By Elena Lukinov, Senior Manager
Let’s face it – accounting functions might not be the top priority for startups (who are we kidding? They’re probably last!). However, the right accounting tech stack—a suite of interconnected finance and accounting tools—will give startups a better chance at effectively budgeting, raising capital, reporting to investors, and optimizing tax benefits.
At KBC, we’ve worked with startups of all stages and sizes. We are dedicated to finding and implementing the most effective automation and vendor tools for our clients. We understand that there’s a vast array of options available and have a team constantly researching and learning about emerging technologies.
Through our experience, we’ve found that the following tools deliver exceptional results for our clients.
Accounting Software
1) Quickbooks Online (QBO) – Simple accounting solution for startups
QBO is relatively inexpensive (compare plans) with an intuitive interface. It allows connection to bank feeds for quick transaction classification. Plus, its simple and convenient features make invoicing customers and collecting payments easy.
More importantly, QBO integrates with a multitude of various apps, including major payroll and vendor spend providers. Its Spreadsheet sync Excel add-on allows for multiple entity consolidation (when entities are in separate QBO accounts) and bulk transaction updates (available for Advanced subscription type).
QBO Pro Tips:
- Create a chart of accounts (or COA – a master list of accounts in your books) suitable for your industry—it’ll serve as the backbone of the whole accounting process. A solid COA can make month-over-month and budget-to-actual analysis very easy and meaningful
- Create rules to categorize cash and credit card transactions to ensure efficiency and consistency
- Utilize department structure (even the simplest ones like General & Administrative, Sales & Marketing, Research & Development) — your tax accountant will thank you later
QBO’s functionality is more than sufficient for a small to medium-sized company. However, as the complexity of the company increases, migrating to a more robust solution like NetSuite could be a viable option. While the cost to implement NetSuite is substantial, it allows for more automation and customization.
Spend Management
2) Ramp – Universal solution
Ramp is ideal for credit card management, expense reimbursements, and bill payment functionality. First and foremost, it offers a free, basic subscription that more than fits the needs of an early-stage startup. Plus, you’ll get a 1.5% cashback, which is always a nice bonus!
Ramp also seamlessly integrates with QBO, allows for a flexible spend approval process, automates transaction coding by using AI, and collects receipts.
More importantly, Ramp allows you to issue as many physical and virtual credit cards as needed. Users can integrate a Purchase order module, get access to a Travel portal, and manage budgets by event and department.
You can learn more about Ramp’s features by following us on social media.
Ramp Pro Tips:
- Issuing credit cards is super easy, but it does not mean you can give them out to employees like candy. Set up strict limits on how much money each manager can approve.
- When using the bill pay function, ask vendors for their IRS form W-9.
Another option widely popular with accountants is BILL. The company now offers two currently separate software solutions: 1) BILL AP and AR, and 2) BILL Spend & Expense. It’s pretty similar to Ramp in terms of features.
Payroll, Benefits, and HR System
3) Gusto – Run payroll like a pro
Beyond competitive pricing, Gusto is also known for easy onboarding for employees and quick setup for running payroll. Users can also select from a wide range of benefits/401k providers.
The learning curve isn’t steep either, since Gusto provides step-by-step instructions for every aspect of running payroll. Whether you want to make global contractor payments or monitor project time tracking (available to Complete and Concierge customers), Gusto has your back. The software also offers support for multiple pay schedules.
Gusto Pro Tip:
- Integrate with QBO by mapping payroll journal entries to sync automatically.
Gusto caters best to small-sized companies, so state registrations and future compliance are your responsibility, which could be time-consuming. If you don’t want to spend the time or resources for state registrations, Gusto uses CorpNet to register in states for a fee.
As your company grows and gears up to hire globally, a PEO (Professional Employer Organization), such as Rippling, Justworks or Trinet, could be a better fit.
4) Rippling PEO
Rippling allows you to hire employees in any state without the hassle of state registration/compliance. It offers seamless onboarding for both employees and contractors (with options to issue corporate cards, laptops, expense tracking, etc.). Rippling PEO also leverages economies of scale to help companies access robust, competitive benefits packages, including health insurance, life insurance, disability insurance, worksite benefits, retirement plans, commuter benefits, dependent care, and more.
Equity Management
5) Carta – the OG of cap table management
Carta is a popular choice amongst law firms, as well as a leading cap table management solution in the VC startup stage. Beyond its clean interface, it also offers 409a valuation (to determine the fair market value of a company’s common stock), ASC 718 (stock-based compensation), and 3921 (exercise of incentive stock options) reporting for an additional fee.
Additional features include board/compensation management, financial risk management, fund accounting, and investment management.
Conclusion
In today’s fast-paced startup environment, having a robust accounting tech stack is crucial for efficient financial management, accurate reporting, and scalable growth. By carefully selecting and seamlessly integrating the right tools, startups can streamline their accounting processes, minimize errors, and make data-driven decisions—all while staying cost-conscious. At KBC, we’re here to help you achieve that!