Are you also struggling to understand when your startup actually needs someone to handle all the numbers, taxes and financial stuff? As your business expands, so do your financial obligations and that is the reason you must employ an accountant.
At one point you may think: "Do I really need an accountant for my startup?" The answer depends on many things, and getting it right can save you time, major stress and money later.
Here, we will see the top 5 factors to consider prior to hire an accountant for your startup. Whether you are just starting off or you are on your way to growth already, these points can help you make a smarter, more confident choice.
Things to Consider Before Hiring an Accountant for Your Startup
Here are the top 5 things to consider before hiring an accountant for your startup:
1. At What Stage Is Your Startup?
Before hiring an accountant, first examine exactly where your business stands.
If you are just getting started, maybe you are pre-revenue or you have only a couple of expenses - you may not require a full time accountant. Rather, you could use accounting software like QuickBooks, Wave or Xero and employ a tax preparer during tax season only. Most founders tackle the basics themselves early on.
But once you get going :
- Accepting customer payments often.
- Paying employees or contractors.
- Inventory tracking.
- Managing investor funds or loans.
- Preparing for tax season 2025 with multiple income and expense sources.
Then at this time, you may need to employ an accountant or at the very least hire one on part time.
Hiring an accountant too soon can feel as if it is an unneeded expense. But hiring one late might mean messy books, missed deductions or worse - IRS fines.
Pro Tip: If dealing with your finances seems overwhelming, you may want to employ an accountant.
2. Do They Understand Your Industry?
Not all accountants are the same. Some assist restaurants, others mainly doctors and some work on tech startups.
You need an accountant who:
- Knows your industry's typical expenses and revenue models.
- Knows your business kind (SaaS, services, e-commerce, etc.)
- Will enable you to make the most of industry specific tax deductions and strategies.
Say you run a software startup. In the U.S., new IRS regulations (Section 174) affect the way software development expenses must be managed. A general accountant might miss these specifics, but a startup-savvy accountant understands the rules and prepares you accordingly.
Employing an accountant that "gets" your business can save you a lot of explaining and may help you save money as well.
Questions to Ask:
- Did you work on startups like mine before?
- Know my business model or industry?
- What type of clients do you generally work with?
3. How Involved Do You Want To Be?
Some startup founders wish to get deeply involved in the financial side of things. Other people prefer to simply hand it off altogether. Consider just how much control or exposure you would like to keep before hiring an accountant. Do you want:
- A full time accountant in-house you can call anytime?
- A virtual accountant or company who checks in each month or quarterly?
- Somebody to handle taxes and reports behind the scenes?
And how do you like to communicate? Some accountants prefer talking through email while other people prefer video calls or even shared dashboards. Be sure that your communication styles match.
Watch out for: If you are hiring an accountant and you can not get regular updates or straight answers, they may be a bad fit, even if they are technically good.
Pro Tip: Set realistic expectations prior to hiring. Ask how frequently you will meet, exactly how reports are going to be shared and just how fast they reply to questions.
4. Will They Grow With You?
Employing an accountant is not about fixing your books for the time being; it is about planning for what happens next.
Startups grow fast. Today you may be a two person team but soon you may be raising your first round of funding or hiring your tenth employee. The right accountant should grow along with you and help you plan for what happens next.
A good accountant can:
- Help you build financial projections and budgets.
- Get prepared for investor meetings or application for a loan.
- Set up scalable systems as you grow.
- Guide you on decisions like when you should transform an LLC to a C Corp.
Consider your accountant as a partner who sees around corners. If you want to grow, hire an accountant who knows taxes. Hire somebody that will help you build a smarter, much more financially good business.
What to Look For:
- Experience with scaling businesses.
- Ability to offer financial advice beyond simply bookkeeping.
- Familiarity with investor reports and startup fundraising.
5. What Tools Do They Use (and Do They Fit Yours)?
These days accounting is much more than spreadsheets; it involves applications, integrations and dashboards.
Ask an accountant what tools he uses before employing him. Some accountants favor particular software platforms and many will demand you to change to your existing system.
If you are already using tools like:
- QuickBooks, Xero, or FreshBooks.
- Stripe, PayPal or Square.
- Gusto for Payroll.
- For expense management, Ramp or Expensify.
Ask them:
- Will they set up or optimize your accounting software program?
- Do they provide regular financial reports in an comprehensible format?
- Can you access your financial info whenever or do you need to hold out around for a report?
Employing a tech savvy accountant can make life a lot easier - particularly in case you are already handling a number of things.
Final Thoughts
Operating a startup requires more things to do than merely working on growth and development. An accountant can help with more efficient decision making and protection against costly errors. But selecting the best accountant is equally as critical as determining when you should bring one aboard.
So before you hire an accountant:
- Understand your business’ stage.
- Find someone with industry knowledge.
- Match their working style to yours.
- Choose somebody who can scale with you.
- Make sure they use tools which work well with your systems.
Whether you are hire an accountant for the first time or shifting to somebody who better fits your requirements, doing it thoughtfully will position your startup for long-term success.
