Startup Accounting Setup: What to Do First

By Jake McKenna, FounderPublished 2026-10-17Last reviewed 2026-10-19

Which startup accounting software should you choose?

We work with QuickBooks and Xero, so those are the two we can speak to. Both connect to bank accounts, and the vendors describe them as suited to small businesses; check their own pages. The better choice is usually the one that fits your situation, not the one with the longest feature list.

Questions to ask when choosing:

• Does your tax professional already use one? Compatibility saves time at year end.
• Will you invoice customers, pay staff or hold inventory? Check the plan covers it.
• Do you need other people to have access, such as a bookkeeper or investor?
• Will the software be used for years? Switching later costs effort.
• How much is the monthly fee, and what does the plan include? Check the vendor's own page; prices change.

There is no universal winner. See our QuickBooks and Xero service pages for what each involves.

What should you do first when setting up startup accounting?

1. Keep business money separate. Open a business bank account and, if you use one, a business card. Do not run business spending through a personal account; it also helps keep your records clean for your tax professional.
2. Choose the software and connect the business accounts.
3. Set a simple chart of accounts. The software's default list is a common starting point. Add accounts only when you need them.
4. Decide your accounting method with your tax professional. Our cash vs accrual accounting page explains the difference.
5. Set up how you invoice and get paid.
6. Record owner contributions and draws correctly, rather than as income or expenses. Terms depend on your entity type, so ask your tax professional.
7. Create a place for receipts and a monthly date for reconciling.
8. Decide who does the bookkeeping: you, a bookkeeper, or a mix.

What does a startup actually need from its accounting?

Not much at first, but it needs to be right. At the early stage that means:

• A true record of money in and money out.
• Reconciled bank and card accounts every month.
• Invoices sent and bills tracked, so you know what is owed.
• Basic reports: profit and loss, balance sheet, and cash position.
• Records your tax professional can use without chasing you.

What changes as you grow is the need for budgets, forecasts and someone who reviews the numbers. That is where bookkeeping, a fractional controller and a fractional CFO differ: record it, control it, drive it.

What mistakes do startups make with accounting?

• Using one personal account for everything, which makes books slow and expensive to fix.
• Letting transactions pile up "until things calm down". They may not, and a catch-up project follows.
• Mistaking cash for profit. See profit vs cash flow.
• Booking loans or owner money as income.
• Choosing software on price alone.
• Thinking software does the bookkeeping. It records; someone still has to review.

Should a startup do its own bookkeeping?

Early on, some founders do. It costs nothing but time, and it teaches you how money moves. The trade-off is time. Founder hours are scarce, and bookkeeping tends to slide when sales get busy.

If you outsource, our monthly bookkeeping is the relevant service. See bookkeeping for startups for how that works in practice.

How often should a startup review its books?

Weekly for the bank feed, monthly for reconciliation and reports. A weekly look is quick and catches duplicates and odd charges while you still remember them. The monthly pass is where you reconcile to statements and read the profit and loss. Skipping the monthly pass is how small gaps become large ones.

When is outsourcing not right for you yet?

If you have almost no transactions, a few invoices a month and a simple structure, paying for a service may be more than you need. Software plus a short monthly routine may do. Revisit when volume grows, when you hire, or when the numbers start feeding decisions.

What about tax and investors?

Accounting setup supports both, but we do not prepare tax returns, audit or give investment advice. We work alongside your CPA or tax professional. This is general information, not tax or investment advice.

What English Oak Financial charges

English Oak Financial starts bookkeeping from $500 a month, the fractional controller from $1,500 and the fractional CFO from $2,500. Pricing is custom to your business and charged as one fixed monthly fee that includes all the work required. See the pricing page.

Related pages

• Bookkeeping for Startups: What Outsourced Bookkeeping Covers