A startup accounting guide to building financially strong businesses

Company culture is very important to productivity, so you want to make sure you have someone that can contribute to the cohesion of your team. First and foremost, you will want an accountant that is forward-looking and aims for growth, growth, growth! They should be able to tell you about businesses they have worked with through numerous stages of fundraising. The other half is actually finding one that you can rely on to serve your accounting needs at the rapid pace of a startup.

You may choose different approaches to finance at various points—from DIY to hiring experts. But the key is that you stay close enough to understand how to add value at key points without getting too bogged down in the minutiae. Strategize with our financial experts to help you achieve your business goals.

Explore All Money Topics for Startup Business

GAAP is a set of accounting rules established by two private professional organizations overseen by the Financial Accounting Foundation. These principles of accounting not only ensure completeness in your accountant’s work, but are also expected by funders who review your books. But at the end of the day, your accountant’s job is to organize your finances and keep you tax compliant. While you may find accounting or ERP software that manages this for you, you’ll still want the eye of an accountant to confirm that you are always in compliance. Your accountant will know where to find information about the relevant jurisdictions you operate in and keep your system always accurate. If you can find an accountant certified in multiple jurisdictions, even better.

Many founders decide to hand-off the startup accounting responsibility to the CPA accounting experts. If you are looking for a startup accountant, look for a provider who knows your particular business model, as different types of early-stage companies have accounting particularities. We recommend QuickBooks Online (“QBO”) as the right bookkeeping software for startups and high-growth small businesses. It’s the leading small business accounting software in the US for small businesses, and interfaces nicely with other automated systems like payroll. Deferred Revenue is when a client pays you ahead of you delivering a service.

How to Select the Right Startup Accountant

The bookkeeping process involves keeping track of business transactions and making specific entries. Accounting systems and bookkeeping software like FreshBooks have a chart that lists all your accounts payable and their 20 Best Accounting Software for Nonprofits in 2023 categories. For example, you can post all sales to income accounts and cash outflows to expense accounts. For employees, you’ll have to set up a payroll schedule and ensure you’re withholding the correct taxes.

• An experienced accountant can help you make important financial decisions, comply with tax and oversight regulations, and save money by taking advantage of all available tax deductions and credits.
• Cash basis accounting works well for small startups with cash transactions and no inventory.
• Wave is a web-based accounting solution built for small businesses.
• While private companies are exempt from annual audits, several scenarios might require a startup to undergo an audit, such as securing a bank loan, line of credit, or other fundraising activities.
• Accounting processes include reporting, summarizing, analyzing, and projecting business transactions using financial statements.
• GAAP is better for running your business, as it helps you match your expenses and revenues with the timing of those activities.

For example, salaries and bill payments are expenses, and you should record them as debit transactions. But the payments you receive from your customers are credit transactions. Read about some of our expertise on our tech startup industry page. Technical debt is incurred https://simple-accounting.org/a-guide-to-nonprofit-accounting-for-non/ when you’re working very fast to develop a prototype or working model, and you’re not building everything perfectly. Accounting debt is a similar concept – startups can often ignore creating their accounting infrastructure to focus on their technology or customers.