Tech Startup Accounting from Hiring a Bookkeeper to Outsourced CFOs

Tech startup accounting moves fast. You work hard on expense management to lower overhead and keep your runway as long as possible, but one of the best decisions you can make is working with a financial professional.

Accounting for startups often goes something like this:

You hire a bookkeeper first
As you grow, you consider a controller
Eventually, you consider a chief financial officer (CFO)

You likely don’t even need to hire in-house (unless you turn into the next tech company going public). Outsourced and fractional options are available that allow you to work with professionals without hiring them in-house or full-time.

Businesses benefit from outsourced solutions because they pay a fee and don’t have to worry about paying benefits, overhead on office expenses, or any other costs associated with in-house hires.

And just because you can hire a bookkeeper or CFO, there’s a right time and wrong time for both.

We’ll explore all of your options below:

Why You Need a Bookkeeper and When to Hire One

BILL has a perfect explanation of when to hire a bookkeeper as a small business, and while you’re in tech, it’s very similar. There are five times to hire a bookkeeper:

You don’t feel confident in your bookkeeping abilities.
You’re spending too much time on bookkeeping tasks that could be better spent on core tasks instead.
You’re missing key areas that can reduce your tax burden, such as documenting expenses and categorizing them.
Over time, accounting for startups becomes more complex and you begin falling behind on keeping the financial data that you need to make data-backed decisions.
Profits are stagnant, and you don’t know how to read the numbers properly.

Your accountant will also appreciate you hiring a bookkeeper because they prepare you for tax season. Bookkeepers have their “boots on the ground” and can help pinpoint tax benefits that you may miss to make filing taxes smoother.

Why You Need a Controller and When to Hire One

Controllers go beyond accounting and work to organize your accounting function. At this stage, your company is growing. Maybe you have an accountant (or a few), bookkeepers and other financial professionals helping you.

In these cases, controllers will focus on your cycle design, management and operation.

A controller will help with:

Financial analysis
Strategic planning
Forecasting future needs and acquisitions
Technology planning
So much more

And when it comes to detailed reports, it’s not uncommon for a controller to perform payroll duties, implement internal controls or spend time on inventory management.

Hiring a controller full-time often comes after the $5 million revenue mark, but this doesn’t mean your company can’t benefit from the guidance of a controller much earlier. Fractional or outsourced controllers fit into many startup budgets far earlier so that they can benefit from forecasts and strategic planning to grow faster.

Why You Need a CFO and When to Hire One

Accounting for startups is complex, with many moving parts and professionals who keep everything working smoothly. A CFO is a financial leader acting in the capacity of a senior executive.

CFOs work alongside COOs to supervise your accounting team, including your controller.

All of your tech startup accounting goes through the CFO, such as:

Verifying financial report accuracy
Data analysis and financial risk management
Reporting to stakeholders
Other detailed tasks

CFOs are masters of data and use past and current data to make smarter financial decisions.

In-House vs. Outsourced

Tech startup accounting is changing. At one time, businesses would hire a CFO when they hit $50 million in revenue and $15-$20 million in tech. But with the rise of outsourcing a CFO, you can bring one on much earlier.

We’re champions of the outsourced structure because it offers:

Flexible hiring of accounting professionals without long-term contracts
Affordable services that tech companies can use to grow without a full-time employee commitment

In-house CFOs and controllers make sense when you hit a certain milestone in business, but fast-growing startups are leaning more on outsourced options.

When you hire in-house, you have a commitment to provide benefits and full-time salaries. Outsourced options allow you to hire a CFO or controller when you need them to grow without the commitment because you never know what tomorrow holds.

Accounting for startups is an integral part of your tech company’s growth.

If your books are becoming overwhelming or you require financial insights that your accountant can no longer offer, it’s time to consider working with an outsourced controller or CFO.

Schedule a consultation now to learn how our outsourced offering works and how we’ve helped other tech companies grow.