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If you are a startup founder, you are hopefully not spending too much time on your bookkeeping. It’s a non-core thing; you need to find product market fit, grow your sales, etc. Here are a few metrics you can use to estimate the time you’ll need for your startup’s bookkeeping:
The volume of your transactions: do you have 100 transactions hitting your bank account and credit cards every month, or 11,000 transactions? The greater the number of transactions, the more time you’ll have to spend. Note that experienced accountants, like my firm, have built software that can make this much more automates, saving time.
The complexity of your transactions: just a few complicated transactions can complicate accrual based accounting (if you are a funded startup, you ought to try to be as close to GAAP as possible, so you don’t muck up your chances of getting acquired. For example, you may have prepaid $150,000 to salesforce.com for CRM for the next year. You (or the person doing your books) will then need to reconcile that account every month against what advertising amount you’ve actually used.
Doing the work yourself: if you can train yourself to do some of the bookkeeping, you can definitely save money. Two caveats though, 1) your time is truly better spent growing and managing your startup and 2) if you make mistakes, fixing them can be very expensive - and heaven forbid you make a mistake that the IRS will care about…
How you’ve leveraged technology: I can’t stress this enough… using technology will greatly reduce the amount of time (aka money) you have to spend on Accounting and HR. Here are my absolute essentials: QuickBooks, Gusto, Zenefits, Expensify or Abacus, Bill.com, DropBox or Box, Gmail.
In sum, how much time you spend on bookkeeping depends on your unique situation. But just to give you an idea… If you are a Seed Stage DE CCorp startup based in SF, NYC, or Chicago, have 10 FTEs, ~400 transactions a month and very few accruals… I’d say ~between $400 to $750 per month.
You can get a feel for what it should cost using the tool on our site here.
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