Accounting for Startups: How to Set Up Smart, Scalable Finances from Day 1

You’re in the middle of your investor pitch.

You’ve just finished walking through your growth, revenue, retention, and a few early wins you’re proud of. There’s interest from the investors. Questions are coming in. The room feels good.

Then one investor leans back and asks: “Can you walk me through your working capital position for the last two quarters?”

You pause.

You know your revenue. You know your runway. But working capital? You kind of know what it means, but not well enough to explain it clearly. Definitely not well enough to answer on the spot.

At that moment, your confidence wavers. You feel the gap. not in your ambition or capability, but in something no one ever told you you’d need to know: those small but essential accounting concepts.

Even seasoned founders have blanked on simple accounting questions.

Most founders aren’t finance people. You’re builders, product thinkers, marketers, engineers. You focus on customers and growth. Accounting always felt like something you’d figure out later, or something someone else would handle. Right?

That’s exactly why we put this guide together. It breaks down accounting concepts as aspects that actually matter when you’re building a startup, especially in the early stages.

Here’s what you’ll learn:

• The difference between cash and accrual accounting

• When DIY works, and when it starts costing you

• How to choose the right accounting method for your stage

• Which tools help you stay lean and financially clear from day one

Ready? Let’s get started.

Accounting for Startups: Why Good Accounting Matters 

Good accounting is crucial for you as a startup founder for several key reasons:

Informed Decision-making

Accurate financial data allows you to understand your company’s performance, identify trends, and make strategic decisions regarding investments, hiring, and product development.

Fundraising and Investor Confidence

Investors rely heavily on well-maintained financial records to assess your startup’s health and potential.

Clean books demonstrate transparency, professionalism, and a solid understanding of your business, which are vital for attracting and retaining investment.

Cash Flow Management

Startups often operate on tight budgets. Good accounting helps you track cash inflows and outflows, preventing unexpected shortages and ensuring your business can meet its obligations.

Compliance and Legal Obligations

You must comply with various tax laws and financial regulations. Proper accounting ensures timely and accurate filings, avoiding penalties, audits, and legal issues.

Performance Measurement and Goal-setting

Financial statements provide a clear picture of revenue, expenses, and profits, enabling you to measure progress against goals and adjust strategies as needed.

Valuation and Exit Strategy

When it comes time to sell your company or pursue an IPO, a strong financial history is essential for an accurate valuation and a smooth transaction.

Operational Efficiency

Understanding financial data can highlight inefficiencies in operations, allowing you to streamline processes and improve overall productivity.

Debt Management

If you take on debt, good accounting is critical for tracking repayment schedules, interest accruals, and overall debt burden.

Avoiding Fraud and Mismanagement

Robust internal controls and regular financial monitoring can help prevent fraud and mismanagement of company funds.

Core Accounting Concepts Every Startup Founder Must Know

Whether you’re bootstrapping or preparing for Series A, having a solid understanding of accounting helps you in many ways. It keeps you on track regarding compliance and helps you make confident business decisions. 

Here are the core concepts you should be fluent in, even if you work with an accountant or use accounting software.

1. Cash vs. Accrual Accounting (Accounting Methods)

💡 Cash Basis

This method records transactions only when cash changes hands.

For example, revenue is recognized when customer payments are received, and expenses are recognized when they are paid to suppliers. This approach is generally simpler and provides a clear picture of cash flow, making it suitable for smaller businesses or individuals.

💡 Accrual Basis

This particular method records transactions when they occur, regardless of whether cash has been exchanged. Revenue is recognized when it is earned (e.g., when a service is provided or a product is delivered), even if payment hasn’t been received yet. 

Similarly, expenses are recognized when they are incurred (e.g., when a bill is received), even if the payment hasn’t been made. 

This method offers a more accurate view of a company’s financial performance over a period, as it matches revenues with the expenses incurred to generate them. It is generally required for larger businesses and those with inventory.

Why should you be familiar with these methods?

If you’re just starting out and dealing with limited transactions, cash basis may work. But the moment you have credit terms, subscription revenue, or future obligations, accrual accounting gives you a more realistic picture of your finances. Most investors also expect accrual-based reporting.

🔖 Related Read: The Difference Between Cash vs Accrual Accounting

2. Revenue Recognition

Revenue recognition dictates the specific point in time when you acknowledge money as earned income in your financial records.

Consider a scenario where a customer pays $120,000 for a service contract spanning 12 months. According to accrual accounting principles, you would not recognize the entire $120,000 upfront.

Instead, you would progressively recognize $10,000 each month as the service is rendered to the customer.

This practice is crucial because prematurely recognizing revenue can artificially inflate your financial figures, potentially misrepresenting your company’s actual performance to stakeholders. In addition, precise and timely revenue recognition builds credibility with investors, auditors.

3. Matching Principle

This principle says that expenses should be recorded in the same period as the revenue they helped generate.

For example, if you spend on ad campaigns in June that drive sales in July, the cost should ideally be matched to the July revenue.

In short, this concept helps you understand the true profitability of each initiative. Matching costs with revenues gives a cleaner, more reliable financial picture, especially when analyzing your customer acquisition efforts.

4. COGS (Cost of Goods Sold)

COGS includes all direct costs involved in producing your product or delivering your service. It doesn’t include operational overheads like marketing or admin salaries.

Understanding COGS helps you calculate gross profit and track unit economics. If your gross margins are tight, you’ll need to optimize pricing, sourcing, or delivery efficiency early.

🔖 Related Read: How Do I Calculate Cost of Goods Sold (COGS)?

5. Gross vs. Net Profit

Gross Profit = Revenue – Cost of Goods Sold (COGS)

This metric indicates how much profit your company makes directly from the sale of its products or services (after accounting for the direct costs associated with producing or delivering them). It shows the profitability of your core offerings.

Net Profit = Revenue – All Expenses (including COGS, operating expenses like salaries, rent, software, and taxes)

This is the “bottom line” profit, representing the total profitability of your business after all operational costs, administrative costs, and taxes have been deducted from your revenue. It provides a comprehensive view of your company’s financial health.

Why this matters to you?

Gross profit tells you if your product/service is profitable in itself. If your gross profit is healthy, it suggests that your pricing strategy and production costs for your core offerings are sound. Net profit tells you if the entire business is profitable. 

A strong gross profit but a weak net profit usually means your overheads (operating expenses) are too high, indicating that while your core product is profitable, the overall cost of running your business is eroding your earnings.

On the other hand, a low gross profit can indicate issues with your pricing or production efficiency, even if overheads are managed well.

6. Depreciation and Amortization

• Depreciation applies to physical assets (like laptops, machinery).

• Amortization applies to intangible assets (like patents, software licenses).

These concepts let you expense large purchases over time rather than in a single month. It smooths out your expenses and reflects asset usage more realistically. Quite important when you start investing in tools or infrastructure.

7. Chart of Accounts

Think of the Chart of Accounts as the backbone of your company’s financial records.

It’s a comprehensive, categorized list that your accounting software uses to organize and record every single financial transaction. This includes all your income (revenue), money spent (expenses), what your company owns (assets), what it owes (liabilities), and the owner’s stake in the company (equity).

A carefully designed and organized Chart of Accounts is crucial for the following reasons:

✔️ Accurate Financial Reporting

An organized Chart of Accounts enables your accounting system to generate precise and reliable financial statements, giving you a clear picture of your company’s health.

✔️ Avoiding Financial Blind Spots

By categorizing transactions effectively, you can pinpoint specific areas of your finances, preventing unexpected issues.

For instance, if you separate “freelancer payments” from “full-time employee salaries” in your chart, you can easily analyze and manage your team’s labor costs more effectively. This level of detail helps you make informed decisions about staffing and budget allocation.

8. Journal Entries & Ledgers

Think of a journal entry as the first draft of a financial event, like when money comes in or goes out. The ledger is the polished, organized collection of all these drafts. 

While today’s accounting software handles all this automatically, knowing how these pieces fit together is key. It helps you quickly pinpoint and fix any errors in your financial reports, even if you’re not manually typing in every detail.

9. Financial Statements: The Core Three You Need to Know

Your financial statements are more than documents for tax filings, they’re the decision-making dashboard of your business. 

There are 3 that work together to give you a complete picture:

Profit and Loss Statement (P&L) – Also known as the Income Statement

What it shows:

• Revenue you’ve earned

• Costs incurred to earn that revenue (COGS)

• Operating expenses (marketing, salaries, rent)

• Final profit or loss over a period (monthly, quarterly, yearly)

What it tells you: Are you making money from your operations? Is your business profitable?

What it doesn’t show: Cash flow timing. You might see profit here, but still face a cash shortage if payments are delayed or large expenses aren’t reflected yet.

Balance Sheet

What it shows:

• Assets: What your company owns (cash, inventory, receivables)

• Liabilities: What you owe (loans, unpaid bills, credit lines)

• Equity: What’s left after subtracting liabilities from assets

• Snapshot: It captures your company’s financial position at a specific point in time (not over a period).

What it tells you: Are you solvent? How much value has your business created so far? Can you cover your debts if everything were called today?

What it doesn’t show: Operational performance over time or income vs. expenses.

Cash Flow Statement

What it shows: How cash moved in and out of your business during a specific period, across:

• Operating activities (sales, vendor payments, salaries)

• Investing activities (asset purchases, investments)

• Financing activities (loans, equity infusion, repayments)

What it tells you: Do you have enough liquid cash to run your business? Are you at risk of running out, even if your P&L shows a profit?

What it doesn’t show: Long-term financial obligations or profitability metrics.

Why You Need All 3? Each statement offers only part of the story: 👩🏼‍💻 The P&L might show profit, but the Cash Flow Statement could reveal that you’re low on actual cash. 👩🏼‍💻 The Balance Sheet might show strong assets, but unless you look at the P&L, you won’t know if the business is currently bleeding money. 👩🏼‍💻 The Cash Flow Statement might show positive inflows, but unless you know the source (operations vs. investor money), it could give a false sense of sustainability. Together, they help you answer these critical questions: Are we profitable? (P&L) Can we pay our bills? (Cash Flow Statement) Are we financially healthy overall? (Balance Sheet)

10. Accounts Payable and Receivable

👉🏼 Accounts Payable (AP): What you owe to vendors/suppliers.

👉🏼 Accounts Receivable (AR): What your customers owe you.

Monitoring AP and AR closely helps avoid late fees, maintain cash flow, and chase payments before they become write-offs. Delayed receivables can choke your operations even if you’re generating healthy revenue.

11. Burn Rate & Runway

👉🏼 Burn rate is your monthly net cash outflow (how fast you’re spending).

👉🏼 Runway is how many months you can operate before running out of cash.

These two are critical survival metrics. Runway gives you a deadline for when you need to break even, raise capital, or cut costs.

How is Accounting Different from Bookkeeping or Financial Strategy? Think of it like this: ✔️ Bookkeeping is the recording. It’s about entering transactions, sales, expenses, invoices, receipts, accurately and consistently. It’s fundamental. ✔️ Accounting is interpreting. It turns all that raw data into structured reports, like P&L, balance sheets, and cash flow statements, so you can understand where your business stands. ✔️ Financial strategy is planning. It’s about using those accounting insights to make decisions: how to price, when to raise funds, where to cut costs, or which growth channels to double down on. In short:  Bookkeeping keeps records. Accounting makes sense to them. Financial strategy turns that sense into action. Need help setting this up the right way from day 1? If you’re building a business in the U.S., doola not only helps you form your LLC and stay compliant, it also gives you access to done-for-you bookkeeping, tax filing, and accounting support.

What’s the Right Accounting Method for Your Startup? (Cash vs. Accrual)

If you’re building a U.S.-based startup, there’s a point early on, maybe right after you form your LLC or get your EIN, where you might get asked: “Are you using cash accounting or accrual?”

And if you’re like most founders, your first instinct is: “Wait, I thought accounting was something I’d worry about later.”

But you can’t keep it in the backseat. The method of accounting you pick now affects how you recognize revenue, track growth, and file taxes. 

So, let’s walk through this (chat specify what this)  like a decision tree. Not by throwing jargon at you, but by helping you see which accounting method fits based on how you’re operating.

Case 1: You’re just getting started.

You’ve either just launched or are in the first year of operations. Maybe it’s just you, or you’ve brought on a co-founder.

Plus, you’re testing your idea in the market, working with a few clients, or selling a single product. In short, you’re focused on getting some revenue in, not building complex pricing models or long-term contracts just yet.

In this phase, you’re tracking cash in and cash out manually, or maybe through a basic tool like Google spreadsheet. Most of your payments are happening in real time: you provide a service, you get paid. You buy a tool, the charge hits your card. There’s no real delay between action and cash movement.

That’s why cash accounting fits perfectly here. 

It’s simple. You record revenue only when the money actually lands in your account. You record expenses only when you’ve paid for something. Your financial reports reflect exactly what your bank balance is telling you, without the added complexity of unpaid invoices or future-dated contracts.

You’re not managing large receivables. You’re not dealing with inventory or customer subscriptions spread out over 12 months. You’re just trying to stay lean, make smart choices, and make sure there’s enough in the bank to cover next month’s bills.

In this early stage, simplicity is an advantage, and the IRS allows you to use the cash basis method if your gross receipts are under $25 million (which most early-stage startups are).

So if you’re here right now, bootstrapping, testing, working solo or with a very small team, cash accounting keeps things straightforward.

But this approach starts to fall short once your business becomes more complex. Let’s go to case 2.

Case 2: You’re moving from “trying” to “building.”

Like every phase in a startup’s journey, things evolve.

What worked when you were just trying to stay afloat starts to feel limiting once growth kicks in. You’re no longer just collecting payments here and there.

You’re structuring longer-term contracts, maybe billing customers annually, offering trials, or bundling services over time. You might be selling a SaaS product where a customer pays $1,200 upfront for a year’s worth of service. Or you’re fulfilling large purchase orders now but receiving payments weeks, or months, later.

And somewhere in the middle of all this, you’re also preparing for your first investor conversations. Or maybe you already have money in the bank from a pre-seed round, and you’re trying to understand how far that cash will stretch.

At this point, cash accounting starts telling you the wrong story.

It might show a huge spike in revenue because of upfront payments, but in reality, you still owe your customers 12 months of service. Or it shows a profit on your books, while your vendors are unpaid and inventory is still sitting in your warehouse.

Your numbers look good, but they’re not aligned with the actual work being done or obligations being fulfilled.

This is where accrual accounting becomes necessary.

With accrual, revenue is recognized when it’s earned, not when the cash comes to your account. And expenses are recorded when they’re incurred, even if you haven’t paid them yet.

This method matches revenue and costs to the same period, giving you a clearer, more honest picture of how your business is actually performing. It helps you track deferred revenue, understand your margins accurately, and present your business in a way that investors and advisors can trust.

Ask yourself this:

If someone invested $250K into your business today, and looked at your financials next week, would they get an honest view of your performance? 

Would it tell them where your revenue is coming from, what you still owe in services or products, and how healthy your operations actually are?

If the answer isn’t a confident yes, you need to move to accrual accounting.

And if you’re SaaS, DTC, B2B with delayed billing cycles, or you have any kind of inventory, honestly, you probably should have started with accrual to begin with. Most startups that plan to raise or scale need it. It’s also what VCs and financial due diligence processes expect!

So, here’s doola’s take:

Start with cash accounting if you’re just finding your footing. But as soon as you’re productizing, scaling, or raising, move to accrual. It’s not just about compliance. It’s about being able to trust your numbers when the stakes get high.

Aspect	Cash Accounting	Accrual Accounting
How it works	You record revenue when you receive money, and expenses when you pay them.	You record revenue when it’s earned, and expenses when they’re incurred, regardless of actual cash movement.
Simplicity	Very straightforward. Easy to manage with basic tools or spreadsheets.	More complex. Needs consistent tracking, and ideally, software or a bookkeeper.
Cash visibility	Gives a real-time view of how much cash you actually have.	Can feel disconnected from your bank balance—because it tracks commitments, not cash.
Accuracy of business health	Can be misleading if you get upfront payments or have unpaid bills.	More accurate representation of profitability and obligations. Aligns with business reality.
Best suited for	Freelancers, solo founders, service-based startups, businesses without inventory or deferred revenue.	SaaS startups, product companies, e-commerce, any business with subscriptions, pre-orders, or long payment cycles.
Investor friendliness	Not ideal. Investors care about long-term performance and deferred revenue.	Preferred by investors, VCs, and financial analysts. Matches expectations during due diligence.
Tax compliance (U.S.)	Allowed if gross revenue is under $25M. Simpler for IRS filings.	Required once you grow past the IRS threshold or carry inventory.
Scalability	Great for early-stage. But breaks down as your business adds complexity.	Scales well. You’ll eventually need this if you’re building toward funding, scaling, or exit.
Tools needed	Can work with spreadsheets or basic software (e.g., Wave, QuickBooks Cash).	Usually requires a more robust system (e.g., QuickBooks Online, Xero) or a professional accountant.

DIY vs. Hiring Help: When Should Startup Founders Bring in Accounting Experts?

In the early days, it’s tempting to do everything yourself, and that includes managing your books. But as your startup grows, so does the complexity of your finances.

The key is knowing when DIY is cost-effective and when it becomes risky, inefficient, or outright dangerous to your company’s financial health.

Here’s your stage-based roadmap, with specific scenarios.

Stage 1: Pre-Revenue – Testing, Building, No Transactions Yet

Scenario: You’ve just incorporated (maybe through doola), bought a domain, and signed up for Figma, Notion, or AWS credits. You haven’t earned a dollar yet, but you’re spending on a few important aspects.

What’s happening financially:

• No revenue yet

• Minimal monthly expenses

• No team or payroll

• Founders often self-funding or on grants/family support

DIY accounting is absolutely fine at this stage. But here’s what you need to do diligently: 

• Set up a business bank account (Mercury or Brex)

• Start tracking every expense from day one in a Google Sheet or Wave

• Keep receipts organized (even forwarding them to a folder or using Expensify for free)

• Understand which expenses may be tax-deductible later

Learning goal: Understand how LLC taxes work, the difference between CapEx and OpEx, and the importance of keeping business and personal finances separate.

📌 When to move beyond DIY?

Once you accept your first customer payment, even if it’s just $10, your business officially comes to the “running” stage. From that point on, you’re legally and financially accountable. DIY tracking may still feel manageable, but it stops being sufficient.

You now need proper systems to record income, report taxes, and separate business finances from personal ones.

Stage 2: Early Revenue – Charging Customers, Basic Ops Start

Scenario: You’re charging for your product or service. Maybe $1K to $5K/month in revenue. You’re sending invoices manually, or receiving Stripe/PayPal deposits. You’ve even hired your first freelancer or designer.

What’s happening financially:

• Revenue is inconsistent but have started coming in

• You’re juggling expenses across different tools

• You’re invoicing and might be accepting multiple forms of payment

• You may have to pay quarterly taxes soon

Here’s what you need to do:

• Move from spreadsheets to accounting software like doola

• Use Stripe or PayPal to keep clean records of income

• Set calendar reminders for estimated quarterly taxes (based on projected net income)

• Automate expense tracking with Expensify or a Gusto-Brex integration

At this point, DIY still works if you’re using the right systems, but mistakes can easily start creeping in. Missing receipts, uncategorized expenses, or incorrect tax estimates now come with financial consequences.

What Expert Help to Bring In?

You don’t need a full-time accountant yet, but this is when light expert support makes a real difference.

• Hire a freelance bookkeeper or CPA to review your books once a month. They’ll catch errors early, help you clean up categorizations, and prepare you for tax season.

• Get help filing your first quarterly taxes. Overpaying hurts cash flow, underpaying triggers IRS penalties. A tax advisor can ensure your estimates are correct.

When to bring in expert help:

• Hire a freelance bookkeeper or CPA for monthly review

• Get help filing your first quarterly taxes to avoid penalties

Trigger Point: Once your monthly revenue hits ~$5K+ or expenses start piling up and manual tracking feels fragile, that’s your signal. Don’t wait for tax season or an investor conversation to realize your books aren’t ready.

Stage 3: Funded Startup – Seed/Pre-Series A, Scaling Begins

Scenario: You’ve raised capital. You have 5–15 employees. You’re building fast and spending faster, hiring, acquiring users, improving ops.

What’s happening financially:

• Burn rate and runway are now key metrics. You’re spending more than you earn, and your job is to deploy capital efficiently.

• You’re reporting to investors or a board, possibly monthly or quarterly. That means your financial data needs to be accurate, consistent, and timely.

• You’re dealing with cross-functional spend, marketing, engineering, customer support, hiring tools, and SaaS stacks.

• You may need to prepare financial forecasts and cash flow models to support future fundraising, headcount planning, or expansion.

At this stage, your startup is no longer “early hustle.” It’s a business that’s expected to operate with discipline and visibility. That means DIY accounting is no longer safe or scalable.

Here’s what you need to do:

• Use a full-service bookkeeping platform like doola

• Hire a fractional controller to oversee monthly closes. You now need someone who can oversee monthly closes, ensure expenses are categorized correctly, and produce GAAP-compliant reports

• Use tools like Finmark to forecast runway and model growth

• Integrate accounting with payroll (Gusto), banking (Mercury), cards (Brex), and invoicing (Stripe). Integrated systems reduce friction, eliminate manual data entry, and help your finance team stay focused on analysis

Remember, reporting must be airtight. Burn, gross margin, CAC, and runway should all be accessible monthly.

Accounting for Startups: Why This Level of Reporting Matters? You’re now responsible to people outside your company. Investors, advisors, maybe even grant or equity partners. They’ll expect clear answers to questions like: 🔍 How much runway do you have? 🔍 What’s your burn multiple? 🔍 What’s your CAC vs. LTV? 🔍 Are your margins improving month over month? If you don’t have those numbers on hand, or if you scramble to generate them, it signals weak financial ops.

Stage 4: Scaling – Series A/B+, Multi-State or Global Expansion

Scenario: Your startup is scaling. You’re preparing for bigger raises, acquisition conversations, or even thinking ahead to long-term exit scenarios. Everything about your operations, from hiring to revenue to compliance, is now happening at a much larger scale.

What’s happening financially:

• You may have multiple bank accounts

• You need multi-entity reporting, consolidation, and audit readiness

• You’re presenting forecasts to the board

• Your finance operations now affect company strategy, hiring, pricing, and product planning

You need strategic financial help now.

What to do:

• Bring in a fractional CFO or full-time finance lead. You need someone to own financial modeling, board reporting, and scenario planning

• Implement tools like doola for complex financials and numbers

• Introduce cost centers to track spend by team or business unit. Finance should partner with ops and leadership, not just monitor from the sidelines

• Ensure you’re fully GAAP-compliant if aiming for M&A or venture debt. 

📌 Final Verdict In the beginning, doing your own books makes sense. You’re testing, money’s tight, and you want to stay lean. That’s normal. But the second money starts moving, whether it’s customer payments, hiring, or investor cash, you need systems. Robust accounting systems. Most founders wait too long to get financial help. And this small mistake doesn’t catch up immediately. It shows up later, when taxes are wrong, when investors ask for numbers you don’t have, or when you realize your burn is off by two months. So, here’s the simple rule for you: Start with DIY, but switch to bookkeeping support before it breaks. You don’t need a CFO on day one. But you do need clean books, reports that make sense, and a basic runway forecast. That’s it. Sign up now for better clarity!

Key Features to Look for in Accounting Software for Startups

When searching for accounting software for your startup, look for key features to ensure it meets your specific needs.

Let’s explore these features in detail to help you make an informed decision when selecting the best accounting tool for your startup.

User-Friendly Interface

As a startup owner who may not have extensive accounting knowledge. So, choose software with a clean, user-friendly interface that’s easy to navigate. Look for features like drag-and-drop dashboards, visual summaries, and straightforward data input to reduce the learning curve

Cloud-Based Accessibility

Startups need flexibility. A cloud-based accounting platform ensures you can access your financial data from anywhere, whether you’re on the move, working remotely, or reviewing reports with a partner. Cloud solutions also offer automatic updates and secure backups, which means less maintenance and lower risk of data loss.

Seamless Bank Integrations With Automations

Manually entering transactions is not only tedious, it’s prone to errors. Opt for software that can sync directly with your business bank accounts. Real-time bank feeds streamline transaction tracking, cut down on reconciliation time, and keep your books current without manual toil.

Customizable Chart of Accounts

Every startup has unique spending and earning patterns. Your accounting software should let you customize your chart of accounts to reflect your specific revenue streams and expense types. This makes tax time easier and ensures your reports align with how your business actually runs.

Invoicing Support

If you’re sending invoices manually or chasing late payments through email threads, that’s valuable time lost. Choose a platform with built-in invoicing tools, ones that let you generate, send, and track invoices in one place. This simplifies receivables management and supports better cash flow.

Accounting for Startups: Top 5 Best Online Accounting Software 

This is your founder-friendly accounting tech stack, grouped by function. Whether you’re a solo founder managing receipts or a scaling team preparing for a raise, these tools will help you stay financially clear, compliant, and investor-ready.

1. All-in-One Platform – doola Bookkeeping

What it is: doola Bookkeeping stands out for its comprehensive approach, explicitly designed with startups in mind. Alongside typical accounting services, doola also offers tools for incorporation, seamless tax filings, and compliance assistance. This service helps startups manage their finances from formation through growth, making it an all-in-one solution.

Why it’s a standout:

• Start with formation and scale into bookkeeping, compliance, and tax filings.

• Plug-and-play integrations with Stripe, Gusto, Brex, Mercury, and more.

• Designed for non-finance founders, no spreadsheets, no syncing nightmares.

• Exceptional support (4.5+ rating on Trustpilot), especially for international founders needing clarity on U.S. regulations.

Best for: Startups that want simplicity, scalability, and a single partner from launch to growth.

Pricing: Starts at $25/month; tailored plans available as you grow.

With doola, you don’t need to stitch together 5 tools. Everything, from formation to financial reporting, you get it all compiled in one platform.

2. Expense Management – Expensify

What it is: Expensify automates one of the most frustrating parts of running a business: expense tracking. With SmartScan, you snap a photo of a receipt, and it handles the rest, pulling data, assigning categories, and syncing to your accounting system.

Why founders choose it:

• No more manual entry. Just snap receipts and submit.

• Teams can submit reimbursements instantly; managers can approve with one click.

• Works seamlessly with QuickBooks, Xero, Stripe, and Gusto.

• Saves hours in finance admin and keeps reports audit-ready.

Best for: Startups that want clean, real-time expense reports without bogging down the team.

Pricing: Free for individuals. Team plans start at ~$5/user/month.

3. Forecasting & Modeling – Finmark (by BILL)

What it is: Finmark is a financial planning and analysis (FP&A) tool purpose-built for startups. It turns spreadsheets into smart forecasts, helping founders see how long their runway will last and what happens if they hire, raise, or pivot.

Why founders love it:

• Create real-world scenarios (e.g., “What if we hire 3 engineers?”) and see the impact instantly.

• Syncs with QuickBooks, Xero, and Gusto—so forecasts match actuals in real time.

• Clean dashboards for burn, revenue, runway, and CAC/LTV, built for SaaS founders and VCs.

Best for: Startups preparing for funding, managing investor expectations, or planning multiple growth paths.

Pricing: Starts at ~$100/month, with custom pricing for advanced use.

4. Full-Feature Accounting – QuickBooks Online

What it is: QuickBooks is a trusted name in small business accounting. QuickBooks Online is a cloud-based version that offers invoicing, payroll, expense tracking, and real-time financial reports.

Why founders use it:

• Strong automation (bank syncs, recurring invoices, smart categorization)

• Easily integrates with payroll, inventory, and payments tools

• Add-on service: QuickBooks Live gives you access to human bookkeepers

Best for: U.S.-based startups looking for a robust accounting system with support from an accountant.

Pricing: Starts at ~$30/month; Live support available at higher tiers.

5. Scalable Accounting for Teams – Xero

What it is: Xero is a cloud-based accounting tool with a clean interface, known for handling large teams and multi-user setups without complexity.

Why founders like it:

• Unlimited users, ideal if multiple stakeholders need access

• Native integrations with 1,000+ apps (including Stripe, Gusto, Expensify)

• Simple dashboard with real-time cash flow visuals

Best for: Startups with remote teams, growing operations, or global needs.

Pricing: Starts at $13/month for basic use; full plans ~$34+/month.

🔖 Related Read: Best Accounting Software for Dropshipping in 2025

Common Startup Accounting Mistakes (and How to Avoid Them)

Here are some of the most common start up accounting pitfalls:

Not Separating Business/Personal Accounts

This is perhaps the most fundamental mistake. Commingling funds makes it incredibly difficult to track business expenses, reconcile accounts, and accurately assess profitability.

It also creates a tangled mess for tax purposes and can even compromise your limited liability protection.

💡 How to avoid this mistake:

Open a dedicated business bank account as soon as you incorporate. Set up a business credit or debit card and commit to using it exclusively for business expenses.

Banking platforms like Mercury and Brex make this process simple and startup-friendly.

Delaying Monthly Reconciliation

Putting off reconciling your bank and credit card statements means you lose out on real-time insights into your cash flow. This delay can hide errors, fraud, and missed opportunities to optimize spending, making it harder to make informed financial decisions.

💡 How to avoid this mistake:

Block a recurring time each month to review transactions and match them with your accounting records. Use accounting tools like doola Bookkeeping to automate this process. Most tools can pull in live bank feeds to streamline reconciliation.

Missing Deadlines for Estimated Taxes

Forgetting or miscalculating quarterly estimated tax payments can result in penalties and interest from tax authorities.

Startups, especially those with fluctuating income, need a robust system to accurately estimate and remit taxes on time.

💡 How to avoid this mistake:

Use bookkeeping software that flags upcoming tax deadlines and calculates estimates based on your income to date.

You can also work with a bookkeeper or CPA to automate reminders and filings. Platforms like doola handle this proactively as part of the compliance support.

Ignoring State-specific Compliance (Sales tax, Franchise tax)

Many startups focus solely on federal taxes, neglecting the complex landscape of state-specific regulations. Sales tax obligations vary by state and product/service, and franchise taxes can apply based on your business structure and location.

Failing to comply can lead to hefty fines and legal issues.

💡 How to avoid this mistake:

Stay informed about the states you operate or sell in. Use tools for sales tax automation, and consult your registered agent or accountant for franchise tax filings.

If you’re using doola, our experts will help you manage your filings and track multi-state compliance as your business expands.

Scalable Bookkeeping With doola: Built for Founders

doola offers startups a flexible bookkeeping solution built to support every stage of business growth.

From initial setup to expanding operations, doola’s services can handle all financial and compliance requirements. With startup-friendly pricing, doola Bookkeeping is an affordable choice for entrepreneurs who want peace of mind in managing their finances.

Sign up now to discover how our complete end-to-end accounting services can help your startup.