Bookkeeping for Startups: What to Set Up in Year One

Most startups do not fail because of bookkeeping, but plenty of them lose weeks to it: a due diligence request they cannot answer, contractor forms nobody collected, or a year of transactions dumped on an accountant in February. A few decisions in year one prevent almost all of it.

Cash or accrual?

Cash basis records money when it moves. Accrual records revenue when it is earned and expenses when they are incurred. Cash is simpler for a founder doing it alone, but investors and auditors usually expect accrual statements, so many startups switch before they raise. If you plan to raise, set the books up so the switch is easy: track invoices, bills and prepaid annual contracts from the start. Your CPA should make the final call.

The year-one setup

• A separate business bank account and card. Mixed personal and company spending is slow and costly to untangle later.
• A chart of accounts that fits a startup. Split cost of revenue from operating costs, and keep research and development costs (engineering payroll, contractors, cloud) in their own accounts.
• A monthly close. Reconcile every bank and card account each month, not once a year.
• A W-9 from every contractor before the first payment. Chasing them in January is slow.
• Receipts attached to transactions in your accounting software, not saved in an inbox.

Deadlines that depend on clean books

• Contractor forms. The reporting threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000 for payments made after December 31, 2025. Royalties are still generally reportable from $10 (NATP).
• Delaware franchise tax. Delaware corporations file an annual report and pay franchise tax by March 1. The minimum is $175 under the authorized shares method or $400 under the assumed par value capital method, and a late annual report costs $200 plus 1.5% monthly interest on unpaid tax (Delaware Division of Revenue). The authorized shares method can produce a very large bill for a startup with millions of authorized shares, so check both methods.
• The research credit payroll offset. A qualified small business, with under $5 million in gross receipts and no gross receipts before the five-year period ending with the current year, can apply up to $500,000 a year of research credit against payroll taxes (Journal of Accountancy). Your CPA claims it, but only clean, separated R&D costs make the claim easy to support.

The numbers a founder should see every month

• Cash in the bank
• Monthly burn (net cash out)
• Runway in months
• Revenue, and for SaaS, recurring revenue
• Bills due in the next 30 days

What it costs to outsource

Offshore bookkeeping runs about $10 to $25 an hour, while US firms charge roughly $200 to $5,000 a month depending on volume and who does the work. See the sourced price comparison.

Opteamus bookkeeping starts at $15 an hour with no setup fee. The team works US business hours, inside your own accounting software, with review by a Director of Accounting and Finance with chartered accountant (CA) level expertise. We do not prepare tax returns; your CPA files, and we make sure the books behind the return are closed and reconciled. Behind already? Catch-up bookkeeping gets the backlog closed first. See our outsourced bookkeeping services.

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