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  • Writer's pictureCharles Edge

Bringing On An Accountant

Every organization needs to account for all the dollars and cents that flow through our doors. We can usually handle the basics of a general ledger but even for a sole proprietorship, we will likely need to handle someone to do taxes at a minimum, and often end up with a second to help us with basic accounting throughout the year.

The easy stuff is tagging receipts to categorize expenditures and entering money as it comes in. But there are a lot of complicated aspects of accounting that career professionals will need to handle. Especially if we find success and there’s real money being made or raised. As those trusted to run a startup, we don’t have to deal with all the accounting minutiae (and in fact a check and balance is a really good idea). Instead, we can (and probably should) immediately hire someone to help us get our books in order.

We often find that a good accountant will not only get what we’ve done in the past in order, but setup a better system for the future. And our first accountant is likely to also act as a financial advisor of sorts. Later, those roles will diverge due to an increasing level of sophistication for both.

When we hire an accountant, look for someone that doesn’t let us just do what we want. This means we need to listen. Yes, we are our own boss. But they’re our boss too, now. As are our employees and customers. It might have been easier when we just had one boss…

The bookkeeping functions of a small business are not the same as an accountant, financial advisor, or tax preparer. We need someone (and at first it is likely to be you) to enter receipts, enter receivables, write the checks for payables, reconcile bank statements, reconcile credit card statements, and maybe deposit checks. There are now SaaS tools to automate much of this so a good accountant will show us how to do as much as they think we can be trusted to do, and define a delineation of responsibilities between us.

As we grow, the accounts receivable and accounts payable often split into responsibilities carried out by two people. But for now, let’s keep the setup simple. We need to bring on a tax preparer and likely an accountant to come in at least once a month to help us get the books in order. Before we hire them (or pretend we don’t need to) here are a few things to keep in mind:

  • Before we accept our first payment, we need to choose what kind of company to start. At a minimum, we likely need to form an LLC in order to get some level of liability protection. See for more information on what type of business to start. An accountant can often help us file the appropriate paperwork.

  • We can work with accountants in person or remotely. We should interview them with video at a minimum.

  • From the second we accept our first payment, we need a tax preparer and to understand when we should plan to make our first quarterly payment and how much to set aside for that payment.

  • Based on the person we choose, we also need to identify which tool will automate the business. This is important because it needs to integrate into the accounting solution we use. For example, If the accounting system is Quickbooks and our bookkeeper and tax preparer both use Quickbooks then we might want to make sure a Shopify store (or whatever tool we like to use) integrates with Quickbooks.

  • Build a good check and balance. We need someone to keep us honest, with spending, forecasting, and taxes. Many an accountant won’t have access to our our accounts. We need to check their work anyway, to make sure they got things right.

  • Categorize receipts immediately. If we let our receipts build up then we’ll have a mountain of work. If we do them upon receipt of a delivery or when the charge hits our accounts payable then it will be much simpler. Or weekly. The tax preparer will sort out what we can and can’t actually claim. This includes services, travel, subscriptions, the cost of the office - which at first might be a part of the costs of a home.

  • If we get financial advice about a business arrangement, think long and hard before proceeding against that advice. We all screw this up and learn the hard way eventually.

  • Don’t ever, ever, ever write your own accounting software. Been there, done that, bad decisions and making up your own GAAP principles will ensue.

  • Keep all of the records pretty much forever.

Every business is different and we can’t provide a universal truth with how to structure businesses finances. But maybe some of this article helps frame things the way each startup needs them framed. To help us hire someone we can trust. Probably someone we aren’t related to. And we should plan to get additional services (insurance, legal advice, etc) from other vendors every now and then.

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