Machine learning in accounting is changing how startups manage their finances. Learn how it could apply to your business.
February 18, 2021
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.
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.
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, 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.
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.
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.”
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 immediately begin working with it 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
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.
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: