When Should a Startup Hire a Bookkeeper?
The short answer: before you need to show your books to anyone. If you’re six months from a fundraise and your books are a mess, you’re already behind.
Most founders wait too long. They’re busy building product, talking to customers, doing everything except accounting. The books get neglected until something forces the issue. An investor asks for financials. A bank wants documentation for a line of credit. Suddenly there’s a deadline and twelve months of transactions to sort through.
Hire a bookkeeper when you hit any of these points: you’ve raised money and need to track how you’re spending it, you’re about to raise and need investor-ready financials, you have more than a few months of transactions piling up, you can’t answer basic questions about your burn rate or runway, or you’re spending more than a couple hours a month doing it yourself.
For startups, the fundraising angle matters most. Investors will look at your books during due diligence. Messy financials slow things down and raise questions about how you run the business. Clean books, closed monthly, signal that you know what you’re doing.
The cost of waiting is higher than the cost of starting. A few months of catch-up work costs more than staying current from the beginning. And the stress of scrambling before a deadline costs more than either.
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More Questions
How to keep track of Etsy finances?
Etsy makes bookkeeping tricky because deposits don't match sales. Fees get deducted before payout, so you need to track gross revenue and expenses separately rather than just watching what hits your bank account.
Read answerHow should sales tax be recorded in QuickBooks?
Sales tax should be recorded as a liability in QuickBooks, not as revenue. QuickBooks has built-in sales tax features that track what you've collected and what you owe, then clear the liability when you record payment to the state.
Read answerWhat is catch up bookkeeping?
Catch-up bookkeeping is the process of bringing your financial records current after they've fallen behind. It involves reconciling accounts, categorizing transactions, and producing accurate statements for whatever period was neglected.
Read answerWhat is multi-entity bookkeeping?
Multi-entity bookkeeping means maintaining separate financial records for each legal entity you own while tracking how money moves between them. It requires individual books for each entity plus an understanding of intercompany transactions and consolidated reporting.
Read answerHow to calculate runway for a startup?
Divide your current cash balance by your monthly burn rate. That gives you the number of months until you run out of money. Most startups should start fundraising when they have 6-9 months of runway remaining.
Read answerCan a small business do their own bookkeeping?
Yes, many small businesses handle their own bookkeeping successfully. Whether you should depends on your transaction volume, financial complexity, and whether your time is better spent elsewhere.
Read answer