Accounting setup for startup

Determine the legal structure (LLC, Corporation, Sole Proprietorship, etc.)

Obtain an Employer Identification Number (EIN)

Choose an accounting method (cash or accrual)

Set up a chart of accounts tailored to the business needs

Here are some additional steps that could be included in the Accounting Method section of the New Accounting Setup for Startup Checklist

Evaluate the business's revenue recognition policies to determine the most appropriate accounting method

Consult with a financial advisor or accountant to understand the implications of each method on tax reporting and financial statements

Document the rationale for choosing the selected accounting method for future reference and audits

Implement internal controls to ensure consistent application of the chosen accounting method across all financial transactions

Review and update the accounting method periodically to ensure it remains suitable as the business grows and evolves

Train relevant staff on the chosen accounting method and its impact on financial reporting and cash flow management

Ensure that the accounting method aligns with any industry-specific regulations or standards that may apply to the business

Open a business bank account

Set up a merchant account for payment processing (if applicable)

Establish a business credit card

Select and purchase accounting software (QuickBooks, Xero, etc.)

Set up the software with company information and chart of accounts

Integrate the software with bank accounts and payment processors

Develop a system for organizing receipts and invoices

Create a schedule for regular bookkeeping tasks

Determine how to handle payroll (in-house or outsourced)

Establish expense policies and procedures

Define guidelines for invoicing and collections

Set up a system for budgeting and forecasting

Research local, state, and federal tax obligations

Set up a system for tracking sales tax (if applicable)

Schedule regular reviews of tax liabilities and deadlines

Define key performance indicators (KPIs) for financial health

Set up periodic financial reports (monthly, quarterly, annually)

Implement a process for financial analysis and adjustments

Understand compliance requirements specific to your industry

Develop a plan for internal audits and reviews

Keep documentation organized and easily accessible for audits

Consider hiring an accountant or financial advisor

Schedule regular meetings with financial professionals for guidance

Stay informed about changes in accounting regulations and standards