--- title: "Bookkeeping for startups, pre-seed to seed | Ledgerbrook" source: https://ledgerbrook.com/blog/bookkeeping-for-startups/ description: "Bookkeeping for startups on QuickBooks Online: a 90-day setup, cash vs accrual, SAFEs and founder equity, and R&D records." --- [Blogs](/blog/) # Bookkeeping for startups, pre-seed to seed ![](/_astro/omkar-moraye.BHiWb4KG_xH3b5.webp) [Omkar Moraye](/about/) · October 16, 2026 [](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fbookkeeping-for-startups%2F%3Futm_source%3Dlinkedin%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](https://x.com/intent/post?url=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fbookkeeping-for-startups%2F%3Futm_source%3Dx%26utm_medium%3Dsocial%26utm_campaign%3Dshare&text=Bookkeeping%20for%20startups%2C%20pre-seed%20to%20seed)[](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fbookkeeping-for-startups%2F%3Futm_source%3Dfacebook%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](mailto:?subject=Bookkeeping%20for%20startups%2C%20pre-seed%20to%20seed&body=Bookkeeping%20for%20startups%2C%20pre-seed%20to%20seed%0A%0Ahttps%3A%2F%2Fledgerbrook.com%2Fblog%2Fbookkeeping-for-startups%2F%3Futm_source%3Demail%26utm_medium%3Dsocial%26utm_campaign%3Dshare) ## What bookkeeping does a startup need? Bookkeeping for startups is the same monthly close as any small business plus 3 things investors and tax preparers check: business accounts separate from day 1, accrual books once there is deferred or contract revenue, and clean records of founder equity, SAFEs and convertible notes. Most early startups need a monthly close, not weekly. Bookkeeping for startups gets written about as if every founder has a board, a Series A term sheet and a controller on the way. Most don’t. This post is for the pre-seed or bootstrapped founder with a Delaware or state corporation, a QuickBooks Online file, a bank account and maybe a SAFE or two. The work is a normal monthly close done carefully, plus three things that small businesses can usually ignore and startups cannot. It is also honest about where bookkeeping stops. Board decks, fundraising models, cap table management and investor reporting are CFO work. Ledgerbrook does not do them; the books we keep are what a CFO, an investor’s diligence team or a tax preparer would start from. ## The first 90 days: a setup checklist | When | Task | Why it matters later | | --- | --- | --- | | Week 1 | Get an EIN and open a business bank account and card in the company’s name | Every later step assumes company money and founder money never mix | | Week 1 | Set up QuickBooks Online with a chart of accounts built for the business, not the default list | Reports investors ask for come straight out of the account structure | | Within 30 days of the stock grant | File any 83(b) election and keep the IRS-stamped copy | The 30-day window under IRC §83(b) cannot be extended, and diligence will ask for proof | | Month 1 | Record the founders’ stock purchase and any money founders paid before the account existed | Opening equity has to tie to the stock purchase agreements | | Month 1 | Collect a W-9 from every contractor before the first payment | 1099-NEC is due in January for anyone paid $2,000 or more (payments made after December 31, 2025) | | Month 1 | Choose a payroll provider before the first employee, founders included | Payroll posts to the books from one report a run, not from bank transfers | | Each round | Store every SAFE, note and stock purchase agreement where the bookkeeper can see it | The balance sheet entries come from the documents, not from the bank deposit | | Monthly | Reconcile every bank and card account and close the month | Everything below depends on reconciled numbers | If the file is not set up yet, our [QuickBooks Online setup](/quickbooks-online-setup/) builds it for $199, one-time. A Delaware corporation also files an annual report and pays franchise tax by March 1 each year; the calculation method chosen there can change the bill a lot, so ask your preparer before paying the first notice. ## 1\. Separate accounts from day 1 Founders pay for things before the company has a bank account: incorporation fees, a domain, the first months of software. Those costs belong in the books. Record each one as an expense of the company, with the other side either a founder loan (if the company will repay it) or additional paid-in capital (if it won’t). Decide which and be consistent; a pile of founder spending with no paperwork is the first thing a diligence review flags. Some of those early costs are startup expenditures for tax purposes. Under IRC §195 a business can deduct up to $5,000 of them in the year it begins business, reduced dollar for dollar once total startup costs pass $50,000, and amortizes the rest over 180 months. The books should keep them identifiable so the preparer can apply that rule; the tax treatment is theirs to set. After the account exists, the rule is simple: company spending on company cards, founder spending on founder cards. A personal purchase on the company card is a founder loan receivable or a distribution question, not an expense. ## 2\. Cash vs accrual, and when to switch Cash basis books record revenue when the money arrives and expenses when they are paid. For a pre-revenue startup paying monthly bills, that is usually fine. Accrual books record revenue when it is earned and expenses when they are incurred. Three things make the switch worth it: - **Annual contracts paid up front.** A $12,000 annual subscription paid on January 1 is not January revenue. On accrual books it is Deferred Revenue that becomes revenue at $1,000 a month. - **A priced round coming.** Investors and their diligence teams expect accrual statements prepared under GAAP, and converting a year of cash books under deadline is slow and expensive. - **Inventory or large prepaid costs.** Both distort a cash-basis profit and loss month to month. The January contract on accrual books: | Date | Account | Debit | Credit | | --- | --- | --- | --- | | Jan 1 | Business Checking | 12,000.00 | | | Jan 1 | Deferred Revenue | | 12,000.00 | | Jan 31 | Deferred Revenue | 1,000.00 | | | Jan 31 | Subscription Revenue | | 1,000.00 | The January 31 entry repeats each month until Deferred Revenue reaches zero in December. Our post on the [journal entry for deferred revenue](/blog/journal-entry-for-deferred-revenue/) covers the QuickBooks Online steps. The method on the tax return is a separate question. A C corporation generally has to use accrual for tax unless its average annual gross receipts are at or below the IRC §448(c) threshold ($31 million for tax years beginning in 2025, indexed each year), so most startups may keep cash-method tax returns while running accrual books. Your preparer handles that difference at year end. ## 3\. Founder equity, SAFEs and convertible notes The bank deposit from a SAFE looks like any other deposit. It is not revenue and it is not a founder contribution, and booking it as either is the most common startup bookkeeping error. Each instrument gets its own account: | Instrument | Where it sits in QuickBooks Online | What happens later | | --- | --- | --- | | Founder common stock | Equity: Common Stock at par, plus Additional Paid-in Capital for anything paid above par | Stays as founder equity; vesting is tracked on the cap table, not in the books | | SAFE | Its own account per round or per investor, usually set up as a liability | Moves to preferred stock and paid-in capital when the SAFE converts at a priced round | | Convertible note | Long-term liability for the principal, plus accrued interest each month | Principal and accrued interest convert to equity at the round, per the note’s terms | Two examples. Founders buy 8,000,000 shares at $0.0001 par for $800: debit Business Checking $800, credit Common Stock $800. An angel invests $250,000 on a SAFE: debit Business Checking $250,000, credit SAFE: \[investor name\] $250,000. Whether a SAFE is a liability or equity under GAAP depends on its terms. Many accountants classify the standard post-money SAFE as a liability under ASC 480 because the number of shares it converts into is not fixed, but that is a judgment for your CPA or auditor once a review or audit is in view. The bookkeeping job is narrower and does not change: keep each SAFE in its own account, at the amount invested, matched to the signed document. The cap table itself, who owns what percentage after each round, lives in a cap table tool or a spreadsheet the company’s lawyer maintains. The books record the cash and the instrument; they are not the cap table. ## R&D credit records your preparer will ask for Many software and hardware startups qualify for the research credit under IRC §41, claimed on Form 6765. A qualified small business (gross receipts under $5 million for the year and no gross receipts before the five-year period ending with that year) can elect, on a timely filed return, to apply up to $500,000 of the credit each year against the employer’s share of payroll taxes, for tax years beginning after December 31, 2022 (IRC §41(h)). That makes it useful before the company owes any income tax. Separately, domestic research and experimental costs can again be deducted in the year paid, for tax years beginning after December 31, 2024, under the new IRC §174A added in July 2025. Before that they had to be amortized over five years. The preparer or a credit specialist does the study. What they need from the books: - **Payroll by person**, with each person’s role, so wages of engineers can be separated from wages of sales. - **Contractor invoices that say what was built**, not just “services”. - **Cloud and computing costs** for development and testing kept apart from production hosting. - **Supplies used in development**, in their own account. A class or a sub-account for development work in QuickBooks Online is usually enough. Building it in from month 1 is much cheaper than reconstructing it from invoices in March. ## Common questions ### How much do bookkeepers typically charge a startup? Freelancers, firms and startup-focused platforms all publish different models; our post on [how much a bookkeeper costs](/blog/how-much-does-a-bookkeeper-cost/) has the market ranges with sources. Ledgerbrook’s figures are at the end of this post. ### Can a founder do the startup’s bookkeeping alone? Early on, yes, with one bank account, one card and a few dozen transactions a month. It stops being a good use of a founder’s time when a SAFE, payroll or annual contracts enter the file, because those are the entries a diligence review checks first and the hardest to rebuild later. ### What does a startup bookkeeper not do? A bookkeeper keeps the books: categorizes, reconciles, records equity and payroll entries, and closes the month. Tax returns, the R&D credit study, SAFE classification under GAAP, fundraising models and investor reporting belong to a CPA, a credit specialist or a CFO. ## When to hand the books off Hand off when the first SAFE closes or the first employee starts, whichever comes first. [Bookkeeping services for small business](/blog/bookkeeping-services-for-small-business/) compares the ways to get it done. Ledgerbrook’s [monthly close](/monthly-bookkeeping/) for startups runs in their own QuickBooks Online company: every account reconciled, founder equity and each SAFE in its own account, development costs tagged for the R&D credit, and statements by the 5th business day. It is $99 a month for up to 3 accounts, up to 200 transactions a month, and $199 past either limit. We do not do CFO work, board reporting or cap tables. How an engagement starts is on the [outsourced bookkeeping page](/for-business-owners/). [Send your file for a free review](/contact/?from=blog%2Fbookkeeping-for-startups): a written answer within 48 hours on what it needs and the fixed price, whether or not you hire us. Ledgerbrook Behind on your QuickBooks books? Cleanup or catch-up $99 per month of backlog, 20% off 6+ months Turnaround 5 business days for a typical year Monthly close From $99 a file a month [Get a free file review](/contact/?from=blog%2Fbookkeeping-for-startups) Free, no card, no obligation. 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