As your startup grows from a bootstrapped company through the first rounds of outside funding, your accounting services needed will change significantly. The level of reporting and analysis required for a more advanced startup is significantly higher than when you’re just starting out. 

Companies have different stages of funding and growth, including:

  • Bootstrapper (self-funded, building an MVP) 
  • Seed round
  • Series A round and beyond

Because the needs can differ so drastically, here’s a look at the general expectations for these three stages of companies.


The term bootstrapper generally refers to a self-funded startup, pre-outside investment. During this stage, companies are generally building an MVP (minimum viable product) and testing to see what kind of traction they can develop. 

Operational Considerations for Bootstrappers

From the outset, there are a few necessary steps for setting up your company’s finances. The first step is to separate your business and personal banking – consider a bank with national presence i.e. SVB, Chase, BoA, Wells Fargo, US Bank. 

Additionally, there are several accounting topics you need to handle at the beginning as well. The business needs a basic accounting system, like Quickbooks Online or Xero, and a payroll system such as Gusto. Your accounting system should use a chart of accounts aligned properly with the business model. 

Next, you need to implement some basic corporate governance. Corporate bylaws (operating agreements for partnerships), should be established, and the business should be registered in the applicable states. Now is also the time to establish a basic cap table (capitalization table). Stock or membership units need to be issued to founders, who should also consider 83(b) elections if applicable. 

From a technology perspective, bootstrappers generally won’t need much. However, you will need a few accounting resources to implement and manage the aforementioned systems. Contracting a part-time bookkeeper can help ensure that operational teams focus on what’s important, not filling out expense reports or reconciling accounts. 

Although you may be small and not generating a profit, from this stage onward you’ll need a CPA (Certified Public Accountant) to do your quarterly and annual tax filings. At this stage you can use cash basis financial statements, generally reporting on a tax basis

Seed Round

Firms that have made it to the next level, “the seed round,” have shown a small amount of revenue, gained a bit of traction, or garnered interest from investors due to a strong MVP. This is the time to adjust your financial structures to be sure to accommodate a larger, more complex business. 

At this point, the accounting function has a few more roles to fulfill. In addition to generating monthly financial statements, a key role in the finance function is preparing a basic financial model of your business. This model is a critical component which enables you to reach out to potential investors. 

Depending on the complexity of the business, it’s possible to use Excel or other spreadsheet tools to prepare both these models and monthly statements. However, as the business grows, a cloud-based service like Jirav can offer much more powerful financial toolsuite for modeling and budget vs actual comparisons.

Accounting Services in the Seed Stage

A part-time accountant can handle your AR/AP (accounts receivable / Accounts Payable) processes, and make sure that bookings are done on time and booked correctly.

Contracting a controller can be a big help. In addition to managing your budgets, this person is also tasked with creating the month-end closing process and doing the monthly budget vs actuals analysis.

Further, it’s time to think about a CFO. If you’re not ready to hire full-time, this function can be outsourced. In addition to preparing the financial model, this person is the go-to person for all financial questions. 

Optimizing Operational Efficiency

Once you’ve passed the seed round, there are 2-3 core accounting processes your company needs. Managing these well can improve your operational efficiency and enhance reporting. 

Your staff accountant will need to set up AP (accounts payable) for business expenses, AR (accounts receivable) for revenue, and deploy an inventory management system (if you’re selling physical products). 

Luckily, there’s no longer a need to do this all by hand. There are a variety of tools available for both AR and AP functions:

  • Accounts Payable:, Veem and Routable
  • Accounts Receivable: Stripe, Chargify, Recurrly. The best choice will depend on whether you’re doing subscriptions or one-time invoicing.

Your staff accountant should also know what to do with founder expenses and start-up costs. For example, start-up expenses are an investment in the future of your company, and certain costs can be depreciated over a fixed period. Founder expenses should be treated as short-term debt to the company, to be repaid at a later date. 

If you haven’t done so already, you’ll need to formalize your cap table. Essentially, the cap table, a list of all outstanding shares, warrants and other equity notes is a complete list of who owns how much of your company. While it is possible to track in Excel, it can be problematic because there is no single source of truth. You can end up with different people having different versions, which can get expensive later on when the lawyers sort it out.

A tool like Carta can help you manage your cap tables reliantly and transparently. 

Other Key Seed Stage Considerations

Once you get your first outside investments, you should be switching from cash basis to accrual basis reporting. This slightly more complex method means recognizing revenues and expenses when their delivery occurs, and not necessarily when they are paid. 

There are a few more things your CPA can assist with:

  • Prior to issuing stock options to employees, ensure you are performing a proper 409A valuation
  • Your CPA can help determine R&D tax credit eligibility. 
  • Ensure that investment instruments (i.e. convertible notes, SAFE notes, etc.) are properly presented on the financial statements and that any necessary interest accruals are made. 

Series A Round and Beyond

Once firms that have shown the ability to generate consistent revenue, profitable or not, the next funding round is the Series A. At this stage, companies have traction and need capital to scale the business model. 

Series A Finance Team

To handle the operational and reporting necessities, the finance team and systems you have in place need to evolve to become more robust and efficient. You may have one full time staff accountant, plus four full- or part-time finance resources:

  • Accounting Manager: responsible for making sure systems are in place for basic accounting processes.
  • Financial analyst: to crunch numbers and run scenarios.
  • Controller: responsible for developing and optimizing month-end close processes and performing budget vs actual analyses. 
  • Part-tme CFO: lead for financial modeling and strategic decision making. Similar, but slightly expanded role in comparison to the seed stage.
  • CPA firm – for tax filings and planning.

The team’s focus revolves around executing and improving the month-end and operational processes developed in earlier stages. 

The Senior Accountant

The senior accountant should continually optimize accounting processes for operational efficiency and enhanced reporting. In addition to the AR/AP & Inventory systems implemented in earlier stages, it’s time to look at a few more helpful tools. 

These can include:

  • A cloud-based modelling and reporting software that docks onto existing cloud accounting and ERP systems. 
  • An expense reimbursement system, like Expensify, to deal with company expenses incurred by staff and executives. 
  • Implement a corporate card program.
  • Expand your chart of accounts to differentiate between departments, locations and product types.
  • Integrate CRM and other data sources with accounting data to further enhance reporting, i.e. revenue by acquisition channels

It’s also time to evaluate the efficacy of Quickbooks online or Xero to meet your accounting needs. An ERP type solution like Netsuite or Sage Intaact could provide much more in terms of reporting and modelling capabilities.

Other Key Accounting Services Considerations for Series A Companies

Besides keeping your single-source-of-truth cap table updated, it’s crucial to ensure HR and benefits compliance. Services like Gusto or Zenefits can save you from needing to increase your internal staff and complexity significantly. 

From a technical perspective, series A stage companies need to move toward GAAP compliant financial reporting. In particular for startups, it’s important to focus on satisfying:

  1. ASC 205 – Financial Statement Presentation
  2. ASC 605 – Revenue Recognition
    1. ASC 985 (software revenue recognition)
  3. ASC 705 – Cost of Sales and Services
  4. ASC 71X – Compensation
  5. ASC 730 – Research and Development
  6. ASC 718 (stock based compensation)

A CPA firm experienced in the startup world can really help cover your bases. They are critical to help you remain compliant and to make sure that your tax filings are optimized to your benefits.

Some investors may also require that the company is audited by an independent public accounting firm. This will ensure that all applicable rules and regulations are being followed, giving investors peace of mind.

Accounting Services as You Grow: The Bottom Line

As your startup grows and progresses from a bootstrapped company through series A and beyond, your accounting needs will change. Without a solid staff, robust tools, and experienced partners you can end up lost, dealing with time and focus consuming catastrophes. 

Founders CPA can support all of your accounting needs – saving you from the headache of hiring and training your own in-house staff. Check out our free consultation and see how we can make your life easier today.

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