Accounting for software startups
Investors want accrual books and numbers that tie. We close your books monthly on an accrual basis, recognize subscription revenue properly, run payroll, check where your software is taxable and keep your federal and Delaware filings current.
What slows down a raise?
Diligence finds these fast. Better that we find them first.
Cash books, accrual questions
Annual plans booked as income the day they're paid make every month look wrong.
Stripe payouts recorded net
Fees, refunds and disputes vanish. We record gross revenue and every cost.
A huge Delaware tax bill
The default method can mean a five-figure notice. The other often means $400.
How do we set up startup books?
The standard investors and acquirers expect.
| Section | Accounts |
|---|---|
| Revenue | Subscriptions, services and implementation, usage fees |
| Cost of revenue | Hosting, third-party APIs, merchant fees, support staff |
| Operating | Payroll by department, contractors, software, marketing |
| Balance sheet | Deferred revenue, SAFEs and convertible notes, accrued payroll |
- $12,000 paid upfront for a year is $1,000 earned each month
- The rest sits as deferred revenue until you deliver
- New, expansion and churned revenue broken out
- Stripe reconciled to gross sales, fees and refunds
- Delaware franchise tax by March 1, both methods calculated
- Domestic research costs deductible right away again since 2025
- The research credit, and its payroll tax offset for qualified small businesses
- SaaS is taxable in some states once you pass their nexus threshold
Which metrics will investors ask for?
Reported monthly from books that close, not from a spreadsheet.
MRR and ARR
With new, expansion and churn broken out.
Gross margin
After hosting, third-party software and support.
Burn rate
Net cash out each month, averaged over a quarter.
Runway
Months of cash left at the current burn.
Deferred revenue
Cash collected for service you still owe.
Spend by department
Engineering, sales and marketing, and general.
Founders ask us.
Ask anything else on a free 30-minute call.
Book a callSources: Delaware franchise tax calculation, IRS research payroll credit
Free tools: C-Corp vs S-Corp, Break-even calculator, Profit margin calculator
Do you require an annual contract?
No. Every plan runs month to month.
Do you do 409A valuations?
No. Valuations come from a specialist firm. We give them the financials they ask for.
We're a foreign founder team with a Delaware company. Can you help?
Yes, as long as the company has US filings. We handle the books, the federal and Delaware filings and any Form 5472 reporting for foreign shareholders.
Tell us what's messy. We'll tell you what it takes.
Tell us what you need and get a fixed price before any work starts. No pressure and no contract.