How to Set Up an Accounting System for Your Startup

When you're building a startup, it’s easy to focus on product, marketing, and growth-and ignore accounting.

However, a secure and simple accounting system is one of the first things every startup should establish.

Why?

Because your finances determine your runway, your expenses, your investors' return, and even your survival.

Here's a simple, step-by-step guide to setting up a professional accounting system for your startup.

1. Choose the Right Accounting Method

Startups usually choose between cash accounting and accrual accounting.

Let’s understand both of them.

a. Cash Accounting

- Record income when money is received.
- Record expenses when money is paid.
- Easy to manage.
- Perfect for early-stage small startups.

b. Accrual Accounting

- Record income when earned (even if not received).
- Provides a more accurate financial picture.
- Preferred by investors.

What to choose? Start with accrual if you aim to grow fast or raise funding.

2. Select an Accounting Software

Using Excel may work for the first and second week, but not beyond that. Choose software that helps you to:

• Track income.
• Manage invoices and payments.
• Handle GST.
• Generate reports, sync with bank accounts, etc.

If needed, TechInventify can also build a custom accounting dashboard designed for your startup.

3. Set Up Your Charts of Accounts

This is the backbone of your accounting system.

Create key categories like assets, liabilities, income, expenses, capital, etc.

This structure makes your financial reports clean and accurate.

4. Create a System for Invoices and Payments

This includes how you generate invoices, how clients pay you (UPI, credit card, bank transfer), and how you follow up on overdue payments.

A startup must avoid delayed collections - it kills cash flow.

Set automated reminders to avoid chasing people manually.

5. Track Every Expense

Set rules like every expense must have a receipt, no cash transactions without entries, etc.

Use a separate business account.

Never mix personal and business expenses or gains; it becomes a nightmare later.

6. Set Up for GST and Compliance

If your startup falls under GST, register early, file returns, and maintain proper purchase and sales records.

How can TechInventify help?

TechInventify helps startups to set up:

• Custom accounting dashboards.
• Automated invoice systems.
• GST-ready billing.
• Expense tracking tools.
• Cloud-based accounting apps.
• Complete financial management systems.

TechInventify develops tools that grow with your startup - simple, fast, and affordable.