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Bookkeeping for startups: what to set up, and when
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Book a callA startup needs five things from day one: a separate business bank account, accounting software connected to it, a short chart of accounts, a place where every receipt and contract is stored, and a monthly close. Keep it simple, use accrual accounting if you plan to raise money, and hand the books over once they take a founder more than a few hours a month.
- Separate bank account, accounting software with a bank feed, a short chart of accounts, one home for documents, a monthly close.
- Use accrual accounting if you plan to raise money.
- Hand the books over once they take a founder more than a few hours a month.
Why founders should care early
Nobody starts a company to do bookkeeping. But the first serious investor, lender or buyer will ask for your numbers, and they will judge the company by how fast and how clean the answer is. Books that were kept properly from the start cost little. Books rebuilt in a hurry before a funding round cost a lot, and the round waits for them.
Month one: the setup
- A business bank account and card. No personal spending through it, ever. Mixed accounts are the main reason startup books become a mess.
- Accounting software with a bank feed. QuickBooks Online or Xero is enough for most early companies. You do not need an ERP yet.
- A short chart of accounts. Thirty to fifty accounts that match how you think about the business. You can add detail later. Removing it is harder.
- One home for documents. Every receipt, invoice, contract and payroll report in one shared folder or receipt tool, from the first day.
- A monthly close, from the first month. Reconcile, review, lock. Decide cash or accrual before the first one: if you plan to raise money or have customers on contracts, start on accrual. Here is the difference.
If an investor asked for last month's profit and loss and balance sheet today, how many days would you need? If the answer is more than two, start with the monthly close.
The monthly routine
| When | What |
|---|---|
| Weekly | Send invoices. Pay bills. Match the bank feed while you still remember what each payment was. |
| Month end | Reconcile bank, cards and payment processors. Post payroll. Record revenue properly if customers prepay. |
| By business day 10 | Profit and loss, balance sheet, cash position and runway, with a few lines on what changed. |
| Quarterly | Sales tax and payroll filings checked. Budget compared with actuals. |
Runway is cash divided by monthly net burn. Both come straight from the books. If the books are a month behind, your runway figure is a guess.
What investors and lenders look at
- Revenue recorded when earned. Annual contracts paid upfront are not one month of revenue.
- Clean equity and loan records. Every share issue, note and founder loan matches the legal documents.
- Payroll and contractor records. Who was paid, as what, and that taxes were filed.
- A balance sheet that reconciles. They will pick an account and ask for the support.
The mistakes we see most
- Personal and business spending in one account.
- Customer prepayments booked as revenue on the day the cash arrives.
- Founder expenses never claimed, then claimed all at once a year later.
- Sales tax ignored until a state sends a letter.
- Nobody reconciling the payment processor, so fees and refunds are wrong.
When to hand the books over
A founder can keep the books alone for the first months. Hand them over when they take more than a few hours a month, when you hire your first employees, when customers start paying upfront for long contracts, or six months before you expect to raise money. At that point your time is worth more elsewhere, and mistakes start to cost real money.
Where this goes wrong
| The problem | What it costs you | The fix |
|---|---|---|
| Personal and business spending are mixed | Every month needs sorting by hand, and tax time is painful | One business account and card from the first day |
| Prepayments are booked as revenue on receipt | Revenue looks great, then collapses, and investors notice | Record revenue as it is earned |
| The books are rebuilt just before a funding round | The round waits for the numbers | Close every month from the start |
We keep the books for growing companies and see the same early mistakes again and again.
Sources we opened and checked for this guide:
First published 2024. Rewritten and checked in September 2026. If something here is out of date, tell us and we will fix it.
