Startup Accounting 101
How to’s, accounting tips, hiring guide and systems advice from the leader in startup accounting.
VP of Accounting Services
First Why Does Good Accounting for Startups Matter?
Good accounting requires work - is it even worth it for startups? For high-growth startups, especially ones that expect to raise venture capital, management needs access to high quality financial statements. Not only are these necessary for running a highly functioning business, but companies that have a good accounting system, process and data de-risk VC due diligence (and improve the odds of surviving an audit by the IRS).
Now you can either do your own accounting, or you can bring in an outsourced startup accounting firm to help you out and take this burden of bookkeeping off your shoulders.
We typically recommend that bootstrapped companies, or ones that have raised less than a quarter of a million dollars in funding, DIY their basic financial work until it becomes too burdensome for the founder to handle. Of course, having the right systems set up can dramatically lower the amount of effort required; we’ll get to those systems in a moment.
If you decide that you don’t have time for the minutiae of doing your own accounting, and know that you should focus your efforts on what matters — strategy, growth and, scaling — Kruze Consulting and our team of tech financial experts are here to help you every step of the way. Just leave your bookkeeping to us.
However, if you want to take a stab at your accounting, read on to see tech startup accounting tips that you can follow. We’ve included everything from why and how to budget, to free financial model templates, to record keeping, to taxes and more … We like to call it the ultimate guide to startup accounting.
Do Startups Need Accountants?
We talk to hundreds of startups a month - and about 10% of them don’t need a monthly accountant. Instead, they are small enough to DIY their accounting, with the exception of filing a tax return - using a legit CPA for a startup tax return is a very, very good idea.
Even for startups that do need accounting help, they don’t typically need a full-time accounting department, and most of their needs can be handled by a part-time bookkeeper who records transactions and closes the books each month and an experienced startup tax accountant.
But at a certain point, your startup is going to need a greater degree of professional expertise. With that in mind, let’s look at what makes an accountant so valuable?
Side Note: What is the Difference Between a Bookkeeper and an Accountant?
A bookkeeper typically focuses on processing and recording transactions, including things like invoices, receivables, payments, and other essential functions. Accountants - particularly CPAs - can provide a lot more. As your startup grows, you’re going to need a greater degree of accounting proficiency to create budgets, handle your financial statements, develop forecasts, and provide reports to your board. Raising capital or considering an acquisition means you’ll need skilled accounting practitioners to help you. Another major area where CPAs can be much better than a simple bookkeeper are producing tax returns - and interacting with tax authorities like the IRS or state tax agencies. CPAs are legally allowed to provide tax services above and beyond what other accounting professionals can do. And this advice can be extremely valuable (in fact, our clients are saving tens of millions of dollars a year on taxes due to our accounting team’s tax work - and that’s for unprofitable startups who don’t ordinary owe income tax!).
Areas Where Accountants Provide Value to Startups
Organization. Your accountant monitors your financials and ensures your compliance documents are in place and accurate. Your accountant should also be available to answer your questions and help you address any issues before they become larger problems.
Due diligence. When venture capital funds are investing in your company, or you’ve attracted the interest of an M&A acquirer, they are going to conduct very in-depth due diligence, typically using their own team of experts. An accounting professional that’s on your side, available to answer questions and explain your financials, is invaluable in those negotiations. Having helped clients get acquired by massive public technology companies for hundreds of millions of dollars, we’ve seen first hand how having a Kruze CPA on the phone during accounting diligence helps M&A teams build confidence in a startup’s books and finances.
Compliance. Tax compliance is a subset of due diligence, and your accountant can help you explain to the VC fund or the acquirer that you have followed all federal and local rules and regulations. Federal, state and local tax laws are increasingly complex, and before you sign a funding round agreement or stock purchase agreement, the other parties will want to be completely sure you don’t have any compliance exposures that they should know about. This is becoming an increasingly important part of later-stage due diligence and M&A diligence, so make sure you have an experienced startup accounting firm if you are raising big VC $$.
Accounting systems set up. Scaling a startup is hard work - but scaling financial and HR backend systems shouldn’t be. The best startup accountants have worked with multiple high-growth companies, and know which software and systems are ready for hyper growth.
Best-in-class technologies enhanced with AI. We are thought leaders in bringing the best in new technologies to our clients. As CPAs, we have a deep knowledge of the unique needs of startup companies and we understand the latest AI and accounting automation tools. Our professional accounting team works extensively with AI-enhanced financial platforms like Brex, and Ramp. We’ve served as beta testers and on customer advisory boards for the most significant AI tools for startups, which means we not only understand AI tools, we helped shape their development.
Responsiveness. During diligence your company will probably face a lot of short turnarounds, and having an accountant supporting you during these urgent requests for financial information can be invaluable. In addition, other emergencies can require assistance from accounting. For example, human resource situations that involve terminating employees can require calculating severance and running payroll, and your accountant can help during these difficult circumstances.
Taxes. Beyond just completing your regular tax returns, you will want to look at available tax credits, like the research & development tax credit. The IRS has recently increased the documentation requirements for this credit, and you’ll need to be able to identify the business components you’ve researched, the actual research, the individuals involved, and all the related expenses. You need a startup accounting expert to support you through processes like this.
Financial advice. Budgeting, modeling, burn rate, cash out dates, and other critical information are an essential part of running your startup. And while it’s pretty easy to download and complete a free financial model, you also need to make sure that information is interpreted correctly. Beyond just creating budgets, your accountant can help you with forecasting, analyzing key performance indicators (KPIs), and developing a financing strategy. Your accountant can help look at the “big picture,” examining how all your financials are interrelated and affect your company. And in today’s higher interest rate environment, our finance and accounting teams have been helping clients think about safe ways to get some yield out of their cash positions.
The value of having someone who understands your complete financial situation really can’t be overstated. Firms that rely on automated accounting systems or who provide limited services can easily miss potential problems, like invoicing issues, double payments, and missed collections. Your accountant should function as a partner, who supports the success of your startup and helps your company achieve its goals. For more information about the value of accounting services for your startup, contact us.
To summarize:
Does my startup need an accountant?
It’s a good idea to have an accountant/CPA to file your startup’s tax returns and interact with state tax agencies. Monthly accounting help is great for funded startups, but DIY accounting may work for many pre-funded companies. And a CPA is VERY helpful for VC due diligence.
How to Hire A Startup Accountant
Most startups should hire an outsourced accounting firm, like Kruze, since a full time hire is too expensive - and won’t come with the range of expertise from GAAP to tax law to VC financing. When your startup is looking to hire an accountant, here are some critical items to look for:
- Experience and Expertise: Choose a firm with a strong focus on VC-backed startups, particularly those with experience in your industry and company size. They should understand the metrics needed to support growth and venture capital (VC) requirements.
- Tax Knowledge: Ensure the accountant is knowledgeable about tax credits beneficial to startups, such as the R&D tax credit, which can help reduce the burn rate. Look for an in-house tax team, like Kruze’s, since you’ll need to get them on the phone for diligence more often than you’d think!
- Customer Service: Opt for firms known for excellent customer service, as founders need reliable partners who can handle complex financial issues efficiently.
- Growth Oriented: Your startup is likely to grow quickly, so hire a startup accounting firm that can grow with you. Choose a firm that works with companies from the earliest-stages to large funding rounds.
- Sales vs. Accounting Expertise: Finally, when you are speaking with a firm that you are considering hiring, confirm that the person you’re speaking with during the sales process is an accountant, not just a salesperson. This not only ensures that you are getting accurate and relevant advice, it will also make it much more likely that you are getting an accurate quote and that you will end up hiring a team that can legitimately service your company.
Important Dates for Startup Accounting
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Hold Q4 board meeting
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Send annual investor update
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Finalize next year’s goals and objectives
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Review year-end bank and cash balances and compare to projections
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Update cash out projection based on current cash and recent burn
"With Kruze, every month we have new financials prepared by a professional accountant who is very hands-on and very, very qualified to handle accounting for a startup."
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Specializing in DE C-Corps with Seed and VC Funding
Please note, our expertise is not focused on LLCs or bootstrapped companies.
Why Budget - The First Step in Startup Accounting
Budgeting Is The First Step In Accounting.
Budgeting will help you:
- Plan your cash flows and cash out date against the progress and goals you need to achieve
- Bring real accountability and scrutiny to your organization
- Measure how you’re really doing vs. expectations
- Ensure you’re hiring correctly
All early-stage companies should budget as part of their initial accounting work!
How To Budget?
Budgeting Tips
Here are a few basic startup budgeting tips for you as you’re building a budget for your startup:
- Headcount is going to be your primary expense in most cases, so this is the place to focus the most. Understanding why your different team members get hired, and how they help you get to the next milestone, is very important.
- You should have a really strong opinion on the amount of revenue and the amount of cash burn that you’ll have in the coming years. Don’t ask your department heads what they want to spend - tell them how much is available and ask them to work within the constraints.
- Match the amount of cash you need with the size opportunity of the company that you’re trying to build. If you are building a company with modest potential, don’t burn millions of dollars!
Financial Models
Here are a few basic startup budgeting tips for you as you’re building a budget for your startup:
- Financial models are typically spreadsheets that will help you create projections for your early-stage company. They also provide the information you need to your 409A valuation firm, help you think through your cash burn and, more. The good news is that you don’t have to reinvent the wheel. You can use a simple template. We have created several financial models that you can use for free.
- Simply click on the financial model below that you want to download to get started - they are free! And if you need help with your modeling project, reach out to us at Kruze Consulting and we’ll see if it makes sense to work with us on a consulting project.
- You can also find helpful modeling tips, how-to instructions and videos here.
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Budget Vs Actuals
Here are a few basic startup budgeting tips for you as you’re building a budget for your startup:
We recommend doing budget versus actuals. This is when you take your financial model or projections and compare them every month to your actual results. For example, you compare your accounting numbers versus your projection numbers. The reason why this is so powerful is it brings a lot of scrutiny and discipline to the company. It ensures financial health. Especially as a founder, you need to know what your expectations are and how you’re doing against your expectations.
Startup Accounting: Recordkeeping
Accurate recordkeeping - known as “bookkeeping”” in the accounting world, is important to ensure you are keeping track of how the company is growing revenue and spending it’s cash. It will be very important if a major corporation asks to acquire you for hundreds of millions of dollars, or if you are raising outside funding from a professional investor.
In the technology and biotech industries, early-stage companies that are playing for the big outcomes need to use GAAP accounting. Many inexpensive, non-CPA bookkeepers will simply do cash based accounting - which is likely fine for a small coffee shop or ad agency. But that’s not what the tech industry expects if you are “going big.
What is GAAP Financials & Does Your Startup Need Them?
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.
Do you need GAAP? Yes, venture-backed high-growth businesses should have as close to GAAP financials as possible.
GAAP is better for running your business, as it helps you match your expenses and revenues with the timing of those activities. It also makes forecasting and trend analysis easier. Finally, and very importantly for early-stage, VC-backed companies is that acquirers and investors will want to see GAAP financials. GAAP will make your due diligence process much easier, and reduce the chances that your exit or investment falls apart from financial statement issues.
Of course, GAAP and other accounting terminology can be confusing. Kruze’s experts are available to explain your books, taxes or prepare you for due diligence. And, check out our startup accounting dictionary to learn about other important GAAP and accounting terminology!
Which Financial Statements Do You Need?
All startup projections should have an income statement and a running cash balance. You can also have the three, traditional financial statements in your model if you’d like; those are:
Having all three does increase the complexity of your projection work - remember, the balance sheet should balance, the cash flow’s ending cash amount should equal the cash position on the balance sheet, and the cash flow statement and the income statement are intricately linked! So we don’t recommend that level of complexity for your seed stage model - just the IS and the cash position (maybe working capital or inventory).
Key Financial Metrics That Matter
There are a few important metrics that entrepreneurs should know about accounting for early-stage businesses.
The burn rate is how much money you are spending every month. The cash-out date is the estimated date you’ll be in business until given your monthly spend and the remainder of the investment you have sitting in your bank account.
Are your customers paying you ahead of time? Deferred Revenue is when a client pays you ahead of you delivering a service. For example, if you charge a client’s credit card for a 12-month subscription, contracts - you just got 12 months of cash from that client! But you owe them the subscription, so Deferred Revenue gets added to your balance sheet as a liability. The offset to this on your balance sheet is cash - so you’ll have more cash flow than your income statement would “predict.” Not a bad problem to have… Watch our deferred revenue video here.
Accounts receivable (AR) refers to the amount that your customers owe to you for the goods or services sold to them on credit. This lives on your balance sheet under liability because you haven’t yet received the cash for the item or service provided.
Accounts payable (AP) is the money your business owes to its vendors for providing goods or services to you on credit. These are bills that you haven’t yet paid. Different vendors have different payment terms, so you should use this to your advantage. But remember, in accrual accounting, if you use a service/get invoiced by a vendor, you’ll see it on your income statement even if you haven’t paid them yet - thus, making your operating loss different from your cash burn.
Finance as a Service (FaaS)
Finance as a Service (FaaS) is a more dynamic financial services model that is growing rapidly among startups and early-stage companies. FaaS uses cloud-based systems and automation to provide startups with high-quality financial management services to help them reduce operating costs, manage their capital, and get accurate and timely forecasts. Kruze Consulting is a leader in the FaaS space, relying on innovative software and our highly experienced team of CPAs, accountants, tax experts, and finance professionals.
Get an Accounting System
We recommend QuickBooks Online (“QBO”) as the right bookkeeping software for startups and high-growth small businesses. It’s the leading small business accounting software in the US for small businesses, and interfaces nicely with other automated systems like payroll.
Read our explanation of how to pick the best accounting software for startups. Remember, VC-backed companies have different needs than traditional small businesses or solo entrepreneurs. Experienced startup accountants who work closely with VC-backed businesses should always recommend an off-the-shelf option, so that your company isn’t stuck working with a system that is only usable by few accountants.
Other tools recommended by top tech startup accountants
Our founder, Vanessa Kruze, CPA, recommends that founders pick a set of financial technology tools that all integrate cleanly into QBO, provide best-in-class automation and controls, are affordable, and can scale with high-growth companies. These tools include expense management/credit card solutions that work for funded companies, banks that know how to help founders manage venture capital dollars, high-growth payroll systems and international payroll systems.
Thought leaders in accounting automation and AI
Our clients benefit from Kruze’s expertise in automated fintech and accounting platforms, and Kruze Consulting has won awards for our innovative use of technology, including some of the most significant AI tools for startups. Our CPAs are experts in startup accounting, and are experienced in leveraging AI accounting tools and automation. Many of the top AI companies are Kruze clients, which gives us unique insights into the latest AI technologies and trends.
How Does Good Accounting Help You Prepare for Due Diligence?
Kruze Consulting clients have raised over $15 billion in venture capital funding, and on average one of our clients is acquired a month. We know how quickly investments and acquisitions can come together, and recommend that companies are ready for due diligence ahead of time. Startups with VC funding must have good startup accounting processes and systems to regularly report on the company’s financial position
We’ve put together the ultimate finance and HR due diligence checklist for startups. Read our downloadable VC checklist here.
Reminder That VCs & M&A Acquirers Want GAAP
VCs and Angels do want to be assured that their financials are presented in compliance with GAAP. So, again, you must have as close to GAAP financials as possible.
If you are going to be acquired by a publicly-traded company for hundreds of millions or billions, GAAP will be important. It is what M&A acquirers want. It also makes running your business a lot easier because you are going to see what is going on all the time.
How Does Good Accounting Help You Get Ready For Tax Season?
Tax season, two dreaded words for anyone, nevermind for a founder. You already have so much on your plate. It can be stressful. It can be a lot of work. However, if you are organized from the start, know what documents to have and keep good records, it may not be that bad. You could always hand it off to the professional certified public accountants (CPAs) if you just don’t want to deal with it.
Even unprofitable startups must file annual federal and state taxes every year.
What Documents Do You Need To Complete Your Startup’s Tax Return?
You will need the following documents to complete your startup’s return:
- EIN Letter from the IRS (this is the Employer Identification Number letter that the IRS created for you when you requested your EIN for your company.)
- Vital Business Statistics
- Business Address
- Shareholder SSN/Address info
- Prior Year Tax Returns (Federal and States)
- Local Tax Returns (if any)
- Financials
- Full-year Balance Sheet
- Profit & Loss Statement
- General Ledger
- Capitalization Table
Our web application makes it easy for you to share these files with us; simply login and upload the documents as you go through our tax software onboarding flow.
We’ve put together a calculator to help you estimate the cost of preparing your business’ return. Remember, your early-stage company is unique and this tool is intended to be a guide. You can always contact us for a free consultation. Let the professional certified public accountants do the heavy lifting for you.
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Know Your Tax Credits
Do you know that you could potentially save up to $250,000 per year on your payroll taxes?
Yes, up to $250k! Payroll taxes are taxes that ALL companies with payroll pay - even money losing, early-stage companies. This is a massive tax credit that your company should take advantage of.
And this amount will double for the tax year 2023 to $500,000 thanks to the Inflation Reduction Act of 2022!
What is the Research and Development Tax Credit?
The research and development, or R&D tax credit, is a US government-sponsored incentive that rewards companies for conducting research and development activities within the United States. Even unprofitable technology companies can use this incentive to reduce their burn rate. Kruze has helped clients reduce their burn rates by over $40 million through our work on this government incentive program.
We’ll explain how this program works, and how your startup can offset your expenses up to $250,000 a year. And the Inflation Reduction Act of 2022 doubles that for the tax year 2023. Visit our R&D Tax Credit Calculator to estimate how much your company can save. And if you are interested, contact us now to see how we can help your early-stage business!
ERC - A Tax Credit Every Tech Startup Accountant Should Know
Accountants who are not specialized in newly formed companies may be missing a new tax credit that can reduce payroll taxes up to $100,000.
If your company was founded after February 15, 2020, it is likely eligible for the Employee Retention Tax Credit (ERC or ERTC).
This credit was authorized under the American Rescue Plan Act of 2021, and provides payroll tax credits for startups founded during COVID.
Read here for more detail on recovery startups and the Employee Retention Tax Credit.
When To Outsource Your Accounting
Handling your company’s accounting is a very important duty and a full-time responsibility. It is critical for your startup’s financial health and ultimate success. As mentioned before, as a startup founder, you may not have the time or knowledge to handle it properly. Many founders decide to hand-off the startup accounting responsibility to the CPA accounting experts. If you are looking for a startup accountant, look for a provider who knows your particular business model, as different types of early-stage companies have accounting particularities.
Do venture-backed startups need an accountant?
At Kruze, we would argue that a VC-backed startup should have an accountant/CPA (and not just a bookkeeper). Businesses with over six months of runway should consider hiring a real accountant. This is because companies that have raised VC funding need more than just a set of financials - the best founders ask for help understanding their metrics, outsource tax and compliance work to a CPA, and want experienced advice on how to interact with their investors and board.
How do startups do accounting?
Startups do accounting by implementing a range of financial management techniques, depending on the founders financial sophistication and time. The best startups use a cloud-based accounting software like QuickBooks Online to do basic bookkeeping, which includes tracking income, expenses, and other financial transactions. They may DIY their books, but should work with a CPA firm to file taxes and ensure state and local tax compliance. VC-backed businesses typically choose to outsource their bookkeeping and tax preparation/compliance to experienced CPA firms. Once they reach a large enough size, typically after a Series C round, a startup will hire a CFO and bring in house most financial functions - with the exception of tax preparation, and audit (if required/requested by their investors).
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What to Look for in a Good Startup Accountant
Startups need more than a robot to reconcile the accounts, they need a trusted advisor who is in tune with their unique growth path. The best accountant for a startup will be available. Available to answer questions, available to update numbers as new data is produced, available to set up the right systems for a high growth company.
When choosing a startup accountant, keep this in mind:
- Speed
- Accuracy
- Reliability
- Expert Advice
- Low Time Commitment
Startup accountants and CPAs are a special breed of advisors. Whereas a traditional small business focuses on their bank account balance, startups focus on the KPIs that help them raise their next round of funding. Choose an advisor who “gets” early-stage, Silicon Valley-style businesses.
We know that as an early-stage business founder, you are busy. You need to get the information you need to make decisions and to ensure the utmost of financial health. Kruze’s team of professional bookkeepers will work with you to find the financial delivery date that meets your needs.
Startup CEOs and founders don’t have time to proof their books, nor should they have to. This tedious job should be left up to the experts. Our CPA team is meticulous. You can rest easy knowing that it will be done right. We are familiar with early-stage companies’ business models, we understand the complexities (and importance) of issues like revenue recognition, ARR, capitalized vs. non-capitalized development costs and, more.
CEOs of early-stage companies have a tremendous number of things to accomplish. You juggle many hats and managing the books shouldn’t be one of them! Kruze’s CPA accounting team strives to handle all the minutia so you can focus on what matters when growing your business like, strategy, networking, achieving product-market fit, advancing your R&D, hiring, etc.
Early-stage companies raising venture capital require professional, accurate books and specialized financial advice. Because Kruze Consulting only works with funded startups, we understand the nuances required to get the numbers right and know what advice you and your investors need. And because we are one of the leaders in accounting automation, we’ve seen the mistakes the automated systems make. We are different “from the other guy” in that we go beyond automation and also provide you with white-glove service as well. If you are aiming for your early-stage company to become a unicorn, you need accurate books!
Our team loves working with startup companies, not only that, but Kruze cares more! We’ve got the experience to help you make critical financial decisions. We have former VCs on staff to help prepare you for your next funding round, and former IRS agents on hand to assist you as you think through the tax ramifications of selling your company. And our advice can grow with your company, from simple startup CPA accounting to part-time CFOs.
When making a decision to go with a vendor or service partner, fitting into your budget matters. Kruze Consulting offers a variety of pricing plans to help early-stage companies afford accurate startup accounting services. Check out our pricing page to learn more.
How Good Accounting Pays for Itself
Founders who try to skimp on accounting can find that poorly kept books can end up being super-costly for several reasons. Here are some of the reasons why good startup accounting matters to early-stage companies:
- Know where you are spending your money so you can manage costs, control your burn and look good to investors
- Good books mean you can move fast during VC and M&A due diligence - and being able to share your financials quickly with strategic partners inspires confidence
- A good certified public accountant (CPA) helps you make sure you’re collecting your revenue and not over-paying vendors, reducing your burn rate
- Solid recordkeeping means you can cut your burn by capturing an R&D tax credit - this could save your startup up to $250,000 a year, and this amount will increase to half a million a year for the tax year 2023
Re-outsourcing your financials: Is it right for your startup?
Many startups outsource their financial reporting and management functions, both to save money and to get professional accounting and finance services that would be difficult to locate and hire. As the company grows, management eventually hires the appropriate personnel and brings these financial functions in-house. However, with the current economic slowdown, some startups that may experience slower than projected growth are choosing to “re-outsource” their financials.
How is accounting debt like technical debt?
Many startup founders understand technical debt. Technical debt is incurred when you’re working very fast to develop a prototype or working model, and you’re not building everything perfectly. Eventually you plan to go back and fix things later. Accounting debt is a similar concept – startups can often ignore creating their accounting infrastructure to focus on their technology or customers. But eventually you’ll need to set up your accounting systems, and the longer you wait, the more you’ll have to go back and fix, just like technical debt. The good news is that by taking some simple steps early, founders can avoid accumulating a lot of accounting debt.
How can you tell if your accountant is doing cash or accrual accounting?
Accrual accounting records revenue or expenses when a transaction occurs, rather than when a payment is made or received. It’s really important for startups to use accrual accounting. It’s the standard accounting method for most companies, and it’s actually required for larger companies. Cash accounting only recognizes transactions when cash is exchanged. Why is that a problem?
Well, let’s look at a quick example. If you are running a SaaS startup, and you sell a 12-month contract to a client for $120,000 in January, on a cash basis you record $120,000 and that’s it. You don’t get any more revenue from that client for the rest of the year. That really doesn’t reflect reality, because you still need to deliver that service for the rest of the year. With accrual accounting, you would recognize $10,000 of that revenue each month. The remainder would stay on your balance sheet as deferred revenue. That makes your income more accurate and predictable, and investors prefer to see that regular revenue.
How can you manage accounting complexities when you have a distributed workforce?
Employees are embracing the flexibility of working remotely, and startups benefit from greater access to talent, happier employees, and lower turnover. So how can you manage accounting with a distributed workforce? Here are some tips:
- Set up an expense tracking system.
- Establish a remote organization management structure.
- Use good accounting software.
- In the US, be aware of tax nexus.
- Use a strong payroll system.
- Remember foreign subsidiaries and foreign owners at tax time.
Develop a strong budget and financial model.
Today’s technology startups are increasingly partly or fully remote. The only way to scaleably run a remote company’s back-office is to embrace cloud accounting technology. Today’s tech startup accounting requires, well, tech!
What is EBITDA?
EBITDA is an acronym for Earnings before Interest, Taxes, Depreciation, and Amortization and it is essentially a metric of the best parts of your business’s income statement.
It is used as a proxy for cash flow while being focused on the income statement. For example, you will hear bankers, private equity investors, and those kind of folks use EBITDA as a proxy for cash flow.
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Recent Startup Accounting Blog Posts
Read our recent blog posts on all things startup, accounting and finance.
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How Are We Different?
We know you are busy. So, we have developed highly automated systems that we use to quickly get the job done for you. However, we don’t just stop there. We go above and beyond automation and always have a team of certified public accountants (CPA) experts ready to provide you with white-glove service. This is the Kruze way!
Don’t take our word for it. Check out our client reviews and testimonials.
Tech Startup Accounting, Biotech Accountants, Crypto and More
As one of the largest tech startup accounting firms, Kruze has expertise in serving SaaS companies, biotech companies, eCommerce players, early-stage hardware businesses, crypto focused companies, marketplaces and more. Read about some of our expertise on our tech startup industry page.
Is Automated Accounting an Option for Startups?
The dirty secret to most (if not all) “automated” accounting firms is that they rely on cheap overseas labor. In fact, the CEO of one of the leading automated bookkeeping firms has emailed us asking for introductions to low-priced, overseas labor shops!
Now, there is nothing wrong with non-US accountants (except of course when using them violates the law, but ignoring that). But startup founders find it misleading that the supposedly automated solution requires a lot of back and forth with a non-native English speaker halfway around the world. There is nothing automated about waiting for someone 12 timezones away to manually recategorize a transaction!
Another major issue we hear about from companies who switch to us from the automated vendors is that instead of allowing the clients to speak with their accountants, they are required to use a call center to get answers to questions.
Kruze relies on US-based accountants as our account managers, many of whom are CPAs. While it is not required for our clients to have monthly calls with our team, we encourage it for most of our pricing plans. And if a client needs help, such as for a VC due diligence session, we are happy to assist!
What IS automated with the automated vendors is price increases. Clients who have switched to us have complained about frequent, often monthly, price increases as their startups’ expenses have grown.
If you are tired of the automated run-around, contact us! We’ll talk to you. :)
