Engaging an accountant is a strategic move for any new business — but how to choose the right accountant for your startup?
There are many questions to consider when choosing the right accountant for your startup. What questions should a startup ask when engaging an accountant? How can startup founders determine that an accountant is the right fit for their business?
Startup founders that work in active startup networks often reach out to fellow startups in order to draw on community knowledge and access referrals to good Australian startup accountants. Most startups have similar accounting needs, so getting in touch with other startups is a great way to identify talented accountants that specialize in new and innovative business ventures.
Before engaging an accountant, however, it’s important that you develop a rapport and ensure that they are the best choice for a startup venture poised for rapid growth.
Choose an Accountant that Understands You
One of the most important factors to look for when choosing the right accountant for your startup is determining whether they “get” the way you operate your business. Has the accountant you’re considering worked with or founded a startup before? Does the accountant understand the rapid growth and activity patterns of a new startup?
A good way to assess whether an accountant understands you and your business is to find an accountant that is able to identify the key metrics that are most important to you right now. Profit and loss statements and balance sheets are important to the operation of any business, but rigid, traditional accounting practices are not often able to provide startup owners with the insight they need.
A great startup accountant will understand and use the key metrics that you implement in the operation of your startups. Terms such as Monthly Recurring Revenue, Life Time Value, Churn, Cash Runway, and Customer Acquisition Cost should be fundamental elements of any startup accountant’s working vocabulary.
Your Accountant Should Help You Achieve Your Vision
Generic accounting professionals are able to analyze historical financial data and assist with the management of basic business finances. Startups accountants that have previously worked with other new ventures, however, possess hands-on experience at the front lines of the startup ecosystem and are able to deliver practical guidance based on real-world experience.
When choosing the right accountant, check that they understand the need for new startups to build traction, and assist in the process of raising venture capital in order to execute growth strategies. Traditional accountants may find it difficult to work with concepts such as equity and valuation in these scenarios. It’s important to work with a startup accountant that understands the basic premises of startup maths.
When focused on raising startup capital, a startup needs an accountant that is able to navigate the complex environment of R&D Tax, grants, and the evolving Australian venture capital landscape. Startup accountants should provide detailed financial modeling and other tools that are critical to capital raising in order to maximize the chance of a successful raise.
Accountant Fee Structures: What to Consider
Bootstrapping a startup often means stretching capital as far as it can possibly go in order to maximize efficiency. Many traditional accountants won’t engage with new business ventures if they don’t see the value in a startup.
Startup accountants understand the narrow financial strategy that most startups operate with, and are able to provide startups with the guidance and answers they need to grow in the right direction. A growing startup needs to invest capital in product development, marketing, sales, and customer service. Until it’s time to engage a full-time CFO, working with a startup-savvy accountant can help a new business stretch available capital further.
Think About the Long Term — What to Ask Your Accountant
- When choosing the right accountant for your startup, consider asking the following questions to ensure you’re making the right choice:
- Does your accountant understand startups? Have they launched their own startup, or worked with other startups?
- Will your accountant grow with your company and deliver adjustable services as your business scales?
- Does your accountant offer a reasonable fee structure?
- Has your accountant helped other startups to navigate the startup ecosystem, and are they able to provide you with guidance based on real-world startup experience?
It’s best to ask a standardised set of questions to multiple service providers and assess the answers you receive in order to make an informed decision.
If you’re currently on the hunt for an experienced startup accountant, get in touch with the Fullstack team today to find out whether we’re the right fit for your business.