However, with the current economic slowdown, some startups that may experience slower than projected growth are choosing to “re-outsource” their financials. These tools include expense management/credit card solutions that work for funded companies, banks that know how to help founders manage venture capital dollars, high-growth payroll systems and international payroll systems. Tax compliance is a subset of due diligence, and your accountant can help you explain to the VC fund or the acquirer that you have followed all federal and local rules and regulations. This is becoming an increasingly important part of later-stage due diligence and M&A diligence, so make sure you have an experienced startup accounting firm if you are raising big VC $$. Outsourced bookkeeping for startups implements robust financial systems customized to the startup’s needs.

• Kruze uses a proprietary software that plugs into QuickBooks and it categorizes about 70% of the transactions, and automatically.
• In conclusion, managing stock-based compensation properly allows tech companies to balance attracting talent with accurate financial reporting, while keeping dilution and profitability in check.
• Our team is trained to look for specific errors based on your company’s stage.
• We are familiar with early-stage companies’ business models, we understand the complexities (and importance) of issues like revenue recognition, ARR, capitalized vs. non-capitalized development costs and, more.
• We’ve automated part of the process to give you the streamlined functionality you deserve using the best resources in the industry.Want to know more about the technology we recommend for SaaS companies.
• Under her leadership, Kruze Consulting has emerged as a distinguished CPA firm, recognized on the Inc 5000 list for five consecutive years, illustrating rapid growth and success in the competitive accounting landscape.

Best Practice #10: KPI Tracking and Financial Dashboarding

Our team is trained to look for specific errors based on your company’s stage. Having a team of experts – not just accountants but also lawyers, HR managers, and senior executives – will protect your company as it grows. Ensure your startup accountant is a good fit with your existing team. Company culture is very important to productivity, so you want to make sure you have someone who can contribute to your team’s cohesion. This means not only how long they have been a practicing accountant but also the volume of their work and how close it is to your business. The other half is actually finding one that you can rely on to serve your accounting needs at the rapid pace of a startup.

Side Note: What is the Difference Between a Bookkeeper and an Accountant?

The typical point where it starts to make sense to hire a startup bookkeeper is when a company has raised over $250,000 in funding and has 6+ months of runway. At that point, it makes more sense for the founders to be 100% focused on growing the business, and let an experienced startup bookkeeper handle the books. Many startups outsource their financial reporting and management functions, both to save money and to get professional accounting and finance services that would be difficult to locate and hire. As the company grows, management eventually hires the appropriate personnel and brings these financial functions in-house.

Best Practice #1: Revenue Recognition

While cash accounting (calculating the money you have on accounting services for startups hand and the money you owe) is relatively straightforward, it isn’t the method of accounting preferred by investors and banks. Another example of industry-specific differences for startups is eCommerce. While a small business might want to focus on a single channel to keep things manageable, eCommerce startups usually maximize the availability of their products by operating on multiple platforms. Regarding the number of employees, sales, and market share, startups look an awful lot like small businesses. While it’s true that startups and small businesses operate simultaneously, a startup has its sights set on larger horizons than a small business – with big implications. It is used as a proxy for cash flow while being focused on the income statement.

Startup Accounting and Bookkeeping Services

• Their expertise and attention to detail in Medicare billing and compliance in medical billing have streamlined our revenue cycle and improved financial performance.
• You will want to make sure you find the right fit for your goals, your industry, and your culture.
• One attractive option for startups is to outsource their HR to a professional employment organization (PEO).
• Especially as a founder, you need to know what your expectations are and how you’re doing against your expectations.
• At Acuity, we’ve worked with tech startups for more than a decade using SaaS technology.
• Beyond just completing your regular tax returns, you will want to look at available tax credits, like the research & development tax credit.
• Kruze Consulting is a leader in Finance as a Service (FaaS), offering outsourced, integrated services that include a full range of financial services through a single provider.

This is especially important for eCommerce startups who have transactions on a multitude of channels. An ERP is a great way to centralize the data coming in from different online marketplaces. Several software options are designed specifically for accounting. Accounting software not only keeps your books balanced but also allows you to establish an accounting process that aligns with your business and finance processes.

• The best startup accountants have worked with multiple high-growth companies, and know which software and systems are ready for hyper growth.
• With a panoramic range of early experiences, we will help them develop into well-rounded business leaders with endless opportunities.
• Our accountants, fractional CFOs, and tax specialists are dedicated to building a strong finance foundation for your business.
• We’ll help set up your full finance stack for scale, including preferred cash–sweep accounts, payroll, and expense management.
• Accurately accounting for these compliance-related expenses is essential for understanding the full financial impact of maintaining security and privacy standards.
• Administratively, there is no difference between a controller and a comptroller.

They should be able to tell you about businesses they have worked with through numerous fundraising stages. A controller will help relieve your accountant of a lot of the administrative burden. By generating your financial statements and reports, the accountant can focus on ensuring clean books. Your accountant can help you determine how to assemble a roster of services to carry out the administrative side of your business. They will have a working knowledge of the cost of various options to help you arrive at a solution that fits your business plan and budget.

Finance as a Service (FaaS)

Although many online calculators exist to estimate your potential credits, nothing will compare to a trained accountant going through your books and determining the highest tax credit possible. The bookkeeping Credit for Increasing Research Activities, more commonly known as the R&D tax credit, allows you to carry forward the value of the credit into your future, profitable years. This is designed to incentivize businesses to prioritize long-term research and business growth even though a return on investment isn’t immediate or guaranteed. If you’ve been in business for any period of time as a startup, you know that you don’t start out profitable. As a result, the first few years may see negative returns and, hence, no income tax liability. By integrating the software, you can connect your finances to the vital data on customers, inventory, and other aspects of your business.