Accounting for Startups — Starting Off on the Right Foot
Author’s Note: This blog post was updated on February 22, 2022, to include new information, resources, and links.
Accounting for startups means more than just keeping up-to-date financial statements and records. Startup founders wear many hats, from sales to accounting.
Accounting may not be on the top of the list, but it is critical to business health and growth. A business that sets appropriate accounting policies from the beginning will have a better chance of success than one that doesn’t.
Does a Startup Need an Accountant?
When opening a new business, there are many decisions to be made. Startups may not need to have an accountant on staff if the business is simple and hasn’t generated a lot of revenue yet. As a startup grows, it will become more important to have the right accounting tools and expert advice.
Business owners gain a competitive advantage by having a strong accounting system set up from day one. An accountant helps startups plan for the future. They can assist with services like payroll, catch up bookkeeping, tax planning, and more.
Why Is Accounting Important for Startups?
When first launching a business on a tight budget, it’s tempting to choose a cheaper accounting solution such as Excel spreadsheets. However, that “cheap” solution can turn out to be more expensive. It can’t prevent human error, can cost many unnecessary man-hours, and in the end, not meet your needs.
Instead, it’s wise to have an accounting strategy planned out in advance. Working with Xendoo’s accounting system you can accurately account for all of your company’s financial needs.
For example, accurate accounting records can assist startups in obtaining a business loan or investment. Both investors and commercial lenders will look at your books during the funding process. They will be more likely to supply you with funds when you show a clean set of accounting books.
However, accounting services can help startups with many more aspects of their business.
What Are the Benefits of Startup Accounting?
Not having proper accounting records from the inception of your business can result in problems down the line. Xendoo uses a cloud-based accounting system for the many ways it saves startups time and money.
There are several benefits of using a cloud-based accounting system. Here are a few ways that Xendoo helps startups with their accounting.
Startup Accounting Expertise That Scales
If you are unsure about how to handle accounting tasks (or simply don’t have the time to do so), it’s worth the cost to use a service like Xendoo that specializes in accounting for startups.
Your accounting should scale with your business needs. As your business grows, its accounting gets more complicated.
If you choose to handle accounting tasks on your own, you may find yourself stretched for time. Instead of focusing on scaling the business, you may spend too much time on administrative work.
Time-Saving Accounting Automation
Xendoo can sync with your bank, so every transaction is automatically entered into the bookkeeping system. It saves many hours of work and avoids the risk of error when a human operator transcribes the numbers.
Instead of spending lots of time at month-end trying to reconcile financial transactions in the general ledger, cash transactions have already been booked accurately. You no longer need to wait for bank statements or credit card statements.
You can know your cash position by having your cash transactions automatically posted in real-time. You’ll be able to make better decisions on upcoming expenses and have better insight into the financial health of your business.
Other entries may also be recorded automatically, such as depreciation on equipment or other fixed assets.
Xendoo can save you serious money on your office staff. You may be employing multiple staff members to handle your accounting tasks, but it may not be necessary. Our trained accountants can handle the accounting transactions for multiple industries, including ecommerce, professional services, and retail.
Our expertise allows us to easily accommodate the needs of your business. The cloud-based accounting system ensures that your financial records are up-to-date and accurate. Plus, you can message your Xendoo CPA team anytime for a fast response.
Offering more remote and part-time work options enables you to reduce your full-time office staff, as well as the overhead costs of accommodating them. Because data is stored in the cloud and not your servers, IT expenses can be trimmed.
Employee Tax Forms and Payroll
If your startup hires employees or independent contractors, accurate records become even more important. A startup accountant can ensure that payroll is handled properly and the requisite taxes are withheld and paid to state and local governments.
There are other tax issues that a startup accountant may assist you with, such as sales taxes, local taxes, and accounting for any fixed assets. Accurate records will help you prepare for your business tax returns at year-end.
From a tax perspective, startup founders can save a lot of time and effort with books that are ready to go for tax season. There’s no need to scramble for records related to business expenses — they’ll already be recorded in the Xendoo cloud-based accounting system.
One huge advantage of working with Xendoo is that you’ll have an accounting system in place that provides you with the reports when you need them. You don’t have to read paper receipts or sit at your office computer to see financial reports or bank transactions.
This enables you to respond to changing conditions as they happen, minimizing the risk of losses or missed opportunities. Xendoo provides accurate financial reporting, including a balance sheet and income statement.
The accounts payable and receivable reports include an overview of outstanding accounts, so you can make quick business decisions based on current information. Startup accounting with Xendoo can also help you reach out to customers who are overdue on their invoices.
Complete, accurate, and up-to-date financial reports are available at any time. Every entry is tax-coded, so no extra work is needed to prepare for filing taxes or being audited.
Another advantage of using Xendoo is financial planning and cash flow statements. A strong understanding of your current cash position can assist with making adjustments to your business strategy as needed.
A basic spreadsheet can’t tell you much about your financial big picture or warn you when things aren’t going according to plan. Xendoo’s monthly P&L statements show where you stand and what needs adjusting at a glance. The CPA team can also offer expert advice on planning for the future.
Don’t waste time with Excel spreadsheets that can quickly lead to an accounting mess. Instead, take advantage of a solution designed to assist startups as they scale for growth. An accurate reporting system set up from day one gives up-to-date information on the financial status of your business.
Leave the accounting to our knowledgeable team that understands accounting for startups. Xendoo can assist you with accounting processes like compliance, reporting, and financial planning.
The cloud-based accounting system is user-friendly, allowing you to easily view your accounting books at any time. Xendoo’s flexible plans are designed to take a business from startup to enterprise level. While Xendoo handles the bookkeeping, you can focus on making your new business the best it can be.