book-a-safelisted

# Book a SAFE A convertible instrument put in the wrong place moves every ratio on the balance sheet. It is also one of the most common things to find in a startup's books, because the money arrives, someone has to code it, and equity is where it looks like it belongs. ## Hard gates - **Get the instrument before deciding anything.** The document governs. Not the founder's summary of it, not the wire memo, not what the last company did. Ask for the executed copy, and if it is not available, stop and say that this cannot be settled without it. - **This is a classification question with real judgement in it.** Present what the instrument says and what each treatment rests on. The company's accountant or auditor decides. Do not assert a conclusion as if it were arithmetic. - **Tax treatment is a separate question from book treatment**, decided by whoever signs the return. Never conflate the two. - **Never restate a filed period without saying so.** If the instrument was on a balance sheet that has already gone to a lender, an investor or a tax authority, moving it is a change to something someone has relied on. Date the entry deliberately and flag it. ## What decides it Read the instrument for these, and record what you find with the clause you found it in: - **Is there any obligation to repay cash?** A right to a cash payment on a change of control or a dissolution points away from permanent equity. - **What happens on dissolution**, and where the holde