Bookkeeping for Startups: A 2026 Guide

Preparing key financial statements, such as balance sheets, income statements, and cash flow statements, provides valuable insights into your startup’s financial health. This should include both recurring and one-time costs like payroll, office supplies, travel expenses, etc. Make sure to document each expense with an itemized receipt or invoice so that you have proof of payment when filing taxes at the end of the year. Cloud-based accounting tools like Dext Prepare (we provide a free account to all our clients) can be used to facilitate the management of rekordkeeping, giving you one less thing to worry about. As a startup business, having the right accounting processes in place is essential for success. To get your accounting practices up and running quickly, consider these helpful tips for startups to save time and money while ensuring accuracy.

Accounting and Bookkeeping Services for Startups

• As you go forward and grow, Freshbooks has excellent invoice software that will allow you to automate and simplify the invoice process.
• In addition, accruals can give startup managers a better understanding of their business’s financial performance, making it easier to set realistic goals and track progress.
• We also understand that many founders start with limited financial knowledge, resources, and time to dedicate to keeping their books in order.
• You have taken out loans from various formal and informal lenders and credit card facilities from banks, which need to be paid on time to avoid any fines later.
• Regularly reviewing your progress towards these goals allows you to assess performance and adjust strategies as necessary.

According to a study conducted by The National Federation of Independent Businesses, roughly 82% of startups fail due to cash flow mismanagement. Mastering bookkeeping can help ensure your startup doesn’t become part of that statistic. While it might not be the most exciting part of running a business, having a solid understanding of your financials is essential for growth and sustainability. Whether you’re just getting started or looking to refine your processes, this guide will walk you through the essentials of startup bookkeeping.

Accounting Software

In general, a business owner can write off travel expenses if the trip is primarily for business purposes, such as attending a conference, meeting with clients, or scouting a new business location. The expenses that can be written off typically include accounting for startups transportation, lodging, meals, and other incidental expenses incurred while traveling. ‍Ideal for startups planning to scale, Xero integrates with various other business tools and offers robust reporting capabilities.

• Keeping accurate records makes it easier to file taxes correctly, reducing the risk of audits and penalties.
• Avoiding common bookkeeping mistakes maintains accurate financial records and ensures smooth operations.
• Figuring out how expenses (due to inflation) and your client decisions will change can be a tricky task and should be done with the help of your accountant or accounting software.
• As your business evolves, regularly review and adjust your financial strategy to align with new goals or market conditions.
• As a startup founder, you’re likely juggling multiple roles and responsibilities.

Monthly bookkeeping tasks

Selecting the method that suits your business needs will make managing finances a lot easier. We set startups up for fundrising success, and know how to work with the top VCs. The dirty secret to most (if not all) “automated” accounting firms https://dimensionzen.com/streamline-your-finances-with-expert-accounting-services-for-startups/ is that they rely on cheap overseas labor.

Keep Track of Accounts Receivable

A virtual bookkeeper offers flexibility, working remotely and often on an as-needed basis, which can save you money. Proof of purchase for expenses incurred by the business, such as office supplies, inventory, and travel costs. Store them on different devices or cloud services to safeguard against data loss.

• This is not recommended for businesses with more than a few expense or income statements to document.
• Through their experience, your accountant will have seen many different arrangements around financing, accounting methods, startup strategies, and more.
• One expense that we often see spiral out of control is unused software subscriptions.
• With our reliable services, you can focus on growing your business without worrying about accounting or payroll complications.
• 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.
• Don’t worry if you don’t know how to set up payroll, you can use our step-by-step guide or sign up for our flexible payroll services.

Finding the right bookkeeping support

Thus, many startups find that maintaining a headquarters is overhead they don’t need, opening them up to employees from anywhere. Accountants’ specialized knowledge can support your startup business in many ways. We’ll cover the various services startups need from accountants and the things accountants look out for while doing their work. The cost of an accountant depends on many factors like the size of the business or experience of the accountant. However, based on US Labor Statistics, for an in-house US accountant, you’ll be paying an annual average of $70,000.

• Quickbooks Online is another popular online accounting software providing users with the services they need to maintain a financially healthy business.
• Managing accounts receivable is vital for maintaining financial stability and ensures that you get paid on time.
• By integrating the software, you can connect your finances to the vital data on customers, inventory, and other aspects of your business.
• This will help you keep your personal and business finances separate, making it easier to track expenses and income.
• Remember, VC-backed companies have different needs than traditional small businesses or solo entrepreneurs.
• Cash basis accounting involves recording revenue when cash is received for a sale and expenses when they are paid.
• Accounting software provides the tools needed to manage finances easily and confidently, making it an essential investment for startups.