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Average Cost of Bookkeeping Services for a Small Business

Keeping your business finances in order is crucial to your success. But if you’re a small business owner, you likely have a long to-do list, and managing your books probably isn’t at the top. The benefits of hiring a bookkeeper include freeing time to focus on running your business. But what about the cost? This article will help you understand the average price of bookkeeping services for small businesses, so you can determine whether hiring a bookkeeper fits your budget.

If you’re a small business owner looking to improve your financial processes, Haven can help. We offer accounting services for small businesses to help you get your financials in order, so you can focus on achieving your business goals.

Average Cost of Bookkeeping Services for a Small Business

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The cost of bookkeeping services varies significantly depending on your needs. Basic bookkeeping services focus on compliance and organization, helping early-stage businesses stay on top of their finances and avoid penalties. These services include:

Recording transactions
Paying bills
Processing payroll and more

Understanding the Comprehensive Value of Full-Service Accounting

Full-service accounting goes beyond these basics to provide financial reporting, cash flow analysis, strategic decision-making support, and other advanced services that clarify your business’s economic health. As you might expect, full-service accounting will cost more than basic bookkeeping.

In-House Bookkeepers: A Consistent But Costly Solution

Hiring an in-house bookkeeper may be the way to go if you want someone dedicated to your business’s finances. This option provides real-time access to financial information and ensures you have help when issues arise.

According to the U.S. Bureau of Labor Statistics, the average salary for a full-time bookkeeper is around $47,440 per year, or about $3,950 per month. Remember, this doesn’t include the cost of:

Employee benefits
Payroll taxes
Equipment
Office space

Outsourced Bookkeeping: Flexible and Affordable

Outsourcing your bookkeeping to a third-party firm is one of the most popular options for small businesses, especially those looking to balance quality with cost. On average, outsourced bookkeeping services range from $300 to $2,000 per month, depending on the size of your business, the number of monthly transactions, and the services you need.

The appeal of outsourcing lies in flexibility and expertise. You’re essentially gaining access to a team of professionals without the overhead of hiring full-time staff.

Freelance Bookkeepers

Freelance bookkeepers offer another flexible and often affordable option. Their rates vary, but the U.S. Bureau of Labor Statistics lists the average hourly rate for bookkeepers at around $22.81 per hour. Freelancers often set their rates, so depending on experience and location, you could pay anywhere from $20 to $75 per hour.

Hiring a freelancer can be smart if you don’t need full-time help but still want someone skilled to manage your books on a part-time or project basis. The bottom line is that how much bookkeeping will cost your business depends on your:

Needs
Preferences
Growth plans

Whether managing the basics or stepping into more complex financial planning, understanding these options and what you’re getting for the price can help you choose the right path forward.

Factors That Influence Bookkeeping Costs for Small Businesses

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The cost of bookkeeping services varies depending on your business's size, the level of service you require, and the bookkeeper's experience. Let’s look at these factors in more detail so you know what to expect when budgeting for bookkeeping:

Business Size

Naturally, a larger business will have more bookkeeping needs and transactions to manage than a small business. This will increase the cost of bookkeeping services. For example, a sole proprietor with a few monthly transactions will pay less for bookkeeping than a company with:

Multiple employees
Accounts
Locations

Service Level

Some small businesses only need basic bookkeeping, such as expense entry and bank reconciliations, while others require more complex services like:

Payroll
Cash flow management
Financial reporting

The more services you need, the higher your bookkeeping costs will be.

Bookkeeper Experience

Like any other profession, more experienced bookkeepers charge higher rates than those just starting. Nevertheless, a professional bookkeeper can handle more complex tasks and provide valuable insights and advice to help you manage your business’s finances. If you’re looking for affordable bookkeeping, consider a less experienced bookkeeper or a small team specializing in serving businesses your size.

Full-Service Financial Management

Let your business take flight while Haven manages your financial runway. Built by founders for founders, we handle everything from daily bookkeeping to complex tax filings, R&D credits that put cash back in your pocket, and fractional CFO services.

Startup-Focused Expertise & Support

Join 400+ startups who've saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline, all while accessing 24/7 Slack support from CPAs who understand the unique challenges of growing businesses.

Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.

How To Choose the Right Bookkeeping Solution

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Know What You Need First

When deciding on a bookkeeping solution, the first step is to know what your business needs:

Do you require basic bookkeeping services?
Are you looking for more comprehensive assistance that includes payroll and tax services?

Not all bookkeepers are licensed to provide all types of accounting services. So, knowing what you need ahead of time will help you narrow down your options.

Look for Experience in Your Industry

Once you know what you need, look for someone with experience in your industry and businesses of your size. Bookkeeping for a small retail operation will differ significantly from that for a nonprofit or a construction company.

Finding someone with experience in your industry will help ensure they can hit the ground running and won’t need much time to learn your business’s financials.

Find a Bookkeeper Who Uses the Same Accounting Software as You

When choosing the right bookkeeping solution, you’ll also want to consider the type of accounting software the bookkeeper uses. If you already use accounting software in your business, look for someone proficient in that program.

This will make it easier to transition your financials to an outside bookkeeping service and help ensure there won’t be a steep learning curve for either party as they take over your books.

Make Sure You Can Work Well Together

Since you will be sharing sensitive financial information about your business with your bookkeeper, finding someone you can trust and who will communicate well with you is essential. When interviewing potential candidates, look for someone personable, professional, and who you feel comfortable talking with.

Consider Your Budget

You’ll want to consider your budget and how much you can afford to pay for bookkeeping services. The average cost of bookkeeping services for small businesses can vary widely depending on the complexity of your financials and the experience level of the bookkeeper.

Some bookkeepers charge a flat monthly fee, while others bill by the hour. Depending on your needs, one pricing structure may be more beneficial.

4 Tips To Reduce Bookkeeping Costs Without Sacrificing Quality

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1. Outsource Strategically

Outsourcing your bookkeeping can lead to significant savings. According to recent studies, 70% of businesses outsource to save money. Another 40% seek scalability and flexibility. When you outsource, you eliminate costs related to:

Employee benefits
Office space
Training

Strategic Partner Selection

To get the most out of outsourcing, choose a partner with experience in your industry. Local firms can offer personalized service and understand regional tax laws. An offshore option might be more cost-effective if you only need basic tasks.

2. Use Technology

Cloud-based accounting software can help you reduce bookkeeping costs. These tools automate many routine tasks to reduce the time spent on manual data entry and reconciliation. This time savings translates directly into cost savings. Invest in software that integrates with your other business tools.

For example, connecting your point-of-sale system directly to your accounting software can eliminate the need for manual sales data entry.

3. Review Your Finances Regularly

Set aside time each month to review your financial statements, accounts receivable, and accounts payable. This can help you spot billing errors, identify late-paying customers, and find opportunities to negotiate better terms with suppliers. Regular reviews often lead to immediate cost recovery and improved financial health.

4. Bundle Services

Many accounting firms offer package deals that combine bookkeeping with tax preparation and other financial services. These bundles often come at a discount compared to purchasing services separately. For example, bundling bookkeeping with tax preparation can save you 15-20% on the total cost of these services.

The Power of Integrated Services

Having the same team handle your day-to-day finances and tax filings ensures consistency and can lead to better year-round tax planning. When considering bundled services, assess your business needs carefully. While comprehensive packages offer value, you don’t want to pay for services you won’t use. Some firms provide customizable bundles, allowing you to select only the needed services.

Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)

haven- Average Cost of Bookkeeping Services for Small Business

Haven elevates your financial management so you can focus on your business. Your business can take flight while Haven manages your financial runway. Built by founders for founders, Haven handles everything from daily bookkeeping to complex tax filings and R&D credits that put cash back in your pocket, as well as fractional CFO services.

Startup Success, Simplified

Join 400+ startups who’ve saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline, all while accessing 24/7 Slack support from CPAs who understand the unique challenges of growing businesses.

Book a call today and discover how our dedicated team can help you focus on building rather than bookkeeping.

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15 Common Bookkeeping Mistakes We See Businesses Make

Imagine you've just closed a big sale. You're excited about the business growth, but what if you didn't record the transaction correctly? This bookkeeping error could cause problems down the road. Common bookkeeping mistakes like this can disrupt your operations and even lead to costly penalties. That’s why understanding the benefits of hiring a bookkeeper is crucial—it ensures your financial records are accurate, up-to-date, and compliant, allowing you to focus on growing your business with confidence. Learning about these errors and how to avoid them can help you keep your business on track.

This article will explore some of the most frequent bookkeeping mistakes and how to fix them. If you’re worried about your accounting processes, Haven can help. We offer accounting services for small businesses to help you manage your financials.

15 Common Bookkeeping Mistakes We See Businesses Make

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1. Hiring the Right Finance Professional Can Make All the Difference

Even seasoned accountants and bookkeepers can slip up now and then. But they’re trained for this. You probably aren’t. Even if you are, is it worth the extra time to manage your business’s books alone?

Bringing a pro on board minimizes the potential for errors in areas such as tracking expenses, paying vendors promptly, balancing bank accounts, and running payroll.

Are you confident you’re handling employees’ tax withholdings properly?
Are you tracking all financial transactions, regardless of size?

A few mistakes in these areas can cost you more than you save by not hiring help.

2. Accurate Cost Tracking Keeps You in Control

When you don’t keep accurate records, your accounting and bookkeeping become less effective. When that happens, you leave your business vulnerable to losing money and being late on crucial bills. This situation sets you up for major headaches come tax season and more problems that can hinder a growing business. It’s not just errors you make while entering transaction data into a spreadsheet or failing to note that you paid a bill.

The Importance of Accurate Financial Tracking

Inaccurate financial tracking ultimately costs your business money and undermines your ability to plan for the next month or beyond. It’s essential for your accounting system, whether it’s just you and a spreadsheet or a bookkeeper, to track every transaction to gauge your business’s financial health accurately.

While having a financial professional handle your books is valuable, an integrated accounting system can help you or your bookkeeper do their job better. Accounting software tracks all of your financial transactions. It records when you pay bills, deposit or withdraw money, or send an invoice.

3. Separate Personal and Business Finances

Small business owners often blur the line between personal and business finances. It’s understandable, especially when a company is just beginning to find its footing. You go to Costco or Walmart to pick up office supplies and get a few items for your home because you're already there. But it goes beyond combining business and personal items on a single receipt.

Many small business owners don’t have a separate business bank account. Using one account for personal and business purposes can cause the following problems:

Difficulty sorting personal and business transactions
Significant issues when filing taxes
Missed tax deductions
Problems when you apply for a business loan or a line of credit

If you’ve been using your business and personal bank accounts interchangeably, break that habit. Open a separate business bank account. You’ll likely get some incentives to do so from the bank where you have your account. If you’re shopping and in a bind, always separate business and personal purchases so you can set aside business receipts.

4. Manage Billing Efficiently to Avoid Cash Flow Problems

Cash flow is essential to keeping a business operating from one day to the next. Billing or invoicing customers efficiently ensures you have money for expenses, payroll, and other needs. Businesses that don’t manage their accounting well can suffer from cash flow problems. Invoicing can be delayed, and customers may take longer to pay, leaving the business struggling to cover its bills.

Being late on your bills isn’t the only ramification of inefficient bill management. According to Statista, 91 percent of failed startups cited running out of money or a lack of financing as the reason they went out of business. Because the stakes are so high, improve your billing management by invoicing customers immediately after you’ve fulfilled your end of the transaction. Accounting and invoicing software can help you create a more seamless process for collecting unpaid invoices.

5. Plan for Tax Season All Year Long

Do-it-yourself tax software can be an attractive solution for small businesses looking to save money on an accountant. But while doing your taxes may be OK for individuals with a simple tax return, it’s not a good idea for small business owners.

Business and payroll tax issues can be complex, and incorrect filings can be costly. To minimize tax errors and oversights, ensure your business uses an accounting system that seamlessly tracks company expenses, payroll, and other fundamental components of its profit and loss statement.

6. Classify Employees Correctly to Avoid Tax Penalties

Most small businesses rely on employees or hire freelancers to conduct essential work. Classifying these individuals correctly is crucial because you could face lawsuits and tax penalties if you do it wrong. Federal and state governments miss out on payroll taxes if a small business owner misclassifies an employee.

According to the U.S. Department of Labor, the penalties for this mistake could be substantial:

Business owners may be responsible for payroll
Social Security
Unemployment and Medicare taxes for misclassified employees

The business can also be penalized and sued if employees aren’t reimbursed and provided benefits under the Fair Labor Standards Act.

Employee vs. Contractor Classification

To avoid misclassifying employees, you must determine if they are employees or contractors based on their jobs, pay, and relationship with your company. If the individual works eight hours a day, five days a week, is paid a salary, and receives health benefits, they are a full-time employee.

If the person works and gets paid per project and isn’t provided any benefits, they should probably be classified as a contractor. Once you’ve made that determination, ensure the worker completes the correct payroll form for their classification. A contractor completes a W-9 form, while a full-time employee fills out a W-4 form.

7. Keep Backup Copies of Paperless Records

A tax audit is the last thing a small business owner wants to experience. But if you must, the more paperwork you have, the better. In this digital age where everything lives in the cloud or on an app, it’s understandable that people don’t save their paperwork for a few weeks, let alone seven years. However, the IRS will want specific records during an audit.

A good rule of thumb is to save the following documents for at least seven years:

Business tax returns
Payroll tax records
Current employee information
Business ownership records
Accountant records
Records from operations

8. Stay on Top of Payroll

Payroll is one of the most significant parts of any business owner’s responsibility. Inability to pay employees correctly, on time, or with the proper deductions can lead to penalties, back payments, and damage to employee morale. A mistake in payroll filings may draw the focus of tax authorities, leading to an audit. Establish a payroll system that automatically calculates taxes and deductions.

Do keep up with deadlines and pay employees according to the current tax law. Suppose your small business payroll is becoming a burden. In that case, you should explore the possibility of outsourcing payroll or hiring an accountant to manage this part of your business. An accountant can also help you comply with tax laws and employee benefits regulations.

9. Track Outstanding Checks Regularly

Another reason business owners should regularly reconcile bank accounts is to track outstanding checks. Having exceptional checks on the books for weeks or months can give the impression that the account has an artificially inflated balance.

Business owners who spend based on cash in the bank run the risk of overspending, which can result in overdrawn bank accounts and bounced checks.

10. Monitor Accounts Receivable and Payable Closely

It can be challenging for small business owners to keep track of their AR and AP, but it’s an essential task, particularly as the business grows and the tracking becomes more complex. Cloud-based accounting software can help you track AR and AP and enable an approval process for invoices submitted by vendors.

You must also monitor past-due client invoices and ensure other business functions are aware when a customer stops paying bills. The right software can easily resolve these communication issues.

11. Avoid Commingling Business and Personal Expenses

One of the most common and potentially costly errors business owners make is commingling business and personal expenses. Doing so may not seem like a big deal, particularly if the owner isn’t drawing a salary.

However, in the event of a lawsuit, mixing your personal and business funds can void the liability protection of your business formation. To keep your funds separate, there are two key steps business owners should take.

Open a separate bank account for the business. Ensure it’s a business checking account and includes the business name.
If you pay for a personal expense from your business account, ensure your bookkeeping accurately reflects the transaction. You can reimburse your business or record the price as an owner’s draw.

12. Record Transfers Correctly

Business owners sometimes transfer funds into the business account, and the accounting software will automatically code those funds as income. These funds should be coded as an owner’s investment, and you may need to make that change manually on the books.

Failing to do so will overstate your revenue.

13. LLC Owners Shouldn’t Be on Payroll

Owners of LLCs, sole proprietorships, and partnerships often make the mistake of adding themselves to the payroll. However, in the case of an LLC, owners are not permitted to be W-2 employees. Instead, they should be paid via an owner draw or distributive share.

Corporations can pay the owners on the payroll as regular W-2 employees. If you own an LLC and need to be on the payroll, you can solve this problem by making a one-time change to your business formation.

14. Communicate With Your Finance Team Often

Whether one person keeps the books or a team handles the accounting, business owners must communicate clearly and regularly with everyone involved in finance. Communication is fundamental to adequate bookkeeping because it keeps everyone on the same page.

If you’re shifting from doing the books to working with a bookkeeper, realize that these functions must work like a machine to keep the business healthy.

15. Negotiate Vendor Terms

Many small-business owners purchase items for their businesses from the same vendor month after month. If this is your practice, contacting your vendor and building a personal relationship with them is a great idea.

Even if your purchases are relatively small, you can still call and ask questions. If you get to know your vendor personally, you can negotiate reduced pricing or longer payment terms, which could increase your business's cash flow.

Why Bookkeeping Matters More Than You Think

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1. It Gives You A Clear Picture Of Where You Are Going

You may be able to see your bottom line by glancing at your bank balance, but the ups and downs in your account are also telling a story.

Are you in profit?
Are sales up?
Are your expenses too high?
Shall we take a guess?

Paying attention to your financial reports is a great way to get to know the story of your business.

2. Claim The Right Deductions For Your Expenses

Owning and operating a business comes with some perks. You can write off travel expenses, phone, utility, and internet bills. But taking advantage of these benefits is impossible if you've been keeping your personal and business expenses together.

3. It Helps You Catch Errors

You will be buried in paperwork if you wait until the year-end to reconcile your financial transactions. You won’t know if the bank made a mistake until you’re buried in it!

Equally, you'll never know if any errors were made in recording your financial transactions until it's too late. This can prove costly in both time and be more challenging to reconcile months later than if you’d caught errors immediately.

4. It Makes Financing Your Business a Lot Easier

Are you considering your next funding round, or applying for a loan or line of credit? If your books are not up to date, it's a lot harder to secure. Having well-kept books gives lenders or investors a clear idea of your business’s financial state.

It allows them to make financial projections about your company’s ability to pay off your loan in the future. Professional Bookkeeping can give you what you need to take that next step in growing your business.

Haven: Financial Management for Startups

Join 400+ startups who've saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline - all while accessing 24/7 Slack support from CPAs who understand the unique challenges of growing businesses.

Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.

When to Bring in a Bookkeeping Professional

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1. DIY Bookkeeping Takes Up More Time Than You Can Afford

According to a Gallup poll, 39% of small business owners work more than 60 hours weekly. Don’t take your own time for granted. Overworking leads to burnout, and every minute you spend on a task has a dollar equivalent.

Start tracking how much time you spend on bookkeeping per week.
Using an online calculator, determine how much your time is worth and determine how many “dollars” you spend on bookkeeping per month.

Compare your “salary” as your bookkeeper against the price of professional bookkeeping. Once you treat the time you spend on bookkeeping as an actual expense in cash, you’ll have a better idea of whether you should keep doing it.

2. Your Books are Never Up to Date

When you fall behind on bookkeeping, your books stop reflecting the actual state of your finances. That makes it more challenging (sometimes impossible) to understand cash flow and accurately gauge the health of your business. For instance, if your Cost of Goods Sold (COGS) hasn’t been updated in six months, you can’t subtract it from your revenue to determine how much profit you’ve earned.

This means you’re blind to how much money you’re making and the steps you can take to increase your income. What’s more, if your books aren’t up to date, you’ll have a ton of catch-up bookkeeping during tax season, making a typically stressful time of year even more difficult. With a qualified bookkeeping solution, you can expect to receive monthly financial statements, which will help you understand where your money is going and coming from.

3. Your Accountant Does Your Bookkeeping

Some entrepreneurs leave their books untouched throughout the year, then deliver their expenses and bank transcripts to their accountant during tax season so they can be done retroactively to file a return.

It may seem simple to deal with an unappealing task, but we advise against it.

‍Here’s why:

When you don’t have up-to-date books during the year, you can’t use monthly or quarterly financial statements to guide your business decisions.
It’s a waste of money. Certified Public Accountants (CPAs) generally charge more per hour than bookkeepers. You could end up paying more for bookkeeping services than you need to.
An accountant won’t necessarily provide you with retroactive month-to-month financial records.
Detailed business records are essential for securing loans, bringing on investors or partners, or selling your business.

Whatever bookkeeping solution you choose should offer you regularly up-to-date books, an affordable rate, and detailed records.

4. At Tax Time, You Send Way Too Many Emails to Your Accountant

Here’s how tax season should look:

The financial year ends at midnight, December 31. Whoever does your bookkeeping hands off your financial records for the year to your accountant. Your accountant uses those records to file your taxes. Later, you receive a tax refund.

The end.

Your tax season won’t look like this if you hand off messy or incomplete books to your accountant. You’ll likely be caught in an email or phone back-and-forth as you puzzle your way through a year’s worth of uncategorized expenses and income.

Having your accountant file taxes should feel like a quick hand-off, not a prolonged arm wrestling match. A comprehensive bookkeeping solution can help.

5. You Missed Out on Tax Write-offs

Suppose you just found out that, since your home is more than 50 miles from your place of work, you’re allowed to deduct some of the commuting costs. That’s excellent news. Only now are you thinking about all the years you spent without filing this deduction, the extra money you could have saved, and how you could have spent it. Images of an in-ground pool dance in your head.

The sooner you know about small business tax deductions, the sooner you take advantage of them, the sooner you’ll benefit.

The Roles of Bookkeepers and Accountants in Expense and Tax Management

Part of a bookkeeper’s job is to take every business expense you incur and categorize it properly. In doing so, they can spot obvious deductible expenses such as mileage. An accountant with experience in your industry is most qualified to give you comprehensive guidance regarding tax write-offs.

However, many business owners only talk to their accountants during tax season. A good bookkeeper who understands your business’s needs can help you throughout the year. Having your accountant file taxes should feel like a quick hand-off, not a prolonged arm wrestling match.

6. Your Cash Flow is Unpredictable

Ever have that sense that you’ve got money coming your way from clients, but you’re not sure how much it will be, or when it will arrive? Or do you come up with an empty wallet when it’s time to pay freelancers or contractors?

You need cash flow statements. A cash flow statement tells you how much money other people owe you, and how much money you owe other people. It’s like a crystal ball that shows you the future of your bank account. With a proper bookkeeping solution, you can get monthly updates on your cash flow.

7. You’ve Had Security Problems With Your Computer

When you use your computer to track and store financial information, you must be 100% certain that it’s secure and stable. In May 2017, the WannaCry ransomware attack hit over 230,000 computers in more than 150 countries worldwide. WannaCry encrypted victims’ data, making it inaccessible, and demanded Bitcoin payments to make it available again.

Losing years of financial info is bad enough. Research from MalwareBytes also reports that over 90% of home computers have been infected by spyware at one point or another. If you’re doing your bookkeeping on your home computer, there’s a good chance someone else has (or will eventually have) access to your business’s financial info. Use a free utility like AVG to scan your computer. If it detects malware, it’s a sign that you either need to beef up your security measures, or hand off the burden of bookkeeping security to a pro.

Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)

When it comes to your business’s financial health, it’s easy to get overwhelmed with all the day-to-day details. Especially when you’re trying to grow your business and there’s so much to keep track of.

That’s why having a team like Haven to manage your bookkeeping can make a huge difference. We take care of everything from daily bookkeeping to complex tax filings and R&D credits that put cash back in your pocket, and fractional CFO services.

Our dedicated team lets you focus on building your business while we handle the financial runway to get you to your next destination.

24/7 Slack Support from CPAs Who Get Startups

When you work with Haven, you’re not just getting a team of expert bookkeepers and accountants. You’re also getting 24/7 Slack support from CPAs who understand the unique challenges of growing businesses.

We know what it’s like to be a startup, and we’ve been through the financial ups and downs ourselves. Our team is here to help you navigate the complexities of your business’s finances so you can make informed decisions and get back to running your business.

Join 400+ Startups Who’ve Saved Millions in Tax Credits and Never Missed a Filing Deadline

With Haven, you’re joining a community of over 400 startups that’ve saved millions in tax credits and never missed a filing deadline. We help you get organized to take advantage of every financial opportunity. Our team works behind the scenes to ensure your accounting is accurate and up-to-date so you can focus on your business and not worry about the financial details.

Book a Call Today to See How Haven Can Help You

If you’re ready to stop stressing over bookkeeping and get back to focusing on your business, book a call with Haven today. We’ll help you understand how our dedicated team can support you and your business so you can reach your goals.

What is Included in Bookkeeping Services?

Bookkeeping services are the process by which a business keeps records of its income and expenses through an accounting system, usually an accounting software platform. Bookkeepers can help you track down money you owe to other organizations and funds owed to your company to achieve the most accurate financial record.

This can give you an accurate depiction of your company’s health. Bookkeeping services center on day-to-day financial management. These include recording transactions, managing your general ledger, and fulfilling tax and regulatory requirements.

Get to Know Your Finances: Recording Financial Transactions

Tracking money coming in and going out is the most basic bookkeeping task but also the most important. Bookkeepers categorize income and expenses so you know exactly how much cash flows into your business, who it’s coming from, what you’re spending money on, how much you’re spending, and how often. They update your financial records on a regular basis, ensuring they’re always accurate. Accurate financial records give you a clear picture of your business’s health.

Play a Game of Match: Bank and Credit Card Reconciliation

Remember playing matching card games like Memory as a kid? Reconciling bank account and credit card statements is the business equivalent. Bookkeepers ensure the income and expenses on your bank statements match the ones on your credit card transactions. They catch any discrepancies as soon as they occur, enabling a fast resolution and preventing additional errors.

Keep the Cash Flowing: Managing Accounts Payable and Receivable

Everybody loves payday (cha-ching!). And everybody hates it when payday comes late (womp, womp). Your bookkeeper manages accounts payable (AP) to ensure vendor bills are paid on time, and they monitor accounts receivable (AR) to ensure your clients pay your invoices punctually. This way, bookkeepers improve vendor relationships and keep your business profitable.

Stay Compliant: Payroll Processing

When you hire employees, you must do more than just pay them. In addition to calculating wages, you’re also responsible for crunching the numbers for deductions and taxes. Bookkeepers take this work off your plate by processing payroll. They also ensure you comply with employment laws.

Know Your Numbers: Financial Reporting

Financial reports involve more than basic Excel spreadsheets. Bookkeepers prepare profit and loss (P&L) statements, balance sheets, and cash flow statements. These records are essential for financial planning and forecasting. They also serve as the basis for monthly and quarterly financial analyses. By enabling regular reviews, bookkeepers help with the strategic decision-making that grows your business.

Get Organized: Tax Preparation and Filing Support

Bookkeepers don’t file your taxes (that’s an accountant’s domain). But they do organize your tax documents, protecting you from panicked scrambling every April. They make sure your accountant has all the info they need to file your return accurately, leverage tax breaks, and keep the IRS happy.

Follow the Money: Expense and Budget Management

Hosting your website on a particular domain and providing employees with Microsoft Office and housing your customer relationship management (CRM) with a specific provider. All these tools cost money and the expenses can add up quickly. Bookkeepers track all operational costs so you know exactly where your money is going and when. This ensures you can follow your financial plan, manage your budget, adjust when needed, and plan for the future.

Keep Track of What You Have: Inventory and Asset Management

In addition to managing daily tasks, bookkeepers can monitor your stock levels and fixed assets. They track asset depreciation and amortization to calculate their value and associated costs.

How a Bookkeeping Service Benefits Your Business

Managing invoices, expenses, and payroll can become overwhelming without the right systems. Professional bookkeepers bring expertise and tools, such as cloud-based software, to streamline these processes.

70% of CFOs rely on Excel for financial budgeting and forecasting, highlighting the need for modernization. Modern bookkeeping services automate tasks like invoicing and expense tracking, saving time and reducing errors, allowing you to focus more on business growth.

1. Tax Compliance: Optimize Deductions, Avoid Penalties, and Reduce Stress

Navigating tax season can be daunting, but accounting services make it manageable. With tax laws continually evolving, staying compliant is essential. A professional bookkeeper ensures you meet deadlines and avoid penalties while identifying potential deductions and credits.

Interestingly, 71% of small companies outsource their tax preparation, underscoring the value of expert assistance. Experts can optimize your tax strategy, ensuring compliance and maximizing savings.

2. Cash Flow Management: Avoid Business Failure with the Help of Bookkeeping Services

Cash flow is essential for your business's health. Alarmingly, 82% of business failures are due to poor cash flow management.

Bookkeeping services clarify your income and expenses, helping you avoid shortages and plan for significant investments. Virtual bookkeeping services have become increasingly popular, offering high-level financial oversight without the cost of a full-time hire.

3. Business Growth Insights: How Bookkeeping Can Help Your Company Scale

Small business bookkeeping and accounting aren't just about record-keeping; they're catalysts for growth. Professional bookkeepers and accountants offer insights that transform data into actionable strategies, from pricing adjustments to expansion plans.

Studies indicate that businesses utilizing external financial advice experience an average 11.5% increase in additional revenues.

4. Peace of Mind: How Bookkeeping Services Help You Focus on Your Business Instead of Finances

Entrusting your finances to experts alleviates concerns about missed deductions, inaccurate records, or unexpected audits. Nearly 40% of CFOs do not entirely trust the accuracy of their organization's financial data. Outsourcing bookkeeping functions enhances accuracy and frees up time and mental energy, enabling you to focus on innovation, marketing, and customer engagement.

Haven: Financial Management for Startups

Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.

What is The Difference Between Accounting and Bookkeeping?

Peron Working - What Is Included in Bookkeeping Services

When you're running a startup or small business, it’s easy to confuse bookkeeping and accounting. They both deal with money, right? But they play very different roles in your financial toolkit, and understanding the difference can save you headaches (and money).

Bookkeeping: The Day-to-Day Numbers

Think of bookkeeping as the foundation. Bookkeepers are responsible for recording all the day-to-day transactions: sales, purchases, receipts, and payments. They're entering data into your accounting software, tracking expenses, and ensuring every dirham or dollar is in the right place.

Bookkeeping doesn’t typically require a degree or certification, but it does require attention to detail. Clean, accurate books are essential because they feed directly into what your accountant will later review.

Accounting: The Big Picture

Now, accounting takes all that data and turns it into something meaningful. Accountants analyse, interpret, and report on your financials. They check your books for accuracy, make necessary adjustments, and help you understand what the numbers mean for your business.

They’re the ones who’ll guide you on budgeting, taxes, profitability, and whether you can afford that new hire. Accountants often hold certifications like CPA (or equivalent) and typically earn more because their job requires a broader and deeper skill set.

In short:

Bookkeepers handle the inputs: recording transactions, organising receipts, and keeping the books tidy.

Accounting handles the outputs: interpreting that data, offering financial insights, and helping you make smarter decisions.

Both roles are crucial. Without good bookkeeping, your accountant is flying blind. You might be flying into financial trouble without realising it, without a good accountant.

Choosing The Right Bookkeeping Service for Your Business?

Person Holding Something - What Is Included in Bookkeeping Services

Bookkeeping isn’t one-size-fits-all. Every industry has its own:

Unique set of regulations
Compliance issues
Operational challenges

An experienced bookkeeper who understands your industry and its nuances will ensure accurate financial records and help you avoid costly mistakes.

They’ll also be able to provide you with strategic guidance to help you plan for growth. For example, a bookkeeper with e-commerce experience will be familiar with sales tax regulations that vary by state and how to manage inventory accounting.

The Value of Industry-Specific Financial Expertise

In contrast, one with expertise in the food service industry will understand the importance of tracking food and labor costs to help boost your profitability. Look for a bookkeeper who has worked with businesses of your size in your sector. This will help ensure they understand your operational challenges and can help you navigate them.

Choose Between Local and Virtual Support

Thanks to modern tools like QuickBooks Online, Zoom, and Slack, you don’t need to limit your search to local professionals. That said, whether you go virtual or in-person, your bookkeeper should be responsive and well-versed in the financial laws that apply to your region or country. Local insight can be valuable regarding compliance, reporting, or tax deadlines.

Review Qualifications, Credentials, and Reputation

While a bookkeeper doesn’t need to be a CPA, certifications such as those from the National Association of Certified Public Bookkeepers or the American Institute of Professional Bookkeepers show a commitment to professionalism. Ask for client references and dig into reviews or testimonials. After all, this person will have access to all your financial records, so it’s worth doing your homework.

Clarify Software Compatibility

Ensure your bookkeeper is fluent in the accounting software your business uses—or is willing to learn. Ask if they’ll use your current system or bring in their own. Either way, you should always have full administrative access to your financial data. Transparency and control over your records are non-negotiable.

Don’t Overlook Tax Knowledge

Bookkeepers aren’t tax advisors; they should understand how everyday decisions affect your tax position. A good bookkeeper will stay on top of relevant tax changes and help you stay organised throughout the year, making life easier come tax season and saving you money through more thoughtful planning.

Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)

When you're busy building your business, the last thing you want to worry about is whether your bookkeeping is done correctly. You can avoid this stress by hiring an expert to manage your books, giving you more time to focus on your business.

Bookkeepers help you organize your finances to understand your financial position and make informed decisions about your business. They also ensure that your books are accurate and up to date well before tax season, so you won’t have to panic when it’s time to file your business taxes.

What Does a Bookkeeper Do?

A bookkeeping professional’s primary role is to record and organize financial transactions. Bookkeepers help you keep track of your income and expenses to get a clear picture of your business’s economic health.

They also ensure your books are accurate and up to date for tax season. While accountants typically focus on taxes and financial reporting, bookkeepers manage your business’s financial records throughout the year. The more organized your finances are, the easier an accountant’s job will be when it’s time to file your business’s taxes.

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Top 10 Benefits of Hiring A Bookkeeper for Your Business

Running a small business involves juggling many responsibilities, and bookkeeping often falls to the bottom of the to-do list. You're not alone if you feel overwhelmed trying to handle your books while keeping your business afloat. Luckily, a simple solution to this common problem is hiring a bookkeeper. Read on to discover the benefits of hiring a bookkeeper and how they can help you tackle your accounting challenges so you can focus on running your business.

Haven offers accounting services for small businesses ready to level up their bookkeeping. Whether you want to learn about the benefits of hiring a bookkeeper or take immediate action and hire one, we can help.

Understanding the Benefits of Hiring a Bookkeeper

Person Working - Benefits of Hiring a Bookkeeper

Hiring a bookkeeper offers businesses a range of practical and financial benefits, especially in today’s increasingly data-driven and compliance-focused environment. As financial responsibilities grow more complex, having a dedicated professional manage the day-to-day flow of financial information can be a game-changer for businesses of any size.

Fueling Market Expansion

The value of bookkeeping is also reflected in market growth. According to Business Research Insights, the global bookkeeping services market was valued at around USD 46.1 billion in 2024 and is projected to reach USD 97.3 billion by 2032, growing at a CAGR of 9.8%.

This growth highlights how businesses worldwide recognize the importance of professional financial support, not just for compliance, but as a core driver of operational success.

Save Time and Get Organized

Running a business comes with its share of financial responsibilities. But there comes a point when you can no longer keep up with the bookkeeping on your own. The time you spend on bookkeeping can be dedicated to your:

Business
Product development
Customer experience
Your bottom line

Stay on Top of Bills and Avoid Late Payments

Late and unpaid bills can dent your cash flow and business goals. A bookkeeper can put a process in place that helps keep an eye on your invoices. This can include sending out reminders if a bill is late, making a phone call, or issuing a late fee penalty. They’ll also keep up with late or forgotten payments, so you don’t have to worry about missing financial obligations.

Improve Your Cash Flow

Since your bookkeeper handles the day-to-day recording of your invoices, receipts, and other transactions, they have a good handle on your income, expenses, and spending habits. Their attention to your accounts will help you understand your business performance and identify any cash flow issues as they come up.

Make Better Business Decisions

Understanding your business income and expenses month by month will help you get a handle on your financial situation. You’ll be able to identify spending patterns and sales trends. A tax professional and bookkeeper can help you make better business decisions about your day-to-day operations, like what time of year it’s best to make significant purchases.

Bookkeeping for Strategic Cash Flow Management

They can help forecast seasonal ups and downs, ensuring you have access to capital during the slow months and avoid taking out too much money during good months. A greater awareness of spending will help you control and lower operating expenses where possible, saving you money in the long run.

Enjoy a Smoother Tax Season

If you hire the bookkeeper at the same firm that employs your tax specialist, they’ll work together to ensure you have an update of your accounting records and return filings. From this, they’ll provide an interim or year-end financial statement, giving you a clearer picture of your business’s economic health and an advanced view of your annual tax obligation.

You can make decisions in advance that could modify or lower your tax bill. And having your paperwork in order makes it easier to prepare accurate and complete tax returns.

Be Prepared for an Audit

In the unlikely event your business is audited, having accurate and up-to-date records will ensure a smoother audit process. The sooner you can get back to running your business, the better. If you’re considering applying for financial assistance programs, having up-to-date records will ensure your applications meet the appropriate requirements and will pass any review or audit test.

Secure Financing More Easily

Creditors need accurate information about the financial position of your business before they give out a loan. Good records show prospective creditors that you know all facets of your company. You will have an easier time securing capital when you can outline past performance clearly.

Business's Credibility and Growth Catalyst

Banks and other lenders must be assured that you have a solid history and a good handle on your business’s finances. If you want to sell your business, good financial records demonstrate its value to prospective buyers. Besides, when it comes time to market your business or secure capital to grow your business, being able to document your past performance thoroughly will help your company’s valuation.

Don’t Miss Tax Deductions or Credits

Without proper bookkeeping, input tax credits may be overlooked or forgotten when filing income tax returns. And you want to ensure you’re taking advantage of every possible tax deduction. The more you can claim, the lower your tax bill. There’s a lot to know regarding expenses and what you can claim.

Bookkeeping as Your Shield Against Tax Scrutiny and Missed Savings

And missing a deduction means paying more in taxes than you need to. Even though you don’t need to send in original receipts when you file your taxes, if the tax authorities want to see proof of a claim and you can’t find it, you can’t claim it. A bookkeeper will keep everything organized for you.

Resolve Conflicts of Interest with Any Business Partners

With more than one founding partner, issues could arise where each partner has some idea of how the money should be spent and how to access it easily. Otherwise, conflict could arise that could impede the progress of your startup. That’s why a bookkeeper should be the gatekeeper of the money, creating the necessary approval processes that stop partners from withdrawing money.

Get a Different Perspective on the Business

Although you may have a good idea about the state of your startup during the development phase, it helps to have another pair of eyes on this. Your bookkeeper can organize the financials and run reports showing how you are doing each month, where the funds are going, and how your efforts are paying off (or might need improving). He or she will give you that big picture through crunching numbers.

When Do You Need To Hire a Bookkeeper?

People Working - Benefits of Hiring a Bookkeeper

When you first open your business, you can run everything yourself. Eventually, hiring a bookkeeper becomes a critical step that helps ensure continued growth for your business. It may seem unnecessary initially, but hiring a bookkeeper can help save you from several business problems.

You're Stressing Out About Bookkeeping

When your business grows, your workload tends to grow in tandem. Trying to run a business by yourself leads to additional stress. As your business grows, a dedicated bookkeeper can help reduce that stress. Your invoices and receipts must be appropriately managed. Bookkeepers help keep track of all of your organization’s purchases, expenses, and sales.

Your Cash Flow is All Over the Place

When work starts to get busy, things sometimes fall through the cracks. Invoices can be left unpaid, and receipts go unaccounted for. This leads to outdated books and statements, which can cause unpredictable business cash flows. Hiring a bookkeeper can eliminate that problem and allow you to focus on other tasks.

Ensuring Financial Visibility and Stability Through Meticulous Bookkeeping

They can stay on top of the payments and ensure your books are in order. When your bookkeeping is incorrect, you are not aware of the actual state of your business's finances. Unpredictable cash flow makes it extremely difficult to gauge how your business is performing and may cause setbacks.

Your Business Isn’t Ready for Tax Season

Preparing for tax season is very important. You don't want to leave anything for the last minute. Giving everything to your accountant to handle shortly before taxes are due isn’t an effective use of anyone's time. Without a system to monitor your books, an accountant will need ample time to organize everything and potentially charge a hefty fee.

Bookkeepers can help you with tax preparation throughout the year, so your business will be ready for tax season. Besides helping with your business’s current taxes, bookkeepers can help you with any retroactive bookkeeping your company might need.

Your Accountant Does Your Bookkeeping

Accountants and bookkeepers do not do the same things for a business. Accountants are responsible for recording financial information and analyzing, reporting, and preparing tax documents. On the other hand, bookkeepers are responsible for the organization’s various accounts.

Bookkeeping as the Foundation for Financial Insight and Strategic Advice

They monitor the company’s transactions and create multiple financial statements and reports. After the statements are made, you can review the reports with your financial advisor to better understand the economic health of your business. If your accountant also handles the bookkeeping, you unknowingly prevent them from focusing on their duties.

Bookkeeping is Taking Up Too Much of Your Time

You most likely did not start your business to spend all of your time doing the bookkeeping. If bookkeeping takes up your valuable time and energy, it's a tell-tale sign to hire a bookkeeper. Doing your bookkeeping isn’t practical in the long run. Proper bookkeeping services require a lot of time and dedication, and if not done correctly, may create roadblocks for your business.

Hiring a bookkeeper will allow you to focus on the other essential aspects of your business and give you peace of mind, knowing that the work is done correctly.

Effortless Financial Management

Let your business take flight while Haven manages your financial runway. Built by founders for founders, we handle everything from:

Daily bookkeeping to complex tax filings
R&D credits that put cash back in your pocket
Fractional CFO services

Startup-Focused Financial Expertise

Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.

5 Tips For Selecting The Right Bookkeeper For Your Business

People Discussing - Benefits of Hiring a Bookkeeper

1. Hire a Person Who Understands Your Business

Finding someone who understands your industry and unique financial needs is crucial when selecting a bookkeeper. Not every bookkeeper can do this effectively. Ask the applicant about their experience with businesses like yours. Have they worked with companies that are about the same size and have the same number of employees?

Do they understand the common financial challenges these businesses face? Bookkeepers who don’t understand your business may create costly errors. They may not have the experience and foresight to guide your financial path.

2. Choose a Local or Virtual Bookkeeper

You will want to connect with your bookkeeper personally regularly. Hiring someone in your area isn’t always a requirement, especially with the number of online collaboration and meeting tools available, such as:

GoToMeeting
Slack
QuickBooks Online

Local Expertise, Universal Benefit

Whether you choose a local bookkeeper or someone remote, make sure they understand local business laws and other regulations. An experienced local or virtual bookkeeper will have first-hand knowledge of financial strategies that work best with the customer base. They can provide suggestions for increasing your revenue.

3. Check for Credentials and Credibility

Ask about the applicant’s training and real-world experience. Do they have any type of certification? Two examples of bookkeeper certification include:

The Certified Public Bookkeeper license, accredited by the National Association of Certified Public Bookkeepers
Certified Bookkeeper, accredited by the American Institute of Professional Bookkeepers

The Imperative of Trust and Verification

Have them describe examples of other businesses they work with. Request professional references. You must trust the person managing your business finances. They have access to all financial records. Even the most experienced bookkeeper can mess up your records or embezzle money.

4. Ask What Software They Use

Before hiring an individual, ask what accounting software they use. If you already have a software package you prefer, will they use it? If not, will you have administrative rights to their software? You must maintain access to your financial information. All accounting files must remain clear and transparent for your protection.

5. Make Sure They Have Tax Experience

Over the life of your business, taxes can have a compounding effect on your income. Thus, you must decrease your tax burden and align it with tax laws. This will help you reach financial goals quicker. Make sure that your bookkeeper is well-versed in all tax law changes. They should guide you in creating the best tax-efficient structure for your company.

Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)

Haven is a bookkeeping firm that caters to growing businesses. Our team of accountants, CPAs, and tax professionals understands the unique needs of startups and can help you save time and money on taxes so you can focus on building your business.

Unlock Growth with Expert Financial Support

Join over 400 startups who have saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline while accessing 24/7 support from experts who get it. Ready to take your business to the next level?

Book a call today, and let us help you focus on building rather than bookkeeping.

Deductible Expenses

Ordinary and Necessary Business Expenses
- Rent or lease payments for office space
- Salaries and wages for employees
- Employee benefit programs and pensions
- Utilities and office supplies, including software
- Professional fees (legal, accounting, etc.)
- Advertising and marketing costs
- Insurance premiums
- Interest on business loans
- Taxes and licenses
Charitable Contributions
Travel expenses that are for business purposes

Non-Deductible Expenses

Personal, Living, or Family Expenses
- Expenses that are considered personal, living, or family expenses are not deductible for tax purposes.
Penalties and Fines
- Penalties and fines paid to the government for the violation of any law are not deductible.
Political Contributions and Lobbying Costs
- Contributions to political parties, campaigns, or candidates, as well as certain lobbying costs, are not deductible.
Federal Income Taxes
- Federal income taxes are not deductible on the corporate tax return.
Business Meals
- Business meals that are ordinary and necessary expenses incurred during the active conduct of business may be partially deductible. The meals must not be lavish or extravagant, and the taxpayer or an employee of the taxpayer must be present at the furnishing of the meal. The Tax Cuts and Jobs Act (TCJA) allows for a 50% deduction for business meals.
Entertainment Expenses
Travel expenses that are for personal purposes

The Essential Role of Fractional CFOs for Growing Startups

In the dynamic world of startups, financial stability and strategic planning are crucial for success. However, many startups, especially in their early stages, find it challenging to justify the cost of a full-time Chief Financial Officer (CFO) on their payroll. This is where fractional CFOs come into play, offering an innovative solution to bridge the financial expertise gap.‍

What is a Fractional CFO?

A fractional CFO is a seasoned financial expert who lends their expertise to startups on a contractual basis. Unlike full-time CFOs, fractional CFOs often work with multiple companies simultaneously, providing cost-effective and flexible financial leadership. Let's explore the pivotal roles they play in shaping the financial success of startups.

1. Financial Stewardship

Financial management is the core responsibility of a CFO, and as startups grow, their financial processes become increasingly complex. Fractional CFOs are adept at navigating the intricate web of financial reporting, accounting, and budgeting, allowing founders to focus on their core business activities.

2. Strategic Optimization

Money drives businesses, making CFOs instrumental in strategy formulation and optimization. Fractional CFOs bring a unique perspective to the table, helping startups test and fine-tune their strategies to ensure financial viability. They provide the financial compass to navigate the path toward success.

3. Systems Implementation

As startups scale, they require efficient systems to meet evolving demands. Fractional CFOs draw on their extensive experience to ensure the smooth implementation of new systems without disrupting existing workflows. They anticipate and rectify potential issues, ensuring that the transition is glitch-free.

4. Capital Raising

Expanding a business often demands an injection of capital. Fractional CFOs excel in valuing companies, engaging potential investors, and managing the post-deal paperwork and due diligence. Their indispensable role in the capital-raising process contributes to the financial health and growth of startups.

5. Navigating Audits and Transactions

Internal audits and mandatory legal requirements can pose a significant challenge for startups. These meticulous examinations involve scrutinizing not just cash flow but also procurement, taxation, and all financial transactions. Fractional CFOs, with their extensive audit experience, provide a lifeline for founders, guiding them through this complex process.‍

Key Benefits of Hiring a Fractional CFO

Cost-Effective: Startups, renowned for their resourcefulness, can benefit from the expertise of an experienced CFO when needed, without the cost of an additional full-time C-suite member.

Vast Experience: Fractional CFOs are seasoned veterans who bring not only depth but also breadth of experience, having tackled a variety of challenges across different domains.

Flexibility: Startups can easily adapt and make changes when working with fractional CFOs, ensuring a harmonious and productive working relationship.

Focused Expertise: Fractional CFOs come in to address immediate needs, allowing startups to concentrate on specific tasks, such as audits, mergers, acquisitions, or fundraising rounds.

Fast-Track Financial Growth: One notable benefit of fractional CFOs is their ability to fast-track financial growth. They help startups seize opportunities, navigate financial hurdles, and optimize their strategies to achieve rapid and sustainable growth.‍

Take Advantage of Fractional CFO Partnerships

Hiring a fractional CFO offers startups access to high-caliber financial expertise without incurring the full-time commitment and cost associated with a traditional CFO. It's a smart and strategic move that aligns with the resourceful spirit of startups, paving the way for financial success and sustainable growth.By considering the innovative option of a fractional CFO, startups can fortify their financial foundations, ensure compliance with regulations, and confidently navigate the intricate world of finance, all while concentrating on their core missions. It's a partnership that benefits both sides, unlocking a world of financial possibilities for startups as they embark on their journey to success.

Navigating Payroll & Entity Tax Penalties: Strategies to Protect Your Business and Finances

Ensuring compliance with payroll tax obligations is pivotal for any business, and avoiding penalties requires diligence and attention to detail. Here are essential strategies to prevent payroll tax fines and maintain financial stability within your organization:

‍Avoid Missing Deadlines: Stay Ahead with Timely Filing and Payment

‍Missing tax deadlines can lead to severe consequences, including hefty penalties and relentless demands from tax authorities. Employers must meticulously adhere to due dates to prevent these disruptions. While payroll providers handle the majority of payroll-related filings, it is important to review them for unpaid balances or discrepancies. In addition, annual reports for the Secretary of State and franchise taxes are due yearly and need to be filed by the company.

Stay Informed: Monitor IRS Announcements and State Tax Regulations

‍Ignorance is not an excuse when it comes to non-compliance with IRS regulations. Employers must proactively stay informed about IRS announcements, tax return news, updates on tax laws, tips, and form deadlines. The IRS frequently releases vital information that businesses need to be aware of, especially during the tax filing season. Additionally, employers should remain vigilant about state-specific regulations, especially if their employees work across different states. Staying abreast of these updates and adhering to state-specific tax laws is essential to prevent inadvertent mistakes that could lead to penalties.

‍Utilizing Available Resources‍

In your pursuit of compliance and resolution, resources like the AbstractOps State Registration Guide can be invaluable. This comprehensive resource can provide you with state-specific information, requirements, and contact details, streamlining your research process and ensuring you have accurate and up-to-date data at your fingertips. Being armed with this knowledge enhances your ability to communicate effectively with state agencies, making your efforts to avoid or resolve penalties more targeted and efficient. AbstractOps can automate this process ensuring you are registered and staying compliant all in ~5 minutes!

‍Received a Penalty?

‍Unexpected expenses, especially those stemming from fines and penalties imposed by state and government agencies, can throw a wrench into any business's financial stability. There are effective strategies to navigate these challenges and potentially have your fees waived, saving your business from unnecessary financial strain.

Open Communication with Your Payroll Provider

‍Your first line of defense is contacting your payroll provider. Often, payroll providers handle filing, payments, and notifications related to your obligations. Mistakes can occur, and these professionals might have crucial information about any errors made. Initiating a conversation can lead to positive outcomes, including the potential waiver of fees. Even if the error isn't on their end, starting the dialogue with your provider can help accurately pinpoint the issue.

‍Direct Communication with the State

‍If your efforts with the payroll provider yield no results, your next step is to directly contact the state agency. While this can be a challenging process, being well-prepared and patient is key. Locate the necessary contact information, either from the notice or bill received or through the state's official website. Once you establish contact, gather the required information and update any account details necessary for compliance. Clearly explaining your situation might lead to understanding from the agency's end, potentially resulting in penalty adjustments or waivers.

Cultivating Compliance and Stability: The Strategic Role of Accounting Firms & Software

‍Businesses facing the complexities of payroll tax penalties can significantly benefit from the expertise of accounting firms, like Haven. Their in-depth understanding of IRS and state tax regulations keeps businesses informed, enabling them to navigate the ever-changing legal landscape effectively. In case of penalties, accountants facilitate open communication with payroll providers, rectify errors, and guide businesses in direct interactions with state agencies. By partnering with Haven, businesses gain access to proactive support, empowering them to prioritize compliance, minimize risks, and concentrate on their core activities, all while safeguarding their financial stability and ensuring enduring success.

Prioritize Compliance, Minimize Risks

‍While the process of getting fees waived can be daunting, persistence, thorough research, and a positive attitude can significantly enhance your chances of success. Remember, proactive efforts and timely compliance are your best defenses against penalties and fees. Prevention, facilitated by tools like AbstractOps that help manage compliance requirements, and ensure you can hire and operate compliantly across all 50 states is always more effective than correction.

Introducing Haven: a tech-forward accounting team for Startups and Growing businesses

Haven is rebuilding accounting operations for founders, by founders. Offering bookkeeping, tax services, tax credits, and more to make taxes and financials simplified. Unlike traditional accounting firms that take weeks to get a hold of and put you on their schedule, Haven creates dedicated Slack channels for clients to answer questions year round. As our CEO, Cyrus Shirazi, says “If we do the little things right and prioritize the customer over all else, the rest will take care of itself”.

Haven is based in New York, and serves clients all across the US. Started in March of 2023, Haven has already attained north of 45 clients; saving them millions of dollars with tax benefits through things such as R&D Tax Credits. Haven doesn’t look at themselves as an outsourced accounting team, but rather an extension of their client’s team.

Staying on top of your finances is important for any business but founders either aren’t versed in finance or simply don’t have the time to deal with it. Haven ensures that your company’s finances are right from the start to allow founders to focus on what matters most - growing their business!

Learn how easy it is to get started working with us at usehaven.com!

Bookkeeping For Startups: Everything Founders Need To Know

As a new business owner, you've poured your heart and soul into developing a product or service. Your passion undoubtedly revolves around the success of your unique business idea. However, amidst the excitement of entrepreneurial endeavors, the critical facets of bookkeeping, accounting, and maintaining balanced books often take a backseat.

For every company founder, understanding how accounting, bookkeeping, and financial reports can work to the advantage of your business is crucial. Early-stage accounting isn't just about tax benefits; it's a strategic move that can save you and your accountant headaches during tax season.

Differences Between Accounting and Bookkeeping

While accounting and bookkeeping may seem interchangeable, there are nuanced differences. Accounting involves decoding financial records for purposes ranging from accurate tax payments to strategic decision-making. On the other hand, bookkeeping ensures the meticulous tracking of all financial records, primarily focusing on income and expenses.

Regardless of your business's size, both accounting and bookkeeping services are invaluable. When seeking investors or partners, they'll require access to your financial reports illustrating the importance of bookkeeping for startups. A skilled accountant can help compile these reports, and efficient bookkeeping ensures the data needed for these reports is readily available.

Setting the Foundation: Choosing a Business Entity

Before diving into accounting intricacies, selecting a suitable business structure is paramount. Consulting with an accountant or lawyer to determine the best business entity for your organization is a wise move.

The five primary business entities—sole proprietorship, limited liability company (LLC), C corporation, S corporation, and partnership—each serve specific needs. The choice depends on factors such as risk level, the need for personal asset protection, fundraising goals, and potential future plans like going public or a sale. Regardless of the entity type one chooses for their business, bookkeeping for startups is of the utmost importance.

Deciding on an Accounting Method

Two accounting methods, cash basis and accrual basis, stand as the options for your business's first tax return. Cash basis accounting tracks income when received and expenses when paid, simplifying the tax return process. On the other hand, accrual basis accounting recognizes money and expenses when earned, providing a clearer long-term outlook for the business.

Engaging with a CPA before deciding between these methods is advisable. A CPA can guide you to choose the accounting method that aligns with your business goals and maximizes tax benefits.

Safeguarding Your Financial Records

Selecting a business entity and accounting method lays the groundwork, but maintaining impeccable financial records is equally vital. In the event of an IRS audit, having solid proof of your tax return claims is crucial.

Ensure meticulous records of invoices, bills, receipts, credit card and bank statements, financial statements from your bookkeeper, proof of payments, canceled checks, previous tax returns, and forms like W2s and 1099s. Store these records for at least three years, with certain documents retained longer for potential queries.

Checklist: Bookkeeping for Startups

Procrastinating on bookkeeping until tax season or investor courting is a recipe for chaos. Implementing regular bookkeeping tasks is essential for accurate financial management:

Weekly Bookkeeping Tasks:

Enter all transactions into your bookkeeping software or an Excel spreadsheet, categorizing them accurately.
File or digitize receipts to avoid loss and provide proof for potential expense deductions during an audit.

Monthly Bookkeeping Tasks:

Reconcile bank accounts to prevent overlooked expenses or income.
Send and prepare invoices promptly to maintain a healthy cash flow.
Pay vendors and bills promptly to avoid late fees and maintain good standing.
Follow up on outstanding invoices to ensure a smooth accounts receivable process.
Review the financial health of your business to gauge its standing and identify areas for improvement.

Embracing Financial Statements for Success

Financial statements are your startup's best friend and an integral component of bookkeeping for startups. Collaborating with a proficient CFO, accountant, and bookkeeper ensures accurate tracking and utilization of these statements, providing insights critical for strategic decision-making.

Balance Sheet:

Reflects assets, liabilities, and owner's equity at specific points in time.

Cash Flow Statement:

Records cash inflows and outflows, showcasing financial management and revenue sources.

Income Statement:

Illustrates profitability by subtracting expenses and losses from revenue.

Cash Runway:

Indicates available cash versus monthly expenditures, vital for financial planning.

DIY Accounting or Professional Assistance?

While some startups opt for a do-it-yourself approach to keep expenses low, others recognize the value of professional expertise. Factors such as the business's complexity, the founder's accounting knowledge, and the need for specialized services influence the decision.

Whether you choose to handle accounting internally or enlist professional assistance, the key is to prioritize accurate and consistent practices. Timely entries, reconciliation, and adherence to good accounting habits will set your startup on a path to success.

Tailoring Strategies to Your Unique Startup

Every startup is unique, and the approach to accounting and bookkeeping should align with your business's specific needs. As you steer your startup toward a promising future, remember that excellent accounting practices are not just about compliance; they are a strategic advantage that can elevate your business above the competition.

In the dynamic landscape of startups, where excitement for product promotion runs high, don't relegate your books to the backburner. Accurate books are not just a requirement; they are the foundation upon which your startup can build lasting success. Financial statements empower you to make informed decisions, ensuring your business becomes more than just another startup—it becomes a frontrunner in its industry.

With the right accounting and bookkeeping practices, your startup is poised for success. Regularly track transactions, reconcile accounts, and stay on top of accounts receivable. As you embark on this entrepreneurial journey, embrace the power of accurate financial management, and watch your startup thrive in a competitive landscape.

The Ultimate Guide to the R&D Tax Credit

In today's competitive business landscape, companies are constantly looking for ways to innovate and gain a competitive edge. One valuable tool that can help businesses in their pursuit of innovation is the Research and Development (R&D) Tax Credit. This comprehensive guide will provide you with everything you need to know about R&D Tax Credit, from understanding the basics to common misconceptions.

Definition of the R&D Tax Credit

The R&D Tax Credit is a tax incentive that aims to encourage businesses to invest in research and development activities. It provides a financial benefit to companies that engage in qualifying research activities, allowing them to reduce their tax liability.

‍Qualifying research activities can include a wide range of scientific, technological, and experimental activities. These may involve the development of new products or processes, the improvement of existing ones, or the creation of innovative solutions to technical challenges.

The Purpose of the R&D Tax Credit

The primary goal of the R&D Tax Credit is to stimulate innovation and drive economic growth. By providing financial incentives for research and development, governments aim to foster technological advancements and improve overall competitiveness.

Through the R&D Tax Credit, businesses are encouraged to invest in activities that have the potential to generate new knowledge, improve existing products or processes, and contribute to the overall advancement of society. This can lead to the development of new industries, the creation of high-skilled jobs, and the enhancement of a country's global competitiveness.

Moreover, the R&D Tax Credit can also help businesses offset some of the risks and costs associated with research and development activities. Developing new technologies or products often involves a significant amount of uncertainty and financial investment. The tax credit serves as a form of financial support, reducing the burden on businesses and encouraging them to take on more ambitious and innovative projects.

Eligibility Criteria for the R&D Tax Credit

Not all businesses are eligible to claim the R&D Tax Credit. There are specific criteria that must be met in order to qualify. Let's take a closer look at these eligibility requirements.

When it comes to claiming the R&D Tax Credit, it's important to understand the qualifying research activities that your business must engage in. These activities go beyond the ordinary day-to-day operations and involve the development of new products, processes, or technologies, or improvements to existing ones. It's all about pushing the boundaries of innovation and making advancements that contribute to the overall growth of your industry.

But what exactly qualifies as a qualified research activity? Well, it's not just any kind of research. To be eligible for the R&D Tax Credit, your activities must involve a level of uncertainty and technical challenges that require experimentation and problem-solving. This means that you're not simply following a well-established path, but rather exploring uncharted territories and finding solutions to complex problems.

Now, let's talk about the expenditures that can be claimed under the R&D Tax Credit. It's not just about engaging in qualifying research activities, but also about the costs associated with those activities. These costs can include wages paid to employees who are directly involved in the research process. After all, it takes a dedicated team to bring innovative ideas to life.

In addition to wages, businesses can also claim expenses related to supplies and materials used in the research. Whether it's specialized equipment, prototypes, or raw materials, these costs can quickly add up. The R&D Tax Credit recognizes the financial investment required to conduct meaningful research and development.

Furthermore, if your business outsources certain research tasks to external parties, you may also be able to claim expenses related to contract research. This allows businesses to leverage the expertise of external organizations while still benefiting from the R&D Tax Credit.

So, as you can see, the eligibility criteria for the R&D Tax Credit goes beyond a simple checklist. It's about engaging in qualified research activities that push the boundaries of innovation, while also incurring the necessary expenditures to support those activities. By meeting these criteria, businesses can unlock the potential of the R&D Tax Credit and fuel their growth through innovation.

How to Calculate Your R&D Tax Credit

Now that you understand the basics and know whether your business is eligible, let's explore how to calculate your R&D Tax Credit.Calculating your R&D Tax Credit can be a complex process, but it is an important step in maximizing your tax benefits. There are two main methods for calculating the credit: the regular credit calculation method and the alternative simplified credit calculation method.

Regular Credit Calculation

‍The most common method of calculating the R&D Tax Credit is known as the regular credit calculation method. This method involves determining the qualified research expenses and applying a specified percentage to those expenses to calculate the credit amount.

Qualified research expenses include wages paid to employees engaged in qualified research activities, supplies used in the research process, and a portion of contract research expenses. These expenses must meet certain criteria outlined by the IRS to be considered eligible for the credit.

Once you have determined your qualified research expenses, you will need to apply a specified percentage to calculate the credit amount. The percentage varies depending on the tax year and whether your business is a startup or an established company.

It is important to keep detailed records of your research activities and expenses to support your claim for the R&D Tax Credit. This includes documentation of the research projects, employee time logs, and receipts for supplies and contract research expenses.

Alternative Simplified Credit Calculation

‍For businesses with limited resources or those new to the R&D Tax Credit, there is an alternative simplified credit calculation method. This method provides a simplified formula that allows businesses to claim a percentage of their eligible expenses as the credit amount.

The alternative simplified credit calculation method is designed to make it easier for small businesses to claim the R&D Tax Credit. It allows businesses to claim a credit equal to 14% of their eligible expenses that exceed 50% of their average qualified research expenses for the preceding three tax years.

This method eliminates the need to calculate and apply different percentages based on the tax year and business status. It provides a straightforward formula that can be easily applied to determine the credit amount.

However, it is important to note that the alternative simplified credit calculation method may not result in the maximum credit amount for all businesses. Depending on your specific circumstances, the regular credit calculation method may yield a higher credit amount.

Regardless of the method you choose, calculating your R&D Tax Credit requires careful consideration of your research activities and expenses. It is recommended to consult with a tax professional or an R&D Tax Credit specialist to ensure accurate calculation and maximize your tax benefits.

The Process of Claiming R&D Tax Credit

Now that you have a clear understanding of the eligibility criteria and how to calculate your R&D Tax Credit, let's discuss the process of claiming the credit.

‍Preparing Necessary Documentation

‍Before you can file a claim for the R&D Tax Credit, you must gather and organize all the necessary documentation to support your claim. This includes documentation of your research activities, project records, employee time logs, and any relevant financial documents.

‍Filing the Claim

‍Once you have all the necessary documentation in place, you can file your claim for the R&D Tax Credit. This typically involves completing the appropriate forms and providing the required information to the tax authorities.

Common Misconceptions about R&D Tax Credit

There are several common misconceptions surrounding the R&D Tax Credit that can often lead to missed opportunities or incorrect assumptions. Let's debunk some of these misconceptions.

Misconception about Eligible Businesses

‍One common misconception is that only large, established companies are eligible for the R&D Tax Credit. However, businesses of all sizes, including startups and small businesses, can potentially qualify for the credit as long as they meet the eligibility criteria.

Misconception about Qualifying Activities

‍Another misconception is that only groundbreaking, revolutionary research is eligible for the R&D Tax Credit. In reality, even incremental improvements and problem-solving efforts can be considered qualifying research activities as long as they meet the necessary criteria.

How Haven can Help

By now, you should have a comprehensive understanding of the R&D Tax Credit and its potential benefits for your business. Remember to consult with experts like Haven to ensure you navigate the process correctly and maximize your eligible credits.

Startup Financial Missteps to Avoid

‍Creating a startup is a thrilling and innovative pursuit, filled with the promise of new horizons. However, amidst this excitement, entrepreneurs often encounter intricate financial challenges that, if not navigated skillfully, can imperil the future of their ventures. This article delves into the frequent financial pitfalls faced by startups, offering valuable insights to avoid these missteps.‍

Thorough Financial Planning

A fundamental blunder made by startups is neglecting detailed financial planning. While optimism is crucial in entrepreneurship, it must be balanced with realistic revenue projections grounded in meticulous market research and well-defined sales strategies. These projections should align with industry benchmarks and incorporate a margin of error. Additionally, underestimating operating expenses and scaling costs can strain finances, depleting resources unexpectedly. Conduct exhaustive research on all potential expenses, including production, marketing, and administrative costs, and consider inflating estimates to accommodate unforeseen expenditures.

Efficient Cash Flow Management

Effective cash flow management is the lifeblood of any startup. It’s not just about having money; it's about having it at the right time. Proper cash flow management involves understanding the timings of your inflows and outflows. Startups often face delays in payments from clients or unexpected expenses, and without a cushion, these situations can lead to financial strain. Monitoring cash flow patterns helps in predicting periods of abundance and scarcity, enabling better financial decision-making. Maintaining a financial buffer for emergencies ensures your startup can weather unexpected storms without compromising daily operations or growth plans.‍

Clear Separation of Personal and Business Finances

Maintaining a clear distinction between personal and business finances is crucial for both financial integrity and legal protection. When personal and business funds are intermingled, tracking expenses becomes convoluted, making it challenging to understand the financial health of the business. Furthermore, it can lead to legal issues during audits or in case of business-related disputes. By establishing separate bank accounts and credit lines for your business, you ensure transparent financial reporting, simplify tax filings, and enhance your credibility, especially when dealing with investors or lenders.‍

Precise Payroll Management

Payroll management extends beyond simply paying your employees. It involves accurately calculating tax withholdings, managing benefits, and complying with state and federal regulations. Failing to comply with payroll tax laws can result in hefty fines and legal repercussions. Additionally, when your startup expands, payroll complexity increases, especially if you have employees working remotely or across different states. Adopting robust payroll software not only ensures accurate payments and tax filings but also streamlines the process, saving time and reducing the risk of errors. Keeping employee addresses up to date is essential, especially if your business operates in multiple states, as it ensures compliance with state tax regulations, avoiding potential legal complications.‍

Accurate Bookkeeping Practices

Accurate bookkeeping is the backbone of sound financial management. It involves recording all financial transactions, tracking expenses, sales, and cash flow. Detailed and organized financial records provide valuable insights into your startup’s financial health. It helps in identifying profitable revenue streams, understanding expenditure patterns, and evaluating the effectiveness of your business strategies. Beyond tax filings and investor presentations, precise bookkeeping allows you to proactively manage your finances. Regularly reconciling accounts, categorizing expenses, and conducting financial audits are essential practices. Moreover, it aids in identifying discrepancies, preventing financial errors, and ensuring that your startup’s resources are utilized optimally. If you're interested in further info on the importance of bookkeeping, check out our past post here.‍

Optimizing R&D Tax Credits

Research and Development (R&D) tax credits are an excellent way for startups to save money while fostering innovation. Many startups engage in activities that qualify for these credits, such as developing new products, processes, or software. However, claiming R&D tax credits can be complex, involving intricate eligibility criteria and documentation. Collaborating with a knowledgeable tax preparer can significantly enhance your chances of maximizing these credits. It's not just about the immediate financial benefit; it's an investment in your startup's future growth. By optimizing R&D tax credits, you can receive up to $250k that can be reinvested into your business, driving innovation and competitiveness in your industry.‍These are just some of the many challenges entrepreneurs face when starting and growing their business. Be sure to avoid these mistakes to ensure sound financials from Day 1. Have bookkeeping or R&D credit questions? Reach out today for the support you need.‍

Important Disclosure: This material is provided for informational purposes only and is not intended to be investment, tax, or legal advice and isn’t meant as a substitute for consulting your own qualified advisors.

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IRS Doubles R&D Payroll Tax Credit: What You Need to Know

The IRS has presented small businesses with a game-changing opportunity. Through Provision 13902 of the IRA of 2022, which became applicable for tax years starting after December 31, 2022, a significant alteration in the tax landscape has unfolded. This provision effectively doubled the maximum amount of payroll tax research credit that a Qualified Small Business (QSB) can utilize against their payroll tax liability, elevating the cap from $250,000 to a substantial $500,000. This change doesn’t just represent a numerical shift; it signifies a potential lifeline for businesses deeply involved in research and development activities.‍

Understanding the Changes: How the Credit Works

The payroll tax credit is a tailored initiative designed to buoy businesses invested in research and development endeavors. With this recent amendment, QSBs now have the flexibility to apply up to $500,000 of this credit against their payroll tax liability, a noteworthy increase from the former limit of $250,000.‍

Changes in Tax Liability Allocation

Commencing from the first quarter of 2023, the enhanced payroll tax credit operates in two distinct stages:

1. Initially, the credit targets the reduction of the employer's share of social security tax, up to $250,000 per quarter.

2. Any surplus credit is then allocated to reduce the employer's share of Medicare tax for the respective quarter.

Furthermore, any remaining credit after both stages can be carried forward to the subsequent quarter. This mechanism equips businesses with the potential to significantly diminish their tax liability, thereby liberating financial resources for vital areas of their operations.‍

Seizing the Opportunity: Leveraging the Benefits

This pivotal amendment in the IRS provision is more than just a legal alteration; it symbolizes a transformative opportunity for small businesses actively engaged in research and development activities. By amplifying the payroll tax credit, businesses now have the freedom to channel more funds into innovation and growth initiatives. This financial breathing room not only propels individual businesses but also fuels economic development and job creation on a broader scale.

In this complex financial landscape, expert guidance becomes indispensable. For businesses seeking to navigate these intricate tax regulations, Haven stands as a beacon of support. Our team of professionals has helped countless businesses claim their R&D tax credits and offers tailor-made solutions to ensure businesses fully capitalize on these benefits. By aligning with Haven, businesses can streamline their financial processes, curtail tax liabilities, and focus on their core strengths—driving innovation and creativity. The door to unlocking unprecedented financial possibilities is wide open; don’t miss the chance to propel your business toward a future filled with prosperity and growth. Reach out to Haven today and embark on the journey to a more lucrative tomorrow.

Effective Cash Management Strategies for Founders

Startup founders face the crucial task of navigating the intricate world of cash management to ensure their companies' survival and growth. In this guide, we'll delve into essential cash management strategies tailored to preserve your startup's capital, maximize liquidity, and minimize risk. Given the current financial landscape of banks in the US, securing your startup's cash while generating yield has never been more critical.‍

‍Understanding Treasury Management

‍Treasury management involves overseeing a company's financial resources to meet its financial needs while managing risk. Unlike large corporations like Goldman Sachs, startups may not have the resources or personnel for sophisticated treasury operations. However, VC-backed startups often possess substantial capital that can be strategically deployed to generate yield.‍

‍Three Criteria for Cash Management: Yield, Risk, and Access

‍Effective cash management requires a delicate balance between three essential criteria:

Yield: Seek opportunities for a reasonable return on your funds while prioritizing safety and liquidity. Although generating investment returns is not your primary role as a founder, some yield can support your startup's growth.
Risk: Avoid high-risk investment options like the stock market or high-yield bonds. As a fiduciary, you are responsible for managing company assets prudently, and major investment losses can have legal implications and impact your relationships with investors.
Access: Ensure easy access to funds when necessary, especially for business expenses. Utilize savings accounts, cash-equivalent options, and money market accounts for liquidity.

‍Best Yield for a Startup's Cash

In mid-Q1 2023, startup founders have the chance to earn yields ranging from 3% to 5% on their idle cash. Gaining yield is vital for startups, as it can provide additional income to support growth. Money market accounts offer a higher interest rate while maintaining liquidity, making them a favored choice. Certificates of deposit (CDs) are another option, although they offer higher interest rates, they come with a fixed term and early withdrawal penalties, making them slightly less liquid. However, safety and liquidity should take precedence over chasing higher yields, given the risks associated with riskier investments. Striking a balance between yield and capital preservation ensures they can navigate uncertainties and seize growth opportunities, contributing to their long-term success.‍‍

‍‍Safely Managing Startup Cash

‍In the early stages, startups often encounter the challenge of generating meaningful revenue or profits. However, for companies that have successfully secured venture funding, cash management assumes paramount importance. The primary objectives are to preserve the company's capital, maximize liquidity, and explore safe yield opportunities.Low-risk investments such as Treasury bills, bonds, certificates of deposit (CDs), and high-quality corporate bonds offer opportunities for yield without excessive risk. By creating a bond ladder with staggered maturity dates, startups can access funds as needed, even if a small penalty is incurred for early withdrawal.

Startups frequently seek treasury management options that offer more comprehensive protection than the $250k FDIC insurance limit. These solutions typically fall into three categories:

Insured Cash Sweep Accounts: These accounts distribute deposits across multiple FDIC-insured banks, ensuring that your balance at any particular bank remains below the $250k insurance limit. Funds are readily available and relatively secure.
Government Bonds: Widely regarded as among the safest investments globally, government bonds and bills provide a secure option for deploying your cash. Collaborating with a reputable banking partner can help you navigate the nuances of selecting the right maturity date.
Money Market Funds: Although not FDIC-insured, money market funds invest in secure, short-term securities. They are generally considered safe. However, it's crucial to collaborate with a reliable treasury management partner to determine if they align with your startup's cash management goals.

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‍‍Access to your Funds‍

Readily available funds, which are the lifeblood of startups, must be placed in liquid and easily accessible accounts or assets. These can include traditional savings or checking accounts at banks, where funds can be withdrawn quickly for daily operational needs. Startups can also consider using cash-equivalent options, like short-term government bonds or commercial paper, which combine safety with relatively easy access to cash. These examples illustrate the importance of balancing liquidity with yield when parking startup funds in various financial instruments, ensuring that the money remains readily available for both expected and unexpected needs.‍

‍Sound Cash Management

‍In a nutshell, managing cash wisely is crucial for startups. It's like walking a tightrope between making some money, keeping things safe, and being able to access your funds when needed. Stick to safer options like Treasury bills, bonds, and consider spreading out your investments over time. If you have more cash than the FDIC insurance limit of $250k can cover, there are options like Insured Cash Sweep Accounts, government bonds, and Money Market Funds, but make sure to work with trusted financial partners. By following these simple principles, startup founders can protect their money, have cash ready when they need it, and even earn a little extra, setting the stage for long-term success.‍

Crafting the Perfect Pitch Deck: A Foundational Guide to Startup Success

The Foundational Role of a Pitch Deck

Pitch decks are the cornerstone of startup success, serving as the essential blueprint for your entrepreneurial journey. In this educational guide, we'll embark on a comprehensive exploration of the art of creating a compelling pitch deck—a critical tool that can unlock funding, strategic partnerships, and exponential growth for your startup. Gain profound insights from exemplary examples and expert guidance as we navigate the path to startup triumph together.‍

Understanding the Significance of a Pitch Deck

Pitch decks are more than just presentations; they are your startup's voice, carefully distilled into a visual narrative. Let's delve into the pivotal role they play in your entrepreneurial endeavors:

1. Capturing Hearts and Minds

In today's information-saturated world, a thoughtfully constructed pitch deck captures the attention of your audience swiftly. Its captivating visuals and succinct content have the power to immerse investors and stakeholders in your startup's compelling story.

2. Crafting a Persuasive Narrative

Pitch decks provide the canvas for you to narrate your startup's journey, from the problems you're addressing to the monumental impact you aim to achieve. They distill complex ideas into a compelling storyline that resonates deeply with your audience.

3. Showcasing Untapped Potential

With a robust pitch deck, you can spotlight vast market opportunities, your innovative solutions, tangible traction, an exceptional team, and financial projections that vividly illustrate your startup's boundless growth potential.

4. Invoking Investment and Support

Ultimately, a meticulously structured pitch deck has the capacity to sway investors towards decisive action—whether that's investing capital, forging strategic alliances, or initiating profound discussions.‍

Insights from Exemplary Pitch Decks

Now, let's embark on an enlightening journey through insights derived from outstanding pitch decks:

1. Front Series A Deck

‍This source unveils the pitch deck used by the startup Front during its Series A funding round. The deck emphasizes the importance of articulating the problem, presenting the solution, and showcasing the market opportunity.

2. Best Pitch Decks

‍An extensive collection of pitch decks reveals a wealth of best practices. Across these examples, a compelling narrative, visual appeal, and a clear call to action emerge as common elements of success.

3. Uber VC Pitch Deck

‍Uber's original pitch deck is legendary. It serves as a testament to the power of storytelling in pitch decks. Addressing the problem, solution, and market size effectively, it played a pivotal role in the company's success.‍

‍4. Startup Pitch Deck Examples

‍A compilation of pitch deck examples highlights effective structures. Key elements such as market validation and competitive analysis are showcased, providing valuable templates for founders.

5. Billion-Dollar Startup Pitch Decks

‍This source presents pitch decks from billion-dollar startups, shedding light on the strategies that contributed to their success in securing significant capital.

6. 15 Great Pitch Decks from Successful Startups

‍Fifteen stellar startup pitch decks are featured here, offering a wealth of inspiration and actionable insights.‍

The Takeaway

In the dynamic world of startups, a well-crafted pitch deck can be your secret weapon. It's your opportunity to make an undeniable case for your venture, attract investors, and propel your startup toward success. Whether you're crafting your first pitch deck or refining an existing one, these insights from accomplished startups serve as a valuable guide.While there's no one-size-fits-all formula for a perfect pitch deck, these examples and expert tips can help you create a presentation that resonates deeply with your audience and advances your startup's mission.

Mastering Personal Finance as a Startup Founder

When you step into the world of entrepreneurship as a startup founder, you're embarking on a journey that's both exhilarating and challenging. As you navigate the ups and downs of building a business from the ground up, managing your personal finances is a critical component that often doesn't get the attention it deserves. Whether you're on the cusp of a life-changing financial windfall or facing the risk of your equity becoming worthless, taking control of your personal finances is vital. In this blog, we'll explore key considerations and best practices for startup founders to master their personal finance.‍

Equity: Understanding Your Starting Point

As a founder, you likely received restricted stock awards (RSAs) as a form of equity in your company. These RSAs are shares that you purchased at a minimal cost. If you haven't already, it's essential to understand the significance of filing an 83(b) election. This action informs the government that you're opting to pre-pay taxes on the shares, which can result in preferential tax treatment. Properly handling this step early on can save you significant money in the long run.Moreover, consider exploring the qualified small business stock (QSBS) tax exemption. If you meet the criteria—holding the shares for five years, your business having less than $50 million in assets when you acquired the shares, and owning original, issued shares from a qualified C-corp—you could avoid paying taxes on the first $10 million of gains upon selling your stock.‍

Tax Strategies: Making Informed Decisions

While there are no "silver bullets" to dramatically reduce your tax burden, understanding your options and planning accordingly is crucial. Some founders consider moving states to save on state taxes. However, remember that choosing your location should align with broader considerations, such as community and lifestyle, not just tax implications.Hiring a capable accountant might seem like a significant investment, but the peace of mind and the assurance that you'll navigate financial complexities correctly can be well worth the expense. As you grow and manage equity decisions or delve into more complex financial matters, a Certified Public Accountant (CPA) can provide essential support.‍

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Getting Liquidity: When and How to Sell Secondary Shares

As your startup thrives, you might explore the option of selling secondary shares. Ideally, this should be done with the blessing of your board, and you might also extend this opportunity to early employees as a reward for their contributions. However, selling secondary shares requires a careful analysis of the opportunity cost. Consider both the immediate liquidity and the long-term potential.Imagine your company is raising a Series C, valued at $250 million, and you own 20% of the shares (a value of $50 million). If you're allowed to sell $5 million in secondary shares (10% of your shares), assess the opportunity cost. The best-case scenario could be a $5 billion IPO without further dilution, in which case your shares would be worth $100 million. Weigh this against the worst-case scenario where your company doesn't succeed, and your shares become worthless. The decision to sell secondary shares involves a gut-check weighing immediate liquidity against the potential long-term gains.‍

Investing: Strategies for Wealth Building

To build and safeguard your wealth, start by creating a cash flow plan to determine your personal expenses and salary. Working with your board and finance leadership can help you establish a fair salary. If your startup's valuation and revenue justify it, don't hesitate to pay yourself a substantial income. However, ensure it's a figure you'd be proud to see in the news.Before investing, set aside cash for short-term expenses, including an emergency fund (3-6 months of living expenses), taxes for the next year, and other significant life goals like a house payment or a wedding. This reserved cash defines how much you can invest.Your network is a unique asset as a founder. Consider angel investing in startups launched by friends or explore opportunities to become a scout for a VC fund. While some may view this as a distraction, it can be a rewarding way to leverage your network and gain further financial insights.‍

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Estate Planning: Preparing for the Future

Though it may not be as exciting as managing equity or making investments, estate planning is incredibly important. If you lack a trust or will when you pass away, your estate may go through probate, making your assets public and incurring additional expenses. Setting up a trust can help you avoid this.Two types of trusts come into play: revocable trusts and irrevocable trusts. Revocable trusts help avoid probate, while irrevocable trusts can provide tax advantages. Assets held in an irrevocable trust are outside your estate and can benefit from estate tax exemptions.‍

Lifestyle: Balancing Financial Growth and Personal Burn Rate

As a founder, sudden wealth can be challenging, especially if most of your assets are illiquid. Ensure your personal burn rate aligns with this financial reality. Prioritize building your business over indulgent personal expenses. Find opportunities to make a positive impact, both through your startup and in philanthropy, which can be satisfying and encouraging.‍

Protect Your Future

Mastering personal finance as a startup founder is not just about managing money; it's about securing your financial future and setting the stage for your business's success. The financial decisions you make today can have a significant impact on both your personal and professional life. Remember that there are no one-size-fits-all solutions, but understanding your options and planning proactively can make all the difference. Consult with professionals in tax, law, and finance to ensure you're on the right path to success.‍‍‍

Important Disclosure: This material is provided for informational purposes only and is not intended to be investment, tax, or legal advice nor a recommendation to buy, sell, or hold any securities or investments. This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy.

Founders Guide: Financial Statements

Financial statements are like your business's financial report cards. They provide valuable information that goes beyond just numbers, helping you make informed decisions for your business. In this guide, we'll dive into the three most important financial statements: the balance sheet, income statement, and statement of cash flows. By the end, you'll have a good understanding of how these statements work together to guide your business toward its goals. Lets dive in.

The Balance Sheet:

Think of the balance sheet as a look into your business's finances at a certain point of time. It shows what you own (assets), what you owe (liabilities), and what's left for you (equity). This statement is crucial for business owners and stakeholders looking to assess the financial health of a company.

Now, let's break down the balance sheet equation: Assets = Liabilities + Equity.

‍Assets: These are things your business owns, like cash, equipment, or even patents.

‍Liabilities: These are debts or things you owe, like loans or unpaid bills.

‍Equity: Equity is what's left after you subtract what you owe from what you own. It's like a reward for business owners. Understanding equity tells you how well your business is doing financially.

The balance sheet serves as a snapshot of your business's financial position at a specific moment in time, revealing the connection between assets, liabilities, and equity. By grasping the different sections of the balance sheet, you gain valuable insights into the components that drive your business's financial well-being. The balance sheet is a core part to guiding you toward informed decisions and a deeper understanding of your business's financial success.‍‍

Balance Sheet example:

The Income Statement:

The income statement, also recognized as the profit and loss (P&L) statement, is like a money story. It tells you how much money you made, how much you spent, and if you made a profit or a loss during a certain time. Here are the key parts:

‍Revenue: This is the total money your business earned from selling products or services.

‍Cost of Goods Sold (COGS): It's the money you spent to make the products you sell.

‍Gross Profit: This is what's left after you subtract COGS from your revenue. It shows if your products or services are profitable.

‍Operating Expenses: These are costs of running your business, like rent, wages, and advertising.

‍Net Profit: This is your bottom line. It's what's left after you subtract all your expenses from your revenue. It's the money your business keeps.

Unlike the balance sheet, which offers a fixed perspective, the income statement tracks changes over a time period. This allows business owners or stakeholders to see how effectively a company is generating profits and managing expenses. You now have the ability to better plan ahead as you have a complete view of your revenues and expenses and how they may vary per month or year.‍

Income Statement example:

Statement of Cash Flows:

A statement of cash flows is a financial document that tracks the inflow and outflow of cash within a business over a specific period of time, typically a month, quarter, or year. It provides a detailed breakdown of how cash is generated and used in the company's operations, investments, and financing activities. The statement of cash flows is broken into three parts:

‍Cash Flows from Operations: This is the cash inflows and outflows from your regular business activities. It includes cash received from customers, payments to suppliers and employees salaries. This can indicate how well a company manages its day to day operations to generate cash.

‍Cash Flow from Investing Activities: This is money typically spent on long term assets. These activities can involve buying or selling property and equipment or the purchase of stocks or securities. Cashflows from investing activities can show how a company is investing in it's future growth.

‍Cash Flow from Financing Activities: Here, you see money you got from obtaining loans, issuing stock or paying dividends to shareholders. This part reflects how the company raises capital and how it returns capital to its investors.

The statement of cash flows is a crucial financial tool because it helps business owners and investors understand how a company manages its cash resources. It also assists in assessing a company's liquidity, financial stability, and ability to fund its operations and growth.‍

Statement of Cash Flows example:

Using Financial Statements Wisely:

In a nutshell, financial statements are more than just boring papers – they're your secret weapon to making good choices for your business. By getting the hang of the balance sheet, income statement, and statement of cash flows, you'll be on your way to financial success.Think of financial statements as a constant source of information that guides your financial choices and supports your business growth. Whether you're a business owner, investor, or lender, these statements are your best pals for unlocking your business's full potential.‍

Demystifying the Payroll Version of R&D Tax Credits

When it comes to growing your business, every dollar matters. That's where R&D tax credits come into play. These incentives offer a fantastic opportunity for companies of all shapes and sizes to recoup some of their research and development expenses. In this article, we'll break down the payroll version of R&D tax credits, making a complex topic easy to understand.‍

Qualifying Activities for R&D Tax Credits

First things first, what activities qualify for R&D tax credits? At Haven, we specialize in uncovering those qualifying activities that often go unnoticed. This includes not only technical roles but also non-technical ones. The great news is that we've found credits for companies across various industries, sizes, corporate structures, and even for those not yet turning a profit.The key to R&D tax credits lies in innovation and problem-solving. If your company engages in activities that seek to develop new products, improve existing ones, or enhance processes through technological advancements, you're likely eligible. This could involve software development, engineering, scientific research, or even the creation of new manufacturing techniques.Your company may be able to apply the R&D tax credit against payroll tax if the following are true:

You’ve never had gross receipts or only had them within the last five years.
You have less than $5 million in gross receipts during the current year.
You have qualifying research activities and expenditures that meet the IRC Sec. 41 four-part test.

Business Entity Types and Eligibility

One might wonder if their business entity type affects eligibility for R&D tax credits. In most cases, it doesn't matter. All business types, including S Corporations, sole proprietorships, partnerships, corporations, and LLCs, qualify for R&D tax credits. The only exception is non-profit organizations (501c3s) because they don't have tax liabilities to offset with credits.This inclusivity is a key strength of the R&D tax credit program. It encourages businesses of all sizes and structures to invest in research and innovation, promoting economic growth and technological advancement across the board.‍

R&D Tax Credits for Startups

You might be wondering if your startup, which isn't profitable yet and isn't paying taxes, can still apply for R&D tax credits. The answer is a resounding "yes!" Even early-stage, pre-revenue startups can leverage federal R&D credits against their payroll taxes. If you haven't set up payroll yet, don't worry; you can carry these credits forward as assets on your balance sheet until you're ready to use them.For startups, R&D tax credits can be a lifeline. They provide a way to offset some of the costs incurred during the crucial early stages of research and development. This financial boost can help startups channel resources into innovation and growth, setting the stage for future profitability.‍

Your Potential Savings Opportunities

Companies that develop new or improved products, processes, or software can:

Generate up to $250,000 annually until December 31, 2022, after that the Inflation Reduction Act increased the election to $500,000 in R&D credits to use against your payroll tax.
Receive a credit equal to 10% of your eligible R&D spend.
Generate payroll credits for up to five years—for up to $2.5 million in total credits.

The additional $250,000 would be used to offset the employer-paid Medicare payroll tax of 1.45% each calendar quarter. The R&D payroll tax credit attributable to the employer-paid Medicare tax must not exceed the tax imposed. Any unused R&D credits will be carried forward and applied to a succeeding calendar quarter as a credit.‍

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How the Process Works

Now, let's take a closer look at how the process of claiming R&D tax credits against your payroll tax liability works:

Assess Eligibility: The first step is to determine if your business meets the eligibility criteria for R&D tax credits against payroll tax. This includes evaluating your gross receipts and research activities.
Identify Qualifying Activities: Work with professionals to identify the specific research and development activities that qualify for credits. This involves a thorough examination of your projects and expenses.
Calculate the Credits: Once qualifying activities are identified, professionals will calculate the credits you're eligible for.
Documentation and Filing: Proper documentation is essential. Our professionals will help you compile all the necessary documentation and file the appropriate forms to claim your credits.
Carryforward: Any unused credits can be carried forward to subsequent quarters, ensuring that you make the most of this valuable incentive.

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Confidently Claim Your Credits

Each payroll provider or professional employer organization (PEO) may have a different process for handling the credits, and businesses are often left to assess these nuances on their own. Our professionals are highly experienced in navigating these distinctions and can even file claims on your behalf if needed.Credits that aren’t properly documented also risk rejection by taxing authorities. Our detail-oriented team will help you identify and compile the documentation needed to advance through the credit process from start to finish.‍

Seizing the Potential of R&D Tax Credits with Haven

In conclusion, R&D tax credits can be a game-changer for your business, whether you're a startup on the cusp of innovation or an established corporation seeking to drive further growth. These credits provide a valuable opportunity to recover costs, invest in innovation, and bolster your financial resources.At Haven, we specialize in uncovering qualifying activities that often go unnoticed and assisting businesses in confidently navigating the complex process of claiming R&D tax credits against payroll tax liability. With our professionals by your side, you can harness the power of R&D tax credits to fuel your business's success, drive innovation, and secure a brighter future.‍

Ready for Haven to help claim your credits? Book a call now!

The Hidden Pitfall: Neglecting Bookkeeping Can Doom a Startup

The Dangers of Neglecting Bookkeeping

In the fast-paced world of Silicon Valley, where innovation knows no bounds, there's a tale that's becoming all too familiar. It's a story of startups that rise to glory and then crash and burn, leaving everyone asking, "How did this happen?" The recent FTX meltdown, the abrupt shutdown of Fast, and Bird's admission of revenue overstatement are just a few chapters in this troubling pattern.On the surface, it's easy to dismiss these incidents as cases of fraud or bad leadership, but there's a more insidious problem at play here—one that affects nearly every startup. It's a problem that often lurks in the shadows, underestimated and overlooked: founders not caring about bookkeeping.Tech startups are notorious for being data-driven, meticulously measuring metrics like Monthly Active Users (MAUs), Daily Active Users (DAUs), Key Performance Indicators (KPIs), Net Promoter Scores (NPS), downloads, churn, and retention right from day one. Yet, curiously, the numbers in the financial books are often treated as an afterthought.This cavalier attitude towards bookkeeping can set a dangerous precedent, leading to mismanagement at best and outright malfeasance at worst. To illustrate this point, let's dive into a few cautionary tales.Fast, the one-click checkout sensation, soared to success one day and vanished the next. TechCrunch reported a burn rate that skyrocketed to "as high as $10 million per month," far exceeding revenue and gross profit. The result? Fast simply ran out of money. The startup's rapid demise can be attributed to one significant oversight—the neglect of financial records.Bird, the electric scooter giant, found itself in hot water when it admitted to the SEC that it had overstated its revenue for two years. The reason? A mistake in recording revenue versus deferred revenue, which might be understandable for someone not well-versed in bookkeeping but is concerning for a publicly traded company.Even FTX, a crypto exchange, saw its fortunes plummet due to a seemingly minor issue—internal labeling of bank-related accounts. This labeling error led to a miscalculation that transformed the company from a $32 billion juggernaut to bankruptcy within 48 hours.‍

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Have Clean Books from Day 1

From an external perspective, these issues might appear as deliberate attempts to evade taxes or conceal a company's true financial health. However, in most cases, they stem from founders lacking the knowledge to handle these matters correctly, assuming they aren't at a stage that warrants better financial systems, or simply not knowing where to find expert guidance.Naturally, nobody embarks on the entrepreneurial journey excited about managing financial books. The motivation typically centers on changing the world through AI, simplifying lives with software, or revolutionizing an industry. This is the way it should be. Leaders should focus on their mission and vision. However, there's a stark distinction between finding bookkeeping tedious and ignoring it altogether.In some respects, it's understandable why bookkeeping can become a second-tier priority. The venture capital model prevalent in Silicon Valley prioritizes growth over immediate profitability, granting startups years to scale. The issue arises when founders treat this phase as an everlasting state, overlooking critical financial housekeeping.For some startups, the realization of bookkeeping's importance dawns when they contemplate going public. Preparing for public markets can be an arduous process, often prompting companies to hire a CFO late in the game. The first task at hand is cleaning up past financial practices and revamping systems to ensure the books can withstand Wall Street's scrutiny. This process frequently uncovers issues such as inaccurately booked revenue, incorrect margins, and duplicate payments. In the worst-case scenario, poor financial records can derail or delay the company's plans to go public, as exemplified by WeWork's high-profile IPO withdrawal.‍

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Choose Haven and Save your Precious Time

‍It's disheartening to witness this cycle repeatedly because it doesn't have to be this way. Founders can change the narrative by shifting Silicon Valley's culture to recognize that bookkeeping is a mission-critical function. Implementing robust financial systems from day one can spare startups the pain of years of bookkeeping cleanup. It allows them to allocate resources to unique company priorities like product development, customer satisfaction, talent acquisition, and strategic partnerships where a CFO can make a real impact. In essence, it empowers them to focus on building the future of their business rather than rectifying past mistakes.The saga of Fast serves as a poignant reminder of the consequences of neglecting bookkeeping in the startup world. It's a story of a startup that had everything going for it but failed to appreciate the hidden hero of financial management. As the startup landscape evolves, founders must recognize that bookkeeping is an integral part of their journey, vital for long-term success, and a safeguard against becoming tomorrow's cautionary tale.‍‍

Have questions about your books? Haven can help. Book a call with us today!

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