Best Startup Accounting Software of 2024

Businesses that evade paying taxes or skirt the rules may face penalties and interest charges. For example, if you’re not paying your employees’ payroll taxes, you could be charged with tax fraud. By following the IRS’s tax filing rules and regulations, you can avoid these kinds of problems. In addition to choosing between cash and accrual methods, you’ll need to decide how to record transactions. Income is recorded only when money is received, and expenses are recorded when they are paid.

Decide on a business accounting method

Choosing a widely used system like QuickBooks means that every accountant, CPA, or financial operator you bring on board will know how to work with your setup—saving you onboarding time and reducing transition risk. VC-backed, early-stage companies have very different needs than traditional small businesses—and your financial stack should reflect that. You’ll need audit-friendly reports, cash flow statements, and collaboration with your finance team. The best way to get everyone on board is to show them what’s in it for them. Automating accruals helps accounting teams stop doing manual, time-consuming tasks. Instead of getting bogged down in repetitive work, they can focus their expertise on more strategic financial analysis.

Is automated accounting an option for startups?

• Do you want advanced analytics, payroll processing, or mobile access?
• Many users are frustrated by the company’s generic help articles that fail to address their issues.
• Store them on different devices or cloud services to safeguard against data loss.
• This isn’t just a convenience; it’s a competitive advantage that frees you to focus on growth.
• This desktop-based software streamlines core accounting solutions, including invoicing, expense tracking, and payroll processing.

It reduces the risk of human error in calculations and data entry and keeps financial data organised and accessible in one place. It also generates reports and dashboards that can help you understand your financial performance and make informed decisions. QuickBooks has become a mainstay in accounting software, especially for startups.

Select an Accounting Method

• This is crucial for attracting investors, securing loans, and maintaining transparency.
• Automated invoice processing platforms can handle processes from receipt capture to payment scheduling, reducing processing time from days to minutes while improving accuracy.
• How well does your chosen accounting software play with other systems?
• In return for their money, investors become partial owners of your business and gain certain rights like having a say in major company decisions.
• As your startup grows, your accounting needs will become more complex.
• The best accounting software offers affordable pricing tiers and has a clean, user-friendly layout.
• Robust integrations also improve financial visibility for leadership teams who require real-time metrics for strategic decisions.

Schedule a demo to see how Brex's accounting automation can streamline your processes and accelerate your business growth. From reducing month-end close cycles to reallocating hours toward high-value activities, the best accounting automation platform transforms accounting from a cost center into a strategic advantage. The question isn't whether to automate, but how quickly you can implement the right solution for your specific needs.

• Currencies eligible for foreign exchange savings are available here.
• The right accounting foundations will provide immense value as you scale your startup – saving you time, effort and money.
• Deferred Revenue is when a client pays you ahead of you delivering a service.
• Plus, they require less expensive on-premise hardware, making them cost-effective for small companies.
• In other words, once you bill a client it gets marked as revenue, and when you are billed it’s marked as an expense.

Must-have accounting software features

Hiring in new states creates multi-state tax obligations, while international expansion introduces issues like VAT and transfer pricing. What starts as simple bookkeeping quickly demands robust systems and expertise. Investors demand clean financials and meaningful KPIs like MRR, churn rate, and CAC. Without proper accounting, you’ll struggle to close funding rounds, make strategic decisions, or prove your business model is viable.

Payroll records

Generally Accepted Accounting Principles (GAAP) stands for Generally Accepted Accounting Principles; it’s the accounting “playbook” in the US that ensures that we’re all applying the same thought process. Copies of filed tax returns, including federal, state, and local income taxes, sales taxes, and accounting services for startups payroll taxes. Details your assets (what you own), liabilities (what you owe), and equity (your investment) at a specific point in time. You've built a fantastic product, found your first customers, and are ready to take on the world.

Accrual accounting, although more complex, provides a comprehensive view of the company’s financial situation by including receivables and payables. This method is generally recommended for growing companies that need detailed financial insights for strategic planning. The downside is that it often requires more robust accounting knowledge and systems, which can overwhelm a small team or individual. Our CPAs are experts in startup accounting, https://www.theclintoncourier.net/2025/12/19/main-advantages-of-accounting-services-for-startups/ and are experienced in leveraging AI accounting tools and automation.

Cash accounting would only record the lump sum payment upon receipt, potentially distorting your financial reports. Cash basis accounting involves recording revenue when cash is received for a sale and expenses when they are paid. This is the easiest of the two methods; however, it doesn’t always provide the most in-depth or accurate representation of the company’s financial position. Furthermore, it is not recommended for businesses with staff or plans for expansion. Protecting your company’s financial data begins with encrypted storage and transmissions using AES-256 encryption. Controlling access to sensitive financial data is a key feature of all accounting software.

Whether you prefer onsite or virtual bookkeeping, confirm your bookkeeper has a strong understanding of financial principles, accounting software, and relevant tax regulations. They should also have experience recording transactions, managing accounts, and generating financial reports, preferably in your industry. Since this decision affects everything from taxes to financial reporting, it’s best to talk to an accountant or financial expert before making a choice.