committing to similar quarterly deadlines to the quarterly report filing deadlines mandated by the SEC.

It also entails creating standardized recordkeeping procedures of financial data, material contracts, and other business changes. This requires promoting accountability within the company. The startup’s in-house legal or compliance team would typically be accountable for establishing standardized procedures. If the startup has not yet reached the point of hiring in-house lawyers, it may be advisable for someone in a finance role to be tasked with leading this effort. The company’s Chief Financial Officer may be a logical choice. Management software can help ease the administrative burden of the more tedious aspects of methodically organizing company records.

Quarterly Reports Help on Earnings Calls, Too

Aside from filing quarterly reports with the SEC, public companies conduct quarterly earnings calls. This involves direct communication with investors on the company’s performance and strategy. Poorly run earnings call can result in a loss of investor confidence. They can also raise investor concerns and invite unexpected questions. A startup planning to go public should rehearse the earnings call process. Some ways to do this include identifying company information most pertinent to investors, anticipating questions that investors might raise on an earnings call, and preparing a mock earnings call script.