Choose the Best Accountant for your Startup

The value of having someone who understands your complete financial situation really can’t be overstated. Firms that rely on automated accounting systems or who provide limited services can easily miss potential problems, like invoicing issues, double payments, and missed collections. Your accountant should function as a partner, who supports the success of your startup and helps your company achieve its goals. For more information about the value of accounting services for your startup, contact us.

If you don’t know the difference between financial statement analysis and financial forecasting, you may want to consider seeking some help. If you don’t have any employees yet, you don’t have to worry about payroll. However, if you have even one employee, you’ll need to properly track payroll.

If you’re not sure whether something needs to be tracked, err on the side of caution and assume that it does. In all cases, the following financial items need to be properly managed. If you are thinking of having an accountant on board after setting up the entire office, you may fall behind in your preparations. John Iwuozor is a freelance writer with expertise in the technology field. He has written for a host of top tech companies, the likes of Technologyadvice, Tripwire amongst others.

Cash method

If they’re not, you’ll likely have to pay late fees, interest charges, or both. It’s just as important to reconcile your credit card statements as it is your bank statement. Credit card fraud is a real thing and can sneak up on you with a lot of small charges put through to see if you’re paying attention. Be sure you have a backup for every charge on your credit card statement.

Once you’ve gotten your idea off the ground, established the structure of your business, and figured out your basic logistics, you need to start thinking about accounting. Since money is what will ultimately drive the success of your startup, how you manage your finances will play a significant role in the viability of your company. So, you’ve turned your great idea into a lucrative business opportunity, started making sales, and are now thinking about processes that can help take your business to the next level.

Accounting and bookkeeping options for your startup

Your accountant needs to know how to calculate your burn rate, should know about treasury solutions so you can earn interest on your bank balance, should have attended multiple board meetings with the best VCs. Budgeting, modeling, burn rate, cash out dates, and other critical information are an essential part of running your startup. And while it’s pretty easy to download and complete a free financial model, you also need to make sure that information is interpreted correctly. Beyond just creating budgets, your accountant can help you with forecasting, analyzing key performance indicators (KPIs), and developing a financing strategy. Your accountant can help look at the “big picture,” examining how all your financials are interrelated and affect your company.

It can be overwhelming, but learning the basics and deciding how to tackle your financial records early is essential. Our account management team is staffed by CPAs and accountants who have, on average, 11 years of experience. Clients who have switched to us have complained about frequent, often monthly, price increases as their startups’ expenses have grown.

But ignoring that stack of papers can create more work for you down the road. If you maintain month-end closing financial statements, your bank reconciliation should be included with the financial statements to make sure that your general ledger balance and bank balance match. Make sure that payments received from your customers are adequately tracked, whether they pay by check, cash, credit card, PayPal, or via ACH transfer.

A qualified accountant is an invaluable asset for any business as he or she can guide you through complex topics, especially tax law. If you know you’ll love a tool and are ready to commit up front, investing in an annual contract probably makes more sense and may even come with a discount for your commitment. However, if you need more time to decide if a tool is right for you, monthly subscriptions are a safer bet. Reviews are an important factor to consider if you are looking to purchase accounting software.

One of the most important steps you need to take to set up your accounting system is to make sure that your files and documents are organized. If you familiarize yourself with basic accounting terms and invest in a good accounting software package, you’ll be well on your way to success. Whereas a traditional small business focuses on their bank account balance, startups focus on the KPIs that help them raise their next round of funding. Choose an advisor who “gets” early-stage, Silicon Valley-style businesses.

Who Should Use Accounting Firms?

In the wake of the SVB crisis, startup founders with millions of dollars in VC funding are looking for FDIC coverage over $250,000. If you are going to be acquired by a publicly-traded company for hundreds of millions or billions, GAAP will be important. It also makes running your business a lot easier because you are going to see what is going on all the time. Yes, venture-backed high-growth businesses should have as close to GAAP financials as possible. Cleo employs a staff of ten comedians to help sprinkle spoonfuls of sugar on the sometimes bitter medicine of personal financial planning. Five million Americans, median age 25, use the chatbot to help track their spending, build credit, plan savings—and uncover whatever humor might be hiding in the sobering truth of their student-loan debt.

However, with the current economic slowdown, some startups that may experience slower than projected growth are choosing to “re-outsource” their financials. At Kruze, we would argue that a VC-backed startup should have an accountant/CPA (and not just a bookkeeper). Businesses with over six months of runway should consider hiring a real accountant. Deferred Revenue is when a client pays you ahead of you delivering a service. For example, if you charge a client’s credit card for a 12-month subscription, contracts – you just got 12 months of cash from that client!

You can do your own books (if you have time)

This way, it won’t be wrong to refer to them as the financial generalists who assist your venture in reaching new heights of profitability. Finvisor has been supporting startups and small businesses since 2014. We have all the accounting technology, tools, experience, and expertise necessary to help you Accountant for startups get where you need to go, all this without breaking the bank. While opting to hire a small business accountant will cost you money, it can also save you a lot in the long run. Unless you are a CPA who is up to date on tax laws, you’re likely missing out on deductions and other small biz benefits.

Pilot is not a public accounting firm and does not provide services that would require a license to practice public accountancy. Xero is another emerging online accounting software company providing practical tools and bank connections with a variety of plans to suit any size of business. Good bookkeeping provides entrepreneurs and small business owners with detailed, accurate, timely records that assist decision-making, taxes, and audits. It’s an essential part of good business management and business growth. Every business owner needs to have a structured method of bookkeeping that records the money coming in and going out of the business.

When it comes to accounting for startups, no two businesses are the same. That said, you should hire an accountant as soon as your business begins making money and it’s viable. While you might not have much financial activity early on, you can use their guidance to make sound financial decisions for your startup. When you’re setting up your business’ accounting, you should also research tax obligations to determine how your choices could impact you when taxes are due. For example, you may be responsible for paying sales and use taxes, and if you don’t, you could face penalties from the IRS. On the other hand, being familiar with small business taxes can also help you take advantage of certain tax credits and deductions, which can help save you money.

Accounting debt is a similar concept – startups can often ignore creating their accounting infrastructure to focus on their technology or customers. But eventually you’ll need to set up your accounting systems, and the longer you wait, the more you’ll have to go back and fix, just like technical debt. The good news is that by taking some simple steps early, founders can avoid accumulating a lot of accounting debt. The next step is to work with your account manager to integrate your existing software and processes with QuickBooks. From that point on, you will receive monthly reports, including cash flow, profit and loss, and balance sheet statements.

Proof of payment

After all, accounting helps you make the daily business decisions required to make your business financially function and grow. Welcome to startup accounting 101 – accounting tips for startups that will help you choose among the best accounting firms for your startup business. Outsourcing your projects to experienced tax pros or CPAs is one of the best ways to ensure that your business’s accounting needs are being met.

FreshBooks can help with resources for small businesses and free trials of software. It is used as a proxy for cash flow while being focused on the income statement. For example, you will hear bankers, private equity investors, and those kind of folks use EBITDA as a proxy for cash flow. CEOs of early-stage companies have a tremendous number of things to accomplish. You juggle many hats and managing the books shouldn’t be one of them! You need to get the information you need to make decisions and to ensure the utmost of financial health.

• The first-ever step of hiring an accountant is to analyze your financial requirements.
• If you’re going to have employees, you’ll need to have a payroll system.
• The reason for this is that like anything else in life, once someone demystifies the work for us (like we’re hoping to do here), none of it really seems that complicated.
• At Kruze, we would argue that a VC-backed startup should have an accountant/CPA (and not just a bookkeeper).
• It is a common type of accounting service that almost every venture requires at some point in running their business.

This is particularly important if you have a company credit card that is used by multiple employees. But when you wake up to the insights of the start-up’s world, you will realize you required an experienced accountant yesterday. Because an accountant offers valuable insights to launching your dream business, ensuring you are not missing any financial aspect at the beginning of your venture. All in all, an accountant is the basic need of the hour to level up your business’s financial status. Our team scales with your growth, so you only spend what you need to to ensure that your business is on the right track. We are ready when you need additional services, tools, and support.