Question 1

QuickBooks or Xero for my startup?

Accepted Answer

QuickBooks is more popular in the US with extensive accountant support. Xero has a more modern interface and is popular internationally. Both work well—ask your accountant for their preference as they'll work in the system too.

Question 2

Do I need an accountant or can I do it myself?

Accepted Answer

You can handle basic bookkeeping yourself using software, but hire an accountant or bookkeeper for tax preparation, complex transactions, and financial strategy. A good accountant saves more than they cost through tax optimization.

Question 3

When should I start tracking finances?

Accepted Answer

Day one. Every expense and revenue from the start. It is much harder to reconstruct records later, and you may miss deductions. Set up your accounting software before making your first business purchase.

Question 4

Should I use cash or accrual accounting?

Accepted Answer

Most startups begin with cash accounting (simpler—record when money moves). As you grow or take investor money, you may need to switch to accrual (record when transactions occur). Discuss with your accountant based on your situation.

Question 5

How do I separate personal and business finances?

Accepted Answer

Open a business bank account and business credit card. Never mix personal and business expenses. This separation is essential for legal protection, tax compliance, and eventually raising investment.

Question 6

What expenses can I deduct?

Accepted Answer

Common startup deductions include software subscriptions, equipment, home office, travel, marketing, professional services, and employee costs. Keep receipts for everything. When in doubt, ask your accountant—missing deductions costs real money.

Question 7

How often should I reconcile accounts?

Accepted Answer

Monthly at minimum. Weekly is better for catching errors quickly. Reconciliation ensures your books match your bank statements. Most accounting software makes this straightforward with bank feeds.

Question 8

What financial reports should I review regularly?

Accepted Answer

Monthly: Profit & Loss (are you making money?), Cash Flow (can you pay bills?), Balance Sheet (what do you own and owe?). Know your burn rate and runway—months of cash remaining.

Question 9

How do I handle invoicing clients?

Accepted Answer

Use your accounting software's invoicing feature for automatic tracking. Send invoices immediately upon delivery, set clear payment terms (Net 15 or 30), and follow up on overdue payments systematically.

Question 10

What is the best way to track receipts?

Accepted Answer

Use receipt scanning apps (built into QuickBooks/Xero or dedicated apps like Expensify). Photograph receipts immediately and attach to transactions. Paper receipts fade—digital backup is essential.

Question 11

How do I handle contractor payments and 1099s?

Accepted Answer

Collect W-9 forms from US contractors before paying. Track payments by contractor throughout the year. Issue 1099-NEC forms for contractors paid $600+ by January 31. Your accounting software can generate these.

Question 12

Should I pay myself a salary?

Accepted Answer

Depends on your business structure. S-corps require "reasonable salary." LLCs and sole proprietors take owner draws. Consult your accountant for tax-efficient compensation strategy based on your specific situation.

Question 13

How do I prepare for tax season?

Accepted Answer

Keep books updated throughout the year. Reconcile all accounts by year-end. Gather documents (1099s, receipts, bank statements). Work with your accountant starting in January to avoid deadline stress.

Question 14

What is burn rate and why does it matter?

Accepted Answer

Burn rate is how much money you spend monthly. Runway is how many months until you run out. If burn is $50K/month with $300K in the bank, runway is 6 months. Always know these numbers and plan fundraising before runway gets short.

Question 15

How do I set up my chart of accounts?

Accepted Answer

Start with standard templates provided by your accounting software. Customize categories to match your business. Keep it simple—too many categories creates confusion. You can always add specificity later.

I need to manage accounting and finances

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