Josh Leider, Head of Growth at Graphite
When people think of startup success stories, they often picture all the exciting, energetic work on the frontlines—investors, pitch decks, prototypes, and relationship-building. What’s often neglected in this picture is less glamorous but absolutely critical…financial planning.
As a startup, you’re in a much more delicate financial situation than more mature organizations. You’re certainly shouldering the same need for a reliable long-term financial strategy, but the kicker is that you only have a fraction of the resources to pull from. Additionally, startups have unique financial planning needs, such as fundraising and planning to scale.
This makes finding the right accountant simultaneously more critical and more challenging.
When looking for a startup accounting firm, you need to identify a partner with an established focus on early-stage and growing startups, the venture market, and your specific industry.
Here are all of the unique considerations that should be on your mind when searching for the right startup accounting firm for your company.
Breadth of Services
Many startups start off working with a simple bookkeeper who only handles transactional work and journal entries. However, many quickly outgrow this need for basic cash-basis bookkeeping.
We see startups realize early on that they made a mistake signing on with just a bookkeeper, at which point they have to spend time and money finding and switching to another firm when they need more support. Not fun.
The crux of the issue is that startups not only need financials for tax purposes, but they also need to tell a financial story—to themselves for growth and to investors for fundraising. Without a strong grasp of their unit economics and a zoomed-out view of their financial story, it becomes infinitely harder to grow, execute plans, and raise future capital.
When you’re looking for a startup accounting firm, you want to ensure they handle accounting, finance, and tax—three wildly different skill sets—so they can act as a long-term partner to help you grow. Think not only about the services you need now but also about what you’ll need over the next year, as most venture-backed startups grow quickly.
In addition to bookkeeping, they should provide GAAP-compliant financials for fundraising, reporting on the financial health of the business, and a financial shoulder to lean on.
Fractional CFO services are also vital for startups. Even if you’ve been handling your financial forecasting in-house up until now, having the option to turn to expert guidance when needed will be essential as your organization grows and your finances get more complex.
Make sure your startup accounting firm has a wide breadth of services available before you make a commitment. Constantly switching between firms as you grow is not only time-consuming, but it’s also very expensive.
High-Touch vs. Low-Touch
You should have a startup accounting partner that you can put your head together with whenever you need it, as opposed to simply hearing from a firm once a month at month-end. A rapidly growing venture-backed startup needs a financial firm that has the time and resources to get in the weeds with you and go beyond basic bookkeeping.
Accounting firms that aren’t used to working with startups don’t usually have the bandwidth to offer this level of support.
A team from a low-touch, volume-based accounting firm might have anywhere from 15 to 30 clients at one time. While this approach works for many small businesses, it isn’t viable for startups in the midst of their growth journey.
Instead, look for a high-touch firm that will take the time to help you with strategic projections and investor management, helping you establish a strong foundation for the future and showing you the ropes as you go.
Looking For a Firm With Deep Expertise in Startup Accounting?
Ideally, you will want to work with an accounting firm that has relevant experience with startups similar to yours, i.e. SaaS, CPG, etc.
If an accounting firm has worked with VC-backed startups in your industry in the past, they will be better equipped to help you prepare for future fundraising rounds, investor/board reporting, and handling rapid growth.
They will be familiar with the unique ins and outs of this world. They can draw from their past experiences to help you avoid common mistakes and align your strategy with best practices.
For example, a SaaS startup will have different needs than a CPG startup. Working with an accounting firm that understands these differences will support your long-term success and growth.
Cost and Value
Cost is an obvious consideration for any organization looking for accounting services. However, it shouldn’t be the first or even second thing you consider when choosing a firm to work with.
You should first determine the few firms that meet your needs and then try to get the best price from those firms. You’ll spend much more time and money switching firms than finding the right one from the get-go.
In fractional accounting and finance, you truly get what you pay for. If you only focus on finding the cheapest option, you’re likely going to grow out of that option within 6-9 months of starting with that firm.
Instead, create a short list of potential accounting partners using the first three pieces of criteria, and then compare costs.
Of course, your accounting services need to fit into your budget, but it’s also important to remember that working with an accounting firm is an investment in your organization’s long-term success.
When comparing potential accounting partners, place equal importance on how much they cost and the value they provide. The best choice may come with a higher price tag, but the advantage they bring to your organization may more than make up for the price gap.
Often, investing in a firm with additional fractional CFO services ends up being a cost-effective option. Startups get the expertise of an experienced CFO but only pay for the time and services they need.
Make Graphite Your Startup’s Accounting Partner
Graphite is a full-service accounting firm built with high-growth startups in mind.
We offer accounting, financial modeling, and even fractional CFO services specifically for early-stage organizations. Get in touch with Graphite to start taking charge of your startup’s financial strategy.
Need CFO or Accounting Help?
Born out of a VC fund, Graphite fully understands the strategic and financial needs of high growth companies. If you need accounting support or simply have a question about accounting at your company, feel free to connect with us!