Understand the drivers of your revenue, be it the number of customers, salespeople, or marketing spend. One of the reasons investors love subscription businesses is that they are easier to forecast – which is also why it’s really important to create a great financial model for your SaaS business. Thankfully, this has all been done before, and we have some free model templates that will help you get started. ARR is generally the most important metric tracked by subscription companies.

Investor Reporting Standards

A conventional retailer or manufacturer records revenue once a sale is made and the product is delivered. A SaaS company, by contrast, earns revenue gradually because its product is continuous access to software rather than a one-time transfer. This creates a timing gap that requires revenue to be recognized in increments that match the service period. Remember, accurate financial management isn’t just about compliance—it’s about creating a solid foundation for your company’s future. SaaS accounting is a bit more nuanced because of the subscription business model.

What accounting software does Founder’s CPA support?

NetSuite isn’t just an accounting tool—it’s a full cloud-based ERP system that ties together financial management with other business areas like CRM, inventory, and e-commerce. It’s ideal for mid-sized to large enterprises that need robust, real-time reporting and the ability to manage multiple subsidiaries all in one place. If you’re looking for an all-in-one solution to manage every aspect of your business, NetSuite is worth a look. Sage Intacct is aimed at growing mid-sized companies that need more advanced financial management. It offers features such as multi-entity consolidation and detailed reporting, helping you automate and manage complex accounting processes as your business expands.

Opt for accrual accounting over cash accounting

FreshBooks is a cloud-based solution that is especially popular with freelancers and small businesses. It takes care of everyday https://dimensionzen.com/streamline-your-finances-with-expert-accounting-services-for-startups/ tasks like invoicing, tracking expenses, and managing time. From providing CFO services to offering tax guidance and financial solutions, they’re essential for optimizing a small business’s time and resources. With expertise in industries like FinTech, these firms deliver precise support in financial forecasting, tax planning, and compliance, helping startups maximize their potential for success. When it comes to managing the finances of startup businesses, top accounting firms like Kruze Consulting and Dubler C.P.A. have your back.

• This accounting software automates workflows like invoicing, expense tracking, and payment reminders.
• In this article, we’ll cover everything you need to know about accounting for startups, enabling you to manage your finances and position your business for long-term success.
• Standard packages add payroll, tax support, and periodic financial reporting for growing companies.
• SaaS businesses must manage sales tax nexus, VAT, and digital service taxes.
• The accounting software also integrates with over 1,000 apps like HubSpot and Square, making it ideal for accounting for startups that already use business tools and need to sync financial data.
• Revenue is recognized over the subscription period as the service is delivered.
• Some of the ones they tend to focus on the most include cash flow, burn rate, CAC, churn rate, gross profit and EBITDA.

Intuit TurboTax Business

Revenue is the total amount of income generated by a business’s primary operations—typically the sales of goods or services—and represents the business’s total earnings or profit. While startups are not required to follow GAAP accounting principles, there are benefits of SaaS startups doing so from an early stage. Generally Accepted Accounting Principles, or GAAP, are accounting rules, guidelines, and regulations to standardize business accounting methods across industries.

The 5 Best AP Automation Software Solutions of January 2026

Explore our SaaS accounting services and see how we can help you achieve your financial goals. Masting SaaS accounting is important for the growth and success of your business. We’ve seen SaaS startups trip up by treating their finances like traditional businesses. Don’t fall into this trap—recognize the unique aspects of your business model from day one. Accrued Revenue is treated as an Account Receivable until the customer pays the bill. However, a high Accrued Revenue signifies that the business is not getting payments for its services and can be alarming from a cash-flow perspective.

This tool is ideal for freelancers and very small businesses because it’s free and covers the basics—like invoicing, receipt scanning, and expense tracking—in a user-friendly way. With FreshBooks, you can set up recurring bills, easily communicate with clients, and integrate with your favorite payment services. It’s designed to simplify your bookkeeping so you can focus on what you do best—growing your business. For SaaS businesses to successfully handle their particular financial requirements, identifying the right accounting software is necessary. Below is a selected list of the best ten accounting software products for SaaS businesses.

• Keeping your investors informed is key to maintaining trust and transparency.
• There are various other scenarios your SaaS startup may encounter that can impact revenue recognition.
• To choose the best SaaS accounting software, you should start by identifying your business needs based on the business size and number of users.
• There are numerous SaaS metrics startups can use to evaluate ROI, but one of the biggest factors to pay attention to is revenue gains.
• If your startup is service-based, its built-in project management tools help you collaborate effectively with clients.
• While startups are not required to follow GAAP accounting principles, there are benefits to SaaS startups doing so from an early stage.
• AI also guarantees compliance by seeing possible mistakes before they become an issue, which helps you avoid fines and penalties.

Expert ASC 606 revenue recognition for subscription businesses, usage-based billing, and complex SaaS contract structures. Selling software across state lines or to international customers may create tax obligations. SaaS businesses must manage sales tax nexus, VAT, and digital service taxes. When customers pay upfront for a year of service, you must defer that revenue and recognize it over time. Failure to track deferred revenue properly can lead to misstated income and tax errors.

• We believe that it’s our team’s job to help save our CEOs time and take care of the basic bookkeeping tasks that other services dump onto their clients.
• This range makes NetSuite an attractive choice for a unified platform for managing various business processes.
• We understand the unique accounting challenges and opportunities in the startup ecosystem.
• Seamless integration with payment gateways (like Stripe and PayPal), CRM platforms (such as Salesforce and HubSpot), and business intelligence tools makes financial tracking effortless.
• Our R&D specialists will even review your accounts, to see if you’re eligible for a cash injection from R&D Tax Relief.
• These statements ensure accurate reporting and compliance with the financial accounting standards board, offering a comprehensive view of financial performance.

What’s the difference between bookings, billings, and revenue in SaaS?

However, the good part is that the right SaaS accounting software is purpose-built to handle the intricacies of modern business finance. Finally, it is essential to review and perform a sanity check on your financial projections. This ensures the projections align with your business narrative and makes sense in terms of the SaaS industry’s financial norms. And we recommend a recurring budget vs actuals exercise, where you compare recent results with projections to understand how you are performing vs expectations. For SaaS startups, headcount is usually the largest accounting for startups expense, so project your personnel needs accurately. Additionally, estimate other expenses, using benchmarks from successful companies if needed.