Are you managing or planning to manage a startup? If so, you likely know the financials are a key driver of your business success.
Join the Raleigh CPAs from Steward Ingram & Cooper, PLLC as we cover what matters most to a young company—helping you create a practical roadmap to protect your small business’s financial health. Whether you’re managing startup accounting on your own, equipping your finance team, or working with Raleigh-Durham area small business accountants, this guide provides foundational tips that are vital for small business accounting practices.
Table of Contents
Lay the Right Foundation From Day One
Set up the basics early so your accounting system produces clean, consistent financial records that are grounded in Generally Accepted Accounting Principles (GAAP). This groundwork makes GAAP compliance and future financial reporting far easier.
Choose a Business Entity
Your business structure can affect taxes, ownership, and even future financing. Many tech and product companies pick a C-Corp; others start as an LLC and later elect S-Corp treatment. Work with counsel on formation while your CPA can inform you of financial filing requirements, tax obligations, and help with your business tax return.
What to Register
- EIN and state accounts
- Sales/use tax and payroll taxes, if applicable
- City or county licenses for small businesses operating locally
Pick Cash Accounting vs Accrual Accounting and Chart of Accounts
Your accounting method often determines when revenue and expenses hit the books. Cash accounting records business transactions when money moves. Accrual accounting records business transactions when you earn or incur—often better for financial reporting, revenue recognition, and fundraising. Your chart of accounts is the master list of categories that organizes your business transactions and maps them to the income statement, balance sheet, and cash flow reports.
Quick Setup Tips
- Use a chart of accounts that reflects your business model (MRR, deferred revenue for SaaS; inventory, shipping, returns for e-commerce).
- Add expense accounts for marketing, R&D, and contractor costs.
- Document your accounting processes for consistency across each accounting period.
- Aim for a solid accounting foundation early. It’s easier (and cheaper) to keep clean books than to fix them later.
Choose and Connect Accounting Software That Scales
If you’re choosing to manage your own accounting, choose reputable accounting software that feature integrations for automatic invoices, bills, and payroll. Many startups pair bookkeeping software with outsourced bookkeeping services until volume justifies a hire.
Core Tools
Choose reputable accounting software that connects to your bank and scales as the business grows. A simple bookkeeping system paired with consistent basic accounting tasks is essential for your startup.
Must-Haves
- Bank feeds for timely financial transactions
- Role-based access and approvals
- Templates for bills, invoices, and accounts payable
Useful Integrations
Add payments, e-commerce, payroll/HR, and spend tools to help with your financial data tracking. Keep financial data clean with naming conventions and an audit trail. If you need help evaluating tools, many accounting firms can advise on setup and migration. In the accounting world, clean data usually reduces friction at month-end and during diligence.
Why Integrations Matter
- May reduce manual entry and minimize errors
- Can improve the accuracy of financial information
- Preparing financial statements and dashboards are clearer when data is in order
Keep Cash Lasting Longer With Forecasting and Spend Controls
Separate accounts, tight spending controls, and weekly reviews of bank statements keep cash flow visible. Pair that with a short cash forecast to protect runway and guide near-term decisions. Even without a large accounting department, these habits are important.
Separate Accounts and Clean Reimbursements
Use a dedicated operating account, a tax savings account, and corporate cards with spend controls. Keep founder reimbursements tidy to protect accurate financial records and the audit trail.
Daily Visibility Tips
- Track your bank account balance and pending payouts
- Review bank statements weekly to confirm activity
Financial Forecasts That Matter
A 13-week cash forecast ties expected receipts, payroll, vendor bills, and debt service into one view of cash flow. Set a minimum cash policy, then update the forecast as deals slip or accelerate.
Negotiating Leverage
- Vendor terms, deposits, and drawdowns can stretch cash flow
- Right-size inventory or ad spend to protect your startup’s financial health
Close the Books Monthly With a Simple, Repeatable Process
Adopt a lightweight monthly close—reconciling bank statements, reviewing AP/AR, and filing support—so you can prepare financial statements on time. A steady cadence under standard accounting processes helps build reliable accounting practices.
Monthly Bookkeeping Checklist
A lightweight close creates dependable financial statements without bogging your team down:
- Reconcile bank statements and credit cards
- Conduct AP/AR aging and accounts payable reviews
- Perform deferred revenue roll forward or inventory counts
- Attach support and update your month-end binder
Policies for Small Teams
Short policies pinpoint who approves spending, sets thresholds for purchases, and reimburses travel for work. Clear financial rules often strengthen solid accounting practices for startups while keeping financial records consistent across each accounting period. These accounting processes should become repeatable checklists each month.
Use Right-Sized Internal Controls to Reduce Risk
Simple software-based controls go a long way for approval workflows, card/ACH limits, and audit logs to help separate duties without adding headcount. Add vendor setup checks, duplicate payment reviews, and clear off boarding steps to prevent common errors and fraud.
Tips to Reduce Financial Risks
- Require two sets of eyes on new vendors and bank changes
- Limit admin access; review user permissions quarterly
- Turn on alerts for unusual spending or new payees
Classify Workers Correctly and Register Wherever You Hire
Classify employees correctly, register where you hire, and stay current on payroll taxes. Clear policies for W-2s and 1099s prevent penalties and keep financial records accurate across states. If headcount is limited, bookkeeping services can help you issue forms on time.
Classify Employees Correctly
Use W-2 for employees and 1099-NEC for true contractors. Misclassification risks penalties and delays your business tax return and annual tax preparation.
Registrations and Filings
As remote hiring expands, you may need new state payroll accounts and tax returns in multiple jurisdictions. Keep a checklist to avoid missed payroll taxes.
Equity Compensation
Coordinate with accounting industry professionals on options or RSUs. Document grant dates, vesting, and any 409A valuation so your financial statements reflect the company’s financial position accurately.
Plan Ahead for Startup Taxes to Avoid Surprises
From income and franchise taxes to sales tax, early tax planning is highly recommended come tax filing time. Organized financial information supports financial strategies that stay consistent between tax filings. Organization is also a smart practice for financial accounting for startups.
Federal and State Income Tax Basics
Plan quarterly estimates, track NOLs, and watch state franchise filings. Clean books make tax preparation faster and reduce surprises.
Sales Tax and Economic Nexus
If you sell across states or through marketplaces, confirm where you must collect and remit. Your accounting software should map items and rates to simplify financial reporting.
R&D Incentives and Section 174
Certain research costs may qualify for credits, and capitalization rules affect timing. Rules change, so consult a Raleigh tax consultant to align with current law and your financial strategies.
Budget Smart, Forecast Often, and Track the Right KPIs
Tie your financial planning to a realistic operating budget and a rolling cash forecast. Track a short list of metrics—runway, margins, and payback—so you see the business’s financial health at a glance.
Build a Practical Operating Plan
Combine top-down targets with bottom-up hiring and spending. Align your small business’s plan to your financing timeline (grant, business loan, or plans to raise venture capital).
Track a Short List of Metrics
Consistent metrics often give business leaders and/or owners financial clarity.
Track:
Finish Strong With a Year-End Compliance Checklist
Stay on top of accounting tasks throughout the year to avoid rushing and re-working at the end of the fiscal year. Set a calendar for forms, reconciliations, and reviews so filings don’t collide with product launches or hiring pushes.
Items that should be on your year-end to-do list include:
Accounting for Startups FAQs
Do we need accrual from day one?
Not always. Many small business teams start with cash accounting and switch to accrual accounting as they scale, pursue financing, or need better financial reporting. Your CPA may be able to help time the change in an orderly accounting period—this choice is part of accounting basics for growing companies. Check with your CPA to see if this is within their scope.
How often should we prepare financial statements?
Prepare financial statements monthly. Deliver an income statement, balance sheets, and a cash flow statement soon after close. This cadence keeps your startup business’s financial health visible and supports planning.
What accounting software should a startup use?
Pick a platform that automates bank feeds, invoicing, and bill pay, and that integrates with your sales tools. Evaluate support, scalability, and pricing for small businesses. Shortlist startups accounting software options and pilot before migrating.
Can you help with tax services and annual filings for my startup business?
Yes—Raleigh-Durham area CPAs at Steward Ingram & Cooper, PLLC provide accounting services, tax preparation, and planning to keep your business’s finances compliant and ready for growth. Contact us early in the year to check availability as we fill up quickly and only take on new clients on a case-by-case basis.
Experience Startup Accounting Success with a Raleigh CPA
If you’re setting up accounting for startups for the first time, Steward Ingram & Cooper, PLLC may be able to help.
Please consider that we only take on new clients on a case-by-case basis. Additionally, we only work with large income individuals and businesses due to our fee structure. To see if we are a good fit for you, call us at (919) 872-0866 or filling out our online contact form below.
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