You can choose a different method for tax purposes than financial reporting. Understand the business scenarios right for each method and pick what makes sense for your startup model. As your business grows and you hire employees, you can consider whether to rent office space or keep working remotely. If you need an easy-to-understand accounting software package with great customer service and tech support, FreshBooks can help. Our team makes sure you are ready to fly through your next VC’s accounting, HR and tax due diligence. And when you use us as your bookkeeper, we set up and keep up-to-date a due diligence folder so you can get that next round of fundraising.

Your office space should be private and free from distractions so, if you are setting up a home office, you should have a separate, private entrance and space for meeting clients. Take your own knowledge, experience, and qualifications, as well as your target clients’ budgets, into account when setting your fees. However, it may give the impression that your time is no more valuable than any other bookkeeper’s which leads clients to shop around. Individuals who prefer access to instructors while they learn can join online or traditional college courses.

Accounting for Startups — A Comprehensive Guide

It can be more profitable and may help you screen for high quality clients but it also slows down the sales cycle as you need to quantify the value of your services. Also consider getting certified in some of the leading accounting software providers, such as QuickBooks and FreshBooks. Now that you’ve built your expertise, created your own bookkeeping business, and are ready to help the organization solve its complex problems. Including a mix of these models may be beneficial, depending on the nature of your new bookkeeping business, and help you to attract potential bookkeeping clients. Selecting the right bookkeeping software can simplify your financial processes, increase productivity, and hence contribute to the success of your business.

• When planning your marketing strategy, it’s important to think about the message you want to send to prospective clients.
• You can sign up for QuickBooks’s ProAdvisor Program and get access to their comprehensive training.
• For example, when money comes from a sale, it will credit the sales revenue account.
• If you aren’t using software, you need to match your bank account statements with the entries in the general ledger to ensure they line up.
• Most startups opt for one dedicated bank account and one business credit card to start.

An accountant familiar with your industry will help you pay the least amount of taxes possible and protect you from the IRS limelight. This could help you build credibility inside that segment, as well as help you hone your skills. Additionally, determining your target audience will be simple if you have a specialty. To help determine your niche, you should also research the market to determine what bookkeeping businesses are already established and which industries they serve. One significant decision startups face is whether to hire in-house accountants or outsource the function to an independent accounting firm.

RECORDING FINANCIAL TRANSACTIONS

Accrual basis accounting counts money when it’s “earned” rather than received (and the same with expenses). So, for example, if your customer signs a big contract, you’d consider the money earned, even if they haven’t paid you yet. startup bookkeeping A business plan involves outlining your plans for your company in detail. It is a comprehensive document that explains not only your services but also your market and the competitive advantage you’ll have in your business.

If you are looking to accommodate a large number of users, we suggest Xero instead because of its ability to accommodate unlimited users. For example, if you purchase inventory with cash, you debit inventory (asset) and credit cash (asset). If you sell inventory for $100 on credit, you debit accounts receivable (asset) and credit revenue (equity) by $100 each. While it’s not required for bookkeepers to specialize in a niche, many choose to do so for marketing purposes. If you focus on a specific industry, you can gain referrals from others within the industry and join industry associations.

Do Startups Need In-House Accountants?

Accrual accounting tracks all business transactions, even when cash isn’t involved. For example if a business records its invoices before they are paid, this is considered accrual accounting. The cash accounting method tends to be simpler and more convenient for most startups. However, accrual accounting can be better when applying for a bank loan to finance your business, or it can help a buyer assess your business if you plan to sell. When choosing an accounting method, cash-basis is likely the simplest option for most startups, especially in the early stages.