11 best accounting software for startups in 2025

Kruze Consulting specializes in providing expert accounting and bookkeeping services tailored to the unique needs of VC-funded companies. Our account management team is staffed by CPAs and accountants who have, on average, 11 years of experience. Partnering with an established accounting firm can provide comprehensive financial services for your startup. While general accounting principles apply across industries, there can be significant differences in financial practices and regulations depending on your sector.

• While many startup founders choose to hire an accountant, it is possible to do accounting yourself or by using accounting services.
• Outsourced bookkeeping for startups implements robust financial systems customized to the startup’s needs.
• The accounting software also integrates with over 1,000 apps like HubSpot and Square, making it ideal for accounting for startups that already use business tools and need to sync financial data.
• More mature startups can rely on our fractional CFO services, which help keep your financial operations running smoothly.
• With solid financial data at your fingertips, you’re better equipped to make strategic decisions about when to expand your team, enter new markets, or launch new products.
• Making timely tax filings and payments can save your startup from penalties, interest charges, and legal issues derailing your progress.
• You can find blank 1099 forms and related instructions on the IRS website.

How Do You Start a New Business Accounting System?

One of your best choices is to try FreshBooks accounting software for free. It can help you navigate the growth of your business and keep your startup’s financial health in tip-top shape. It’s essential to think beyond immediate accounting costs and consider how investing in quality accounting services can benefit your startup in the long run. Proper financial management can lead to better cash flow, informed decision-making, and compliance with tax regulations, all vital for growth. Allocating sufficient resources to accounting from the outset can mitigate financial risks and set your business up for sustainable success. Embarking on your startup journey involves many exciting developments, but establishing an effective accounting system is non-negotiable.

Common bookkeeping challenges

This helps you make strategic decisions, such as when to hire or invest in new projects. ‍If you’re seeking funding, clean and accurate financial records are a must. Investors want transparency and a clear understanding of how their money will be used. Accounting might not be the most exciting part of launching a startup, but it is undoubtedly one of the most crucial. Accurate financial records are not just about compliance—they provide valuable insights that can influence strategic decision-making. In this Finance 101 article, I dive into the key finance and accounting considerations for startups that are Pre-Seed or Seed.

Choose Your Business Entity

Payroll and benefits can be complicated and easy to mess up, especially when you’re managing a mix of full-time employees and contractors in the earliest days of building your business. Here are the finance and accounting tools we are using (and loving) on a day-to-day basis. What-if analysis is a strategic decision-making tool used in financial planning to evaluate the impact of various hypothetical scenarios on … Company culture is very important to productivity, so you want to make sure you have someone who can contribute to your team’s cohesion. Another issue you may run into as a startup, particularly if you operate with a remote team, is complying with tax laws across multiple jurisdictions. The more places you find employees, vendors, and clients, the more likely you will run into disparate state and local tax laws.

What Are the Basics of Bookkeeping?

• Keep a detailed record of every income and expense, regardless of size.
• This simplifies the auditing process, ensures compliance, and facilitates easy retrieval of documents when needed.
• This includes maximizing deductions and credits, optimizing employee stock option plans, and ensuring compliance with both state and federal regulations.
• With an organization as fast-moving as a startup, it’s important to plan for all contingencies, and your accountant should help you do that with a proper financial model.
• Was that trip to Staples for office supplies or to pick up a new banner for your tradeshow booth?

In double-entry bookkeeping, every transaction affects two accounts, meaning two entries are made. When a business keeps correct recordings of their transactions, the accounting equation always balances. Either way, these fundamentals, metrics, solutions, and best practices are just as relevant for your startup’s future. To maximize cash flow, incentivize early payment, optimize inventory, use electronic payment, negotiate with suppliers, and have high-yield savings accounts.

Cash-based accounting records transactions when cash is exchanged, while accrual accounting records transactions when earned or incurred, offering a more accurate financial picture. An efficient COA ensures accurate categorization and tracking of financial transactions, facilitating easy monitoring of revenue and business expenses. With a well-managed COA, startups can make informed business decisions based on reliable financial data. Regularly generating financial reports, such as income statements and balance sheets, provides insights into your startup’s financial performance. Analyzing these reports helps identify trends, spot areas for improvement, and make informed decisions.

How do I account for startup costs in GAAP?

By implementing these accounting practices, you can maintain financial health, ensure compliance, and make informed decisions that drive growth. Don’t underestimate the power of good accounting—it’s the backbone that supports your entrepreneurial journey. SaaS startups are all different, and we’ve worked with hundreds, providing expert accounting, tax compliance, and financial advice. We help you correctly recognize SaaS revenue and expenses, and provide financial reporting that includes specialized SaaS ratios and calculations. 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.

When to Consider Hiring an Accountant

As your startup grows, your accounting needs will become more complex. Consider hiring an accountant who can scale with your business and provide the level of expertise you’ll need in the future, even if you start with more basic needs. accounting for startups Use accounting software to automate bookkeeping as much as possible, including tasks like reconciliation and classifying bank transactions.

Closing Accounts

An independent contractor is technically a business entity rather than an employee. In theory, an independent contractor is someone who is in control of the conditions of their employment and is paid for the product of their services that are produced independently. Learn how a 3PL company improved https://dimensionzen.com/streamline-your-finances-with-expert-accounting-services-for-startups/ efficiency by partnering with Invensis and minimizing errors in AP and AR invoice processing.