When you’re searching for the right accountant for your startup, it’s important to remember that not all accountants have the same qualifications: All CPAs are accountants, but not all accountants are CPAs.
A Certified Public Accountant (CPA) is a finance professional who is licensed by a state board of accountancy. CPAs can fulfill various roles for businesses, including acting as auditors, business advisers, tax consultants, or accounting consultants. For accountants to qualify as CPAs, they have to meet education requirements, pass examinations, and complete ongoing training. As a result, CPAs are among the most trusted financial advisors. For an in-depth description, take a look at this article from The Balance on what it takes to be a CPA.
To gain the most benefit from this relationship, it’s important to find the right CPA for your business. There are five key criteria to consider to help you choose the best CPA for your startup.
5 Criteria To Pick The Best CPAs For Startups
CPAs are highly qualified accountants, but if they don’t have experience with the precise requirements of your business, they could overlook important regulations or leave money on the table. To avoid these issues, the startup community should look for these five criteria when hiring a startup CPA.
1. Startup-Specific Expertise
Particularly if you’re a first-time founder, startups often make several common finance mistakes—this article from SaaStr highlights the 10 most important. Find a CPA with expertise in startups to steer your business away from these pitfalls. An effective startup CPA should have a thorough understanding of the regulatory complexities of startups and associated paperwork, and standard investor or board reporting requirements. They should also be able to calculate and track key startup metrics like burn rate and cash zero date with accuracy. For tax planning purposes, your CPA should have in-depth knowledge of R&D credits and any available startup tax incentives. Any venture capital-backed startup CPA also needs to understand the ins and outs of the fundraising process and cap table management as it relates to your financial statements.
See also: 5 Best Banks for Startups Compared: SVB vs Mercury vs Brex Cash vs First Republic Bank vs Wells Fargo
2. Experience In Your Business Vertical
Find a startup CPA who has extensive experience working with businesses in your vertical. If they don’t understand the reporting, financial modeling, and tax requirements for your industry, this can lead to miscalculations and missed opportunities. Many finance firms specialize in certain verticals, and you can also consult online guides that highlight the experience your industry needs—for example, this guide from 5 Minute Bookkeeping offers advice on finding an accountant with e-commerce experience.
See also: SaaS Accounting Basics: A Comprehensive Guide for SaaS Startup Founders
3. Responsive Communications
Ask for information about the CPA’s contact hours and average response time to gauge how they will handle time-sensitive accounting requests. As Gene Marks explains in this article from Entrepreneur, “If your CPA is slow to respond, or you find yourself repeatedly reaching out to get an answer to a question, then this is a CPA performing a sub-standard service.”
See also: Hiring an Accountant: 10 Interview Questions to Ask When Hiring an Accountant
4. Familiarity With Your Finance Stack
You likely have accounting software like QuickBooks and a set of finance tools already in place, so confirm that your prospective CPA understands how to use them. This is particularly important for any vertical-specific software: The finance toolkit for an e-commerce business looks very different from that of a SaaS business, for example. A CPA who is familiar with the software will be able to begin working with it immediately and can also recommend how to implement accounting processes that allow you to use it more effectively.
See also: 8 Best Accounting Tools for Startups
5. Startup-Friendly Pricing Plan
Some business owners delay hiring an accountant to keep their costs down, but, as this article from Small Biz Daily shows, the right accountant (and particularly the right CPA) will be well worth their fee. To find a CPA whose pricing suits your startup’s budget, look for an accounting firm or finance service that charges fixed monthly fees, so you can set your budget in advance and receive transparent pricing that details how your bill will change as your company grows.
See also: What To Expect From Most Bookkeeping Price Packages (& A Better Solution)
Zeni: The Outsourced CPA Service Designed For Startups
Zeni is a full-service finance firm that handles all your startup’s bookkeeping, accounting, and CFO needs. Zeni’s team of finance experts consists of fully-certified full-time bookkeepers and accountants, CPAs, and tax advisors who are specialists in working with startups and bring more than 100 years of collective experience to your business.
Our experts have worked with companies ranging in size from early-stage startups to VC-backed growth-stage companies, as well as public companies like Apple and Whatsapp. Plus, they’ve worked through every type of business financial scenario—mergers and acquisitions, different fundraising processes, IPOs and more. They’ve dedicated their careers to helping countless startups establish a solid financial foundation for growth.
Zeni’s finance experts are paired with artificial intelligence to maximize efficiency, creating the ultimate bookkeeping and accounting solution for startups:
- We perform daily bookkeeping and maintain 100% accurate books throughout the year. This makes it easier to do things such as prepare investor packages, be audit ready, and file your year-end tax return.
- We bundle all the data from various financial accounts into one easy-to-navigate finance dashboard where the most important insights for your business are available in real-time, 24/7. This includes burn rate, cash zero date, OpEx, cash balance, and more.
- We utilize a fast and efficient accounting system to manage receipts, invoicing, bill pay, and other financial functions.
- We proactively communicate important financial insights in real-time, allowing you to identify and take action on changes to your finances as quickly as possible.
Schedule a free demo with us below to learn more.