How to choose the right accountant for your startup
What do you look for when you choose an accountant for your startup? How do you know who to choose and why they are a good fit for you?
If you are part of an active and social startup community, like Startup Melbourne or Startup Adelaide, you can draw on your community for referrals to good accountants. Because your peer group has many of the same needs as you do, you will be able to learn the good, bad, and ugly stories about their accountants and how they work.
It’s important that you build an understanding about what makes an accountant good for a startup as opposed to just a new business. Not all that sparkles is gold, and not all accountants are good at working with young, high growth companies.
Do they get you?
One of the first things to look for in a startup accountant is whether or not they get it. Do they understand startup life? Have they worked in, or founded, a startup themselves? Do they get the highs and lows? Being involved in a startup is not the same thing as running a flower shop, or a tyre fitting business, or even a flourishing restaurant.
A good example is working out which metrics are important to you right now. That is the kind of knowledge that your average accountant just doesn’t have. Yes, it’s important to have an understanding of each line in your Profit & Loss or Balance Sheet. But will a traditional accountant’s metrics give you an immediate sense of how your startup is functioning? Probably not.
Does your accountant get the terminology and metrics you need to run your technology startup? Things like Monthly Recurring Revenue (MRR), Churn, Life Time Value (LTV), Customer Acquisition Costs (CAC) and (cash) runway?
If your accountant doesn’t get that, maybe they’re not the right person for you.
Are they on board with your vision, and actively help you to achieve it?
Sure, your average bookkeeper or accountant can look backwards, and help you with the basic finances. When you have a startup accountant who has been in the trenches, they can guide you practically from that experience. The “fail and learn” scars that come with startup life are invaluable.
The other bonus is that your accountant will understand the need to build traction and raise venture capital to support your growth.
Your normal accountant struggles with the concepts of equity and valuation. You want a startup accountant that not only gets this, but is experienced enough to share and teach “startup maths”.
When it comes time to raise money, you want someone that can help you navigate the R&D Tax, grant and venture capital landscape in Australia. Make sure that your accountant can give you the financial modeling and other capital-raising support services that will maximise your chances of success.
Think about their fee structure
Most accountants don’t want to know you until you’re paying them enough to “make it worth their while”. Startup accountants get the cash crunch and penny pinching you have to do to stretch every dollar as far as it will go.
When you’re first starting out you’ve got a bunch of questions you need answered. You just need a little help pointing you in the right direction. As you grow you’ll want to spend more time on product development, sales and customer services. You may need more financial support, and eventually an startup-savvy part-time virtual CFO until you’re ready for one of your own.
Think about whether your accountant will be with you for every stage of the journey
In a nutshell, here are the questions that we recommend you try to answer when you start looking for a startup accountant:
- Do they really get startups? Have they travelled the startup journey themselves and do they make a point of focusing on startups specifically?
- Will they grow with your company providing just what’s needed at the different stages, at a reasonable expense?
- What services do they offer? And are the fees fair and transparent?
- Do the know the ins and outs of startup funding, and can they educate you and support you to access it?
Ask a range of service providers these questions and see what kinds of responses you get in return.
This way, you will go into a relationship with an accountant with your eyes open. It’s not the kind of decision you want to make without being properly informed.
If you’d like help with your startup finances, talk to our team to find out if we are the right accountants for you.