Accounting For Startups: Everything You Need To Know In 2025

Having a financial cushion can help you weather these challenges without disrupting your operations. Otherwise, you risk giving your vendors free money in late payment interest. Ensure that your site is mobile-friendly, has clear navigation, and loads quickly. A well-structured site with relevant internal linking can enhance both the user experience and your SEO performance. Today, the vast majority of accounting websites still look like they were made in the the 1990s. To stand out, you need a website that looks modern, works just as well on mobile as it does on desktop, and that represents your brand in an exciting way.

At Kruze, we would argue that a VC-backed startup should have an accountant/CPA (and not just a bookkeeper). Businesses with over six months of runway should consider hiring a real accountant. However, if you want to take a stab at your accounting, read on to see tech startup accounting tips that you can follow. We’ve included everything from why and how to budget, to free financial model templates, to record keeping, to taxes and more … We like to call it the ultimate guide to startup accounting.

Fundamental accounting tasks

It’s how you track your company’s financial health, understand where your money is going, and make informed decisions about the future. Think of it as your financial GPS, guiding you toward profitability and sustainable growth. At its core, startup accounting involves recording and organizing all financial transactions, from initial investments and sales revenue to operating expenses and taxes.

Step 1: Decide if the Business Is Right for You

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market. Accounting services run anywhere from $100 to $500 per hour, but as a CPA you should be able to begin with a rate of $150 or $200. Once you have an office, after you pay rent, payroll, and overhead, your profit margin should be around 20%.

steps to starting an accounting firm in 2024

Accounting systems and bookkeeping software like FreshBooks have a chart that lists all your accounts payable and their categories. For example, you can post all sales to income accounts and cash outflows to expense accounts. Now that you know what’s involved in starting an accounting firm, it’s a good idea to hone your concept in preparation to enter a competitive market. Startups need more than a robot to reconcile the accounts, they need a trusted advisor who is in tune with their unique growth path. Available to answer questions, available to update numbers as new data is produced, available to set up the right systems for a high growth company.

Cost is also important to factor in when purchasing accounting software. Most systems will charge you either per month or annually and you should determine which makes more sense for your business strategy. Of the many accounting software options on the market, each one has its benefits and drawbacks based on your business size, number of employees and other needs. Did you know that over 30% of new businesses fail due to running out of cash? This is unfortunate, but can be prevented by knowing the proper accounting systems.

Do startups use GAAP?

• Governments and large businesses often employ them to comb through a company’s or individual’s accounting records and check that no fraud or other deception is being committed.
• With Virtual Accounting Services, startups can access the same level of expertise and support while benefiting from greater flexibility and reduced overhead costs.
• Start by researching what other firms in your area charge for similar services and, rather than setting competitive rates, find a balance that will carry your firm forward.
• For example, human resource situations that involve terminating employees can require calculating severance and running payroll, and your accountant can help during these difficult circumstances.
• Consider exploring FinOptimal’s managed accounting services for expert assistance.
• Our team loves working with startup companies, not only that, but Kruze cares more!

A qualified accountant is an invaluable asset for any business as he or she can guide you through complex topics, especially tax law. While accounting software is helpful, it performs even better when coupled with the expertise of a chartered accountant or bookkeeper. The list goes on, but this high-level overview of basic and sophisticated accounting software features should give you a general idea of what to look for when shopping for accounting tools for your business. Most accounting systems cater to basic accounting needs, such as tracking spending and expenses, billing, accounts receivable, and so on. The cash flow statement is a valuable tool to analyse a company’s strength, long-term future outlook and overall profitability. This would be stated as an increase or (decrease) in debt on the cash flow statement.

Tailored Strategies for NYC Startups

But regular sound professional advice is invaluable and can make your business successful. Xero is another emerging online accounting software company Accounting For Architects providing practical tools and bank connections with a variety of plans to suit any size of business. Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your accounting firm meets their needs or wishes.

For more comprehensive needs, such as strategic financial planning or CFO services, costs can rise to $3,000 per month or more. Accounting isn’t just a backend task—it’s key to your startup’s survival. Good accounting helps you understand your cash flow, avoid financial pitfalls, and make informed decisions. Investors expect organized financials, and tax compliance relies on accurate record-keeping.

When you deliver services virtually to clients, it is also easier to run your firm virtually. Working from home provides employees with more flexibility, no commutes, and more location independence. It also gives employers the ability to hire accounting professionals from a wider geographic area. Beyond your business structure, you’ll need to understand other tax obligations relevant to your operations. This might include sales tax, if you sell physical goods, or payroll tax if you have employees.

Running an accounting business requires a different set of skills and experience than working as an employee. As with any small business, establishing an accounting practice entails a great deal of work, but as Thomson Reuters notes, accounting firms are currently among the most profitable of all small businesses. In the fast-paced world of New York City’s startups, managing tax obligations with precision and foresight is crucial. At Kruze, we offer unparalleled tax advisory services that cater specifically to the diverse and ever-evolving needs of NYC startups. Our team of seasoned tax professionals is equipped to guide your business through the maze of state, city, and federal tax deadlines, ensuring compliance and optimizing your financial strategy.