Now that you know the five main account types, you should begin to familiarize yourself with some other accounting basics. If you’re using accrual, or double-entry accounting, you will need to understand the accounting equation and debits and credits, which are the backbone of any accounting system. Choose wisely, as once you choose an accounting method, you’ll need authorization from the IRS to change it. If your small business doesn’t include piles of paperwork and boxes full of receipts, you may want to consider handling your accounting yourself. There’s no shortage of excellent, affordable software options on the market and we’ve done the legwork to research the top choices for you. Check out our reviews of the Best Accounting Software to find one that will work for your needs.

Furthermore, it is not recommended for businesses with staff or plans for expansion. Startup CEOs and founders don’t have time to proof their books, nor should they have to. Accounts payable (AP) is the money your business owes to its vendors for providing goods or services to you on credit.

FAQs on Accounting for Startups

Both bookkeeping and accounting are vital to every business’s success, but you may have an additional need to keep good records as a startup. If you have investors, they’ll require that you provide financial reports. And if you are trying to get a business loan, you’ll need clear and easy-to-read financials so that potential investors can make an informed decision about investing in your vision.

We set startups up for fundrising success, and know how to work with the top VCs. Kruze is trusted by hundreds of companies, and we understand the unique challenges startups face. Our premium package offers access to strategic expertise from professionals that understand your startup’s needs. Our entry-level package gives early-stage founders the accounting expertise they need. If you’re a brand-new business, chances are you don’t have any tax returns yet. However, once you do, those returns must be filed away and kept for at least three years, although it may be a good idea to keep them longer.

Dave Lowe, CPA

So, essentially, this statement shows you how much your capital has changed, due to these four factors. The Bureau of Labor Statistics states that accounts are paid $78,000 annually or $37.50 per hour on average. VCs and Angels do want to be assured that their financials are presented in compliance with GAAP. This is as user-friendly and adaptable as possible to suit most SaaS businesses. Designed for a startup with multiple departments; use to budget for hiring and non-FTE spend.

The biggest ones like Watershed, Persefoni, Sweep or Greenly have an industry-agnostic approach. They help you track your carbon emissions and create reports in a more or less automated way. According to the BLS, accountants earn a median annual salary of $73,560. Accountants can increase their earnings by earning a master’s degree and professional licensure (e.g., CPA certification).

Questions About How to Become an Accountant

CPAs can also supply customized dashboards highlighting KPIs specific to your startup. Their commentary and insights help you make informed pricing, budgeting, growth channels, and more decisions. Rather than getting lost in scattered data, you leverage financial insights to calibrate strategic direction.

We look to partner with our clients, going beyond the typical outsourced accounting relationship and seeking to provide a higher level advisory role. We feel honored to be a part of making the world a better place, even if it’s one debit and credit at a time. They set up our books, finances, and other operations, and are constantly organized and on top of things. As a startup, accountant for startups you have to focus on your product and customers, and Kruze takes care of everything else (which is a massive sigh of relief). As your startup scales, you’ll need more extensive accounting services. When early-stage companies get acquired by massive public companies or sophisticated venture capitalists, they need specialized accounting consulting and finance help.

Startup Accounting: Recordkeeping

However, it’s still crucial to have some general knowledge of the fundamentals of accounting. This startup financial model is used to negotiate the size of the option pool needed at a venture round. At any moment, executives or team members may own public or private stock in any of the third party companies we mention.