Sign up to receive accounting tips, videos, news and webinar info before anyone else
Mailing Address
21750 Hardy Oak Blvd
Ste 104 PMB 63328
San Antonio, TX 78258-4946
(760) 697-1033
As a startup begins to grow, its financial needs change fast. What started as a simple spreadsheet or a part-time bookkeeper can quickly become a tangled web of reports, tax filings, and compliance requirements. Building the right accounting team is crucial for startups that aim to scale responsibly, remain audit-ready, and make informed decisions with real-time financial data. This article outlines the key roles of accounting for startups, including timing and the steps required to establish a robust accounting function that supports growth.
Why Accounting for Startups Should Begin Early
Many founders wait too long to invest in accounting. In the early days, it might feel like a luxury. But as a startup scales, poor financial practices can turn into major setbacks. These can include missed tax deadlines, inaccurate reporting, problems during funding rounds, or underestimating the importance of cash flow for startups. A solid accounting team helps startups:
- Maintain financial transparency for investors and lenders.
- Make informed business decisions based on real-time numbers.
- Prepare for audits and tax filings.
- Support long-term planning and budgeting.
- Avoid costly errors or legal problems.
- Accounting for startup costs and launching estimates.
Yes, keeping the books is a major accounting function, but it’s also about creating a system that supports the company’s growth and gives leadership the insight needed to make strategic decisions.
Key Roles in a Startup Accounting Team
As a startup grows, so does the complexity of its financial picture. Building the right startup accounting team involves hiring for different levels of expertise, tailored to a business’s size and specific needs. Here are the core roles typically involved.
Bookkeeper
The bookkeeper handles daily transactions, such as recording expenses, tracking revenue, and reconciling accounts. In early-stage startups, this role may be outsourced or part-time, but it is foundational.
Staff Accountant
A staff accountant brings a more technical understanding of accounting principles. They prepare journal entries, manage accounts payable and receivable, and support month-end close activities.
Controller
A controller oversees the accounting function. They are responsible for accurate financial reporting, internal controls, compliance, and improving financial processes. This is often a full-time hire once the company reaches a certain size.
Chief Financial Officer (CFO)
The CFO is a strategic financial leader. While they may not be needed on day one, a fractional or full-time CFO becomes essential when preparing for funding rounds, scaling operations, or planning for exit strategies.
The Right Time to Invest in Accounting for Startups
The right time to start building your startup company accounting team depends on a few key indicators:
- You’ve raised funding or are preparing to.
- You’re managing payroll and recurring expenses.
- You’re generating revenue across multiple products or markets.
- You’re struggling to close your books each month, or can’t track cash flow.
- You need GAAP-compliant reporting or financial forecasts.
Start with the basics: bookkeeping and clean records. As revenue grows or funding is secured, bring in additional expertise. Many startups work with outsourced providers, such as TGG Accounting, to access fractional support across all levels.
In-House vs. Outsourced Accounting Support for Startups
Early on, it often makes more sense to outsource accounting rather than hire a whole team in-house. Outsourced accounting teams give startups access to experienced professionals without the overhead costs. As the business scales, some roles may transition in-house while others remain outsourced.
Outsourced accounting for startups is especially helpful when:
- You need flexible support that scales with you.
- You want systems and processes set up correctly from the start.
- You’re not ready to manage a full-time finance department.
Working with an experienced outsourced accounting firm for startups also helps avoid the trial and error that can come from hiring underqualified or misaligned candidates.
Setting Up Tools and Systems for Long-Term Growth
The right tools make your accounting team more efficient. This includes accounting software, forecasting tools, expense management platforms, and payroll systems. Choosing scalable solutions early on helps avoid the pain of migrating systems later.
Common platforms for scaling startups include:
- QuickBooks Online or NetSuite for accounting.
- Bill.com for accounts payable.
- Expensify or Ramp for employee expenses.
- Gusto or ADP for payroll.
- Fathom or Jirav for forecasting and reporting.
An experienced team will help you build out a financial tech stack that integrates well and gives you full visibility into the health of the business.
How to Attract and Retain the Right Talent
Startups often compete with larger companies for accounting talent, so it’s important to offer more than just a paycheck. A strong team will want to work in a mission-driven environment where they can make a real impact.
To attract the right people:
- Offer flexible work options and a strong team culture.
- Provide opportunities for growth and development.
- Set clear expectations around responsibilities and outcomes.
- Partner with recruiting firms that understand the unique financial needs of startups.
When you find people who not only know the numbers but care about your vision, they become essential partners in your journey.
Building a Financial Function That Investors Trust
Investors care deeply about the quality of your financials. Before funding rounds, they’ll want to see accurate reports, well-documented systems, and evidence that your numbers can be trusted. A well-run accounting team builds that trust.
By investing in strong financial leadership and operational accounting early, you set the company up to scale smoothly and raise capital confidently.
FAQs About Accounting for Startups
How can accounting help my startup secure funding?
Accurate financials build investor confidence. With clean books, well-documented revenue, and strong forecasting, your startup can present a clear financial picture during fundraising rounds. Investors want to see that you understand your burn rate, margins, and growth potential.
What should I look for in an outsourced accounting partner for startups?
Look for a firm that understands accounting for startups, offers flexible service levels, and can scale with your business. They should have experience with GAAP compliance, investor reporting, and forecasting tools. It’s also helpful if they recommend or manage the right tech stack for your stage.
Do I need GAAP-compliant financials even if I’m not getting audited?
Yes, especially if you’re planning to raise money or eventually exit. GAAP-compliant financials bring structure and consistency that investors, lenders, and future acquirers rely on. They also help reduce risk and confusion as your startup scales.
How involved should founders be in accounting?
In the early stages, founders should be closely involved in budgeting, reviewing reports, and understanding cash flow. As the team grows, founders can shift more of the day-to-day tasks to finance professionals—but it’s still important to stay engaged with the financial direction of the company.
Can accounting systems support hiring and compensation planning in startups?
Absolutely. A well-structured accounting setup enables you to understand how changes in headcount will affect cash flow, burn rate, and runway. It also supports proper payroll management, benefits tracking, and compliance with employment tax laws.
Read More >>>
Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
