Outsourced Accounting for Startups: When It Makes Sense
Your seed round closed three months ago. Your books are a mess. Your investor just asked for monthly financials, and you’re not entirely sure what GAAP compliance means. This is the moment most founders realize they need help—and hiring a full-time accountant doesn’t make sense yet.
Outsourced accounting has become the default for venture-backed startups. It gives you investor-ready books, professional financial management, and the flexibility to scale without building an internal team too early. But not all outsourced accounting is built for startups—and getting this wrong creates expensive cleanup later.
This guide explains why startups outsource accounting, what startup-specific services look like, when outsourcing makes sense vs. hiring in-house, and how to find the right provider.
Why Startups Outsource Accounting
Startups outsource accounting because they need professional financial management without the overhead of full-time hires. The math is straightforward: a competent in-house accountant costs $60,000-$90,000 in salary plus benefits, taxes, software, and management time. Outsourced accounting runs $1,500-$5,000 per month—and you get a team, not a single point of failure.
But cost isn’t the only reason. Startups outsource because:
Investors expect it. VCs assume your books are clean and GAAP-compliant. Messy financials are a due diligence red flag. Outsourced providers who specialize in startups deliver investor-ready books from day one.
You don’t have time. Founders should build product and close customers, not reconcile bank accounts. Every hour spent on bookkeeping is an hour not spent on growth.
Complexity scales faster than you expect. Equity grants, 409A valuations, revenue recognition, multi-state payroll—startup accounting gets complicated quickly. A solo bookkeeper or DIY approach breaks down.
You need flexibility. Startups are spiky. Some months are quiet; others involve fundraising, acquisitions, or rapid hiring. Outsourced teams scale with you without the commitment of full-time headcount.
You get expertise you couldn’t afford to hire. Outsourced teams include controllers, accountants, and often fractional CFO support. You’re buying access to a bench, not a single generalist.
What Outsourced Accounting Includes for Startups
Startup-focused outsourced accounting goes beyond basic bookkeeping. Here’s what a comprehensive engagement typically includes:
Core Accounting Services
- Bookkeeping and transaction coding. Recording all financial transactions, categorizing expenses, reconciling accounts. The foundation everything else builds on.
- Accounts payable and receivable. Processing vendor payments, tracking customer invoices, managing cash timing. Some providers handle bill pay directly; others prepare everything for your approval.
- Bank and credit card reconciliation. Monthly reconciliation of all accounts to ensure books match reality. Catches errors and fraud early.
- Monthly close process. Producing complete financial statements (P&L, balance sheet, cash flow) on a reliable schedule—typically within 15-20 days of month-end for startups.
Startup-Specific Services
- GAAP-compliant financials. Accrual-based accounting that meets investor and audit standards. Critical for fundraising and eventual exit. Many startups start cash-basis and have to do expensive conversions later—don’t make this mistake.
- Investor reporting packages. Monthly or quarterly reports formatted for your board and investors. KPIs, variance analysis, runway calculations—the metrics VCs actually want to see.
- Equity and stock option accounting. Tracking grants, exercises, and cancellations. Preparing schedules for 409A valuations. Ensuring cap table accuracy.
- 409A valuation coordination. You need a 409A every time you issue options at a new strike price (typically annually or after funding). Outsourced teams coordinate with valuation firms and provide the financial data they need.
- Revenue recognition guidance. SaaS, marketplace, and service businesses have complex revenue recognition rules (ASC 606). Getting this wrong creates restatement risk. Good providers set up proper recognition from the start.
- Sales tax compliance. Multi-state nexus, SaaS taxability, registration requirements—this gets complicated fast. Many outsourced providers include or add sales tax compliance.
- Payroll integration. Most startups use payroll providers like Gusto or Rippling. Outsourced accountants ensure payroll flows correctly into your books and handle payroll tax reconciliation.
What’s typically NOT included (but can be added):
- Fractional CFO services (strategic planning, fundraising support)
- Tax preparation and filing
- Audit support (may be separate engagement)
- Bill pay execution (some include, some don’t)
When to Outsource vs. Hire In-House
The decision depends on your stage, complexity, and how you want to allocate resources.
| Stage | Revenue | Best Approach | Why |
|---|---|---|---|
| Pre-seed | <$500K | DIY or light outsourcing | Keep costs minimal; books are simple |
| Seed | $500K-$2M raised | Outsource | Need investor-ready books; too early for hire |
| Series A | $2-10M raised | Outsource | Complexity growing; still not worth FT hire |
| Series B | $10-30M raised | Outsource + consider hire | May add internal accountant alongside outsourced team |
| Series C+ | $30M+ raised | Hybrid or in-house | Volume may justify internal team; keep outsourced for overflow/expertise |
Outsource when:
- You’re pre-Series B and don’t need full-time accounting staff
- Your books are relatively straightforward (no manufacturing, inventory, or complex revenue models)
- You want professional-grade financials without management overhead
- You’re raising soon and need investor-ready books
- You’d rather spend $3,000/month than manage an employee
Consider in-house when:
- You have enough transaction volume to keep someone busy full-time
- You need someone physically present (rare for most startups)
- You have unusual complexity requiring deep institutional knowledge
- You’re at a scale where a controller or VP Finance makes sense anyway
The hybrid model: Many Series B+ startups keep outsourced accounting while adding an internal finance hire. The internal person handles day-to-day questions, vendor relationships, and strategic work, while the outsourced team handles transaction processing and closes. This gives you leverage without building a full team.
What to Look for in a Startup Accounting Provider
Not all outsourced accounting firms understand startups. Here’s how to evaluate:
1. Startup experience and VC fluency.
How many venture-backed startups have they worked with? Do they understand equity accounting, 409A coordination, and investor reporting? Can they tell you what Series A investors expect to see?
Red flag: They primarily serve SMBs, restaurants, or professional services firms.
2. GAAP expertise from day one.
Do they set up accrual-based, GAAP-compliant books from the start? Or do they default to cash-basis and “convert later”? The right answer is GAAP from the beginning—it’s cheaper than conversion.
3. Technology stack.
What accounting software do they use? (QuickBooks Online, Xero, and NetSuite are standard for startups.) Do they integrate with your payroll, banking, and expense tools? Are they comfortable with the automation you want?
4. Reporting quality and timeliness.
How quickly do they close the books? (15-20 days is good for startups; 30+ is too slow.) What do their reporting packages look like? Ask for samples.
5. Communication and responsiveness.
Who’s your point of contact? How quickly do they respond to questions? Do they communicate via Slack or email? Startups need partners who move at startup speed.
6. Scalability.
Can they grow with you? What happens when you raise and complexity increases? Do they offer CFO services or have partnerships for when you need strategic support?
Questions to ask:
- How many venture-backed startups do you currently serve?
- What stage companies are you best suited for?
- What’s your standard close timeline?
- How do you handle 409A coordination and equity accounting?
- Can you share sample investor reporting packages?
- What’s your pricing model and what’s included?
How Much Does Outsourced Startup Accounting Cost?
Outsourced accounting for startups typically costs $1,500-$5,000 per month depending on transaction volume, complexity, and services included.
| Stage | Transaction Volume | Typical Monthly Cost |
|---|---|---|
| Pre-seed/Seed | Low (<100 transactions/mo) | $1,000-$2,000 |
| Seed/Series A | Medium (100-300 transactions/mo) | $2,000-$3,500 |
| Series A/B | Higher (300-500+ transactions/mo) | $3,500-$5,000 |
| Complex (inventory, multi-entity) | Varies | $5,000-$8,000+ |
Pricing models vary:
- Fixed monthly fee: Most common. Predictable cost based on expected volume and services.
- Transaction-based: Price scales with volume. Good if you’re highly variable.
- Tiered packages: Bronze/Silver/Gold with different service levels.
What affects pricing:
- Transaction volume (more transactions = more work)
- Number of bank accounts and credit cards
- Payroll complexity (states, contractor mix)
- Revenue model (SaaS vs. marketplace vs. services)
- Reporting requirements (basic vs. investor-grade)
- Add-on services (sales tax, bill pay, CFO support)
Cost comparison:
- In-house accountant: $60,000-$90,000/year + 25-30% burden = $75,000-$117,000 total
- Outsourced at $3,000/month: $36,000/year
- Savings: $40,000-$80,000/year, plus you get a team instead of one person
How to Get Started
1. Get your current books in order (or be honest about the mess).
If your books are clean, onboarding is straightforward. If they’re a disaster, say so—most providers offer cleanup services, but they need to scope it accurately.
2. Define what you need.
Basic bookkeeping? Full monthly close with investor reporting? 409A coordination? Sales tax compliance? Know your must-haves vs. nice-to-haves.
3. Evaluate 3-4 providers.
Look for startup specialists. Ask about their client mix, close timelines, and pricing. Request sample reports.
4. Start before you need it.
The worst time to find an accountant is two weeks before your investor meeting. Engage 2-3 months before you need polished financials—especially if cleanup is required.
5. Plan for onboarding.
Expect 4-8 weeks to fully onboard, depending on cleanup needs. You’ll need to grant system access, provide historical documents, and answer questions about your business.
The right outsourced accounting partner becomes invisible—your books are clean, your reports arrive on time, and you never think about accounting except when making decisions. That’s the goal.
Need startup-ready accounting that scales with your growth? Talk to Exact Partners—we help venture-backed companies get investor-ready books without the overhead.
