The Best Bookkeeping Tips for Tech Startups

Oct 28, 2021


When you’re in the early days of your startup, a lot comes down to money. So much of your focus has to go toward finding the funding you need to get your idea off the ground. 

After all the work you put into finding investors, securing grants, or forging other paths into bringing money into your startup, it’s critical that you’re mindful of how that money gets spent. You probably want to be, too. But with all of the moving pieces that launching a tech company involves, it’s easy for some expenses to get lost in the shuffle. 

Bookkeeping can help you avoid precisely that. 

Keeping track of your financials might sound like something that will happen naturally, and implementing bookkeeping processes could feel like an unnecessary added burden. But it’s surprisingly easy to lose track of transactions, especially when your focus will be pulled in so many directions as you grow. Plus, starting with bookkeeping best practices now can help you quickly scale those efforts with your startup over time. 

Know the difference between bookkeeping and accounting

First up, it’s important to distinguish between bookkeeping and accounting. Bookkeeping is the ongoing work of keeping your financial records accurate and organized. It means everything from logging invoices and payments to keeping your accounts reconciled. 

Accounting takes it a step further, using the data derived from your bookkeeping efforts to analyze the financial health of your startup, project your runway, scale your budget, and manage your taxes.

All told, bookkeeping is something that needs to happen on a regular basis. You may not need a full-time bookkeeper on the payroll yet, but you should have someone handling your startup’s bookkeeping on a weekly basis, if not more frequently.  

Accounting, on the other hand, requires a deeper dive but doesn’t need to happen as often. You might meet with your accountant monthly or quarterly, for example. 

Your accountant should have greater expertise than your bookkeeper so they can offer actionable insights to help your startup succeed. Your bookkeeper’s primary focus should be on keeping your books organized and ensuring your accounts payable (A/P) and accounts receivable (A/R) are both on track. 

Set systems in place for tracking

Once you get behind on your bookkeeping, getting caught up can be a nightmare. 

From the very beginning, set a system in place for tracking money going out and money coming in. It could be as simple as a spreadsheet, but countless software solutions can implement automation to make this process easier on you.

Plus, setting up an automated system now, at the very beginning, can be a lot easier and give you better insights than trying to set something up later. At that point, you’ll already be in full swing, and you probably won’t have the time or energy to add transactions retroactively. And that means losing data points that could help you make smarter financial decisions as you scale.

Quick note: once you have your system in place, make it a rule to track every single transaction, no matter how small. You might be surprised how those coffees for potential clients add up, which could help you score a tax deduction at the end of the year. 

Anticipate big expenses

Take the time to think through the high costs that will be associated with building your business. Maybe it’s purchasing technology for your team, renting office space, or paying the salaries of executives you want to get involved in the early days. 

Effective bookkeeping can and should help you plan for sizable expenses. But in order for that to work, those outputs need to be accounted for in your bookkeeping efforts. Make sure you alert whoever handles your bookkeeping, whether that’s an internal team member or an external partner, to any major costs you anticipate in the future. 



Designate bookkeeping to the right party

In your early days, it’s tempting to want to handle as much as possible yourself. But bookkeeping is not an area where you want to play things fast and loose — and you probably have bigger fish to fry.

On a weekly basis, whoever is responsible for your bookkeeping should, at the very least, double-check that all transactions are entered into your tracking system, store those receipts, and categorize those transactions. They should also check that any bills or vendor dues are paid on time and that you have sufficient cash flow to pay upcoming expenses.  

All told, it doesn’t have to be a huge amount of work, but bookkeeping does mean ongoing to-dos that someone needs to handle regularly. Fortunately, you don’t have to designate part of your payroll to an in-house bookkeeper. 

Outsourcing your startup’s bookkeeping gives you a way to ensure everything is handled. Plus, the right bookkeeping service provider can help you build scalable processes while giving your investors peace of mind and keeping work off your desk at the same time. And they can do all of that at a fraction of the cost of hiring an in-house bookkeeper. 

But don’t scale back entirely

Whether you outsource or hire a bookkeeper to your staff, don’t assume you can apply a set-it-and-forget-it mentality. As a founder, checking in periodically with your bookkeeper helps you understand your startup’s runway. It can also alert you to any trends that you need to monitor, like an uptick in vendor charges. 

Ultimately, an accountant can do a lot of this work for you. But if you’re in your early days and hiring an accountant doesn’t fit your plan just yet, it’s important that you or some other key member of your team check-in with your financial reports on a regular basis.

Here at ShayCPA, our team blends bookkeeping and accounting expertise. And we specialize in helping tech startups grow, too. 

In addition to our bookkeeping services, we can help you structure your bookkeeping processes, decide if your startup is ready for an accountant, and more. If you want to talk to experts when it comes to financially structuring seed-stage startups, we’re here. Don’t hesitate to get in touch today.