New Businesses: Don't Go Cheap on Accounting

17 May 2023 · 1 min

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In this advisory segment, founder‑focused speaker Feras Alhlou warns new business owners against cutting corners on accounting. He stresses that the first step should be hiring a bookkeeper to establish a proper chart of accounts—including revenue, expenses, assets, liabilities, and equity—because a correctly set‑up accounting system is foundational. As the company grows, he recommends transitioning to a qualified accountant or CPA, either in‑house or via a fractional accounting/finance firm, to handle expanding financial duties such as accounts payable, accounts receivable, revenue recognition, purchasing, and other specialized functions that founders often overlook.

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Accounting. So where do you start? The tendency with a lot of founders, in my experience, is to go cheap. If cash flow is really tight in the beginning, at the very least, contract with a bookkeeper to set up the main business categories or accounts the right way. I'm talking about revenue, expenses, assets, liabilities, and equity, i.e., what your friendly accountant would call your chart of accounts. An accounting system set up right is half the battle. My recommendation is, from day one, contract with a bookkeeper to do all of your bookkeeping. As you continue to grow, at some point you may need to hire an accountant or CPA, either part-time or full-time, or hire a fractional accounting and finance firm. The latter will provide you with a turnkey solution from experts without having to pay a full-time salary plus benefits for multiple financial resources. These professionals will manage your evolving needs from your accounts payable, paying vendors, and accounts receivables, collecting from customers, revenue recognition, purchasing, and a long list of accounting functions you did not know existed.