fbpx
image represents What is the best way to manage bookkeeping/accounting for a SaaS startup?

What is the best way to manage bookkeeping/accounting for a SaaS startup?

Having a business is not just about running it and making money. It’s about finding customers who can buy your product and keep your business running smoothly. Bookkeeping and accounting are two essential responsibilities of a business. Without them, a business cannot manage its finances, identify growth opportunities, and increase revenue.

While bookkeeping and accounting are tedious tasks that need meticulous attention, they can also be challenging for small to medium-sized companies. One of the reasons is that most companies struggle to find the right bookkeeping services or accounting software for their needs.

In this blog, we will discuss the best bookkeeping/Accounting platforms for saas companies based on customer feedback, experience, and rating. We will also touch upon some of the common challenges faced by companies in having a smooth flow of bookkeeping and accounting for their SaaS business.

What Is SaaS Bookkeeping & Accounting?

Startups need to have the right accounting system in place from day one to avoid future stress and financial mess.

image represents What Is SaaS Bookkeeping & Accounting?

The best accounting system for a software-as-a-service business is a hybrid system that combines financial reporting with bookkeeping and accrual accounting. Bookkeeping is important for tracking the revenues, expenses, cash flow, and balance sheets of a business. An accountant can help you create financial statements, balance sheets, income statements, and other financial statements for your business.

Hybrid accounting systems provide a service provider with a complete view of their business from end to end. It allows them to track key metrics such as revenue, expenses, cash flow, assets, liabilities, and other metrics. Besides that, it includes accrual accounting which helps the business track expenses as soon as they are incurred without having to wait until the financial year is over.

Besides bookkeeping services mentioned above, an accountant can also help you with other accounting duties like working with accountants or auditors or preparing financial statements or tax returns

Bookkeeping Platforms for saas startup

SaaS bookkeeping/Accounting platforms are popular for startup companies as they help them manage their accounting and bookkeeping requirements efficiently. SaaS accounting services include revenue recognition, working capital, deferred revenue, monthly and quarterly close, client invoicing, cash flow management, journal entry processing, and GAAP standards.

Typically these services are provided by a third-party company through a cloud-based solution. This allows startups to save costs associated with managing various financial aspects of the business.

Startups should prioritize their accounting system to avoid any financial mess in the future. It is vital to have a detailed chart of accounts that reflects business transactions accurately. A tailored chart of accounts will help startups identify specific financial metrics quickly and make informed business decisions.

Xero

Xero is a user-friendly accounting software technology that is used by startup companies to manage their Bookkeeping/Accounting needs.

image represents xero as best Bookkeeping Platforms for saas startup

It provides basic inventory management, and access anytime and anywhere, making it ideal for small businesses with a limited IT budget.

It also offers perpetual CPA, which means that a CPA will be attached to the account from the start. This can save startup companies time and money by ensuring financial accuracy from the start.

Accounting SaaS is a method in which a service provider hosts an application on their cloud-based platform. Perpetual CPA services are often part of accounting saas packages to help a small business function smoothly.  Xero is a great tool for managing accounting for small business owners.

Wave

Wave offers fee-based bookkeeping services for small businesses and independent contractors.

image represents wave as best Bookkeeping Platforms for saas startup

As a cloud-based bookkeeping software, Wave provides a comprehensive platform for invoicing, payment processing, and bookkeeping, including unlimited income and expense tracking and multiple business support features. One of the unique features of Wave is its mobile app, which allows users to access accounting features on the go.

Another benefit of Wave is its ability to collaborate with guest users. This makes it ideal for freelancers and service-based small businesses that require bookkeeping services on a short-term or occasional basis. Overall, Wave is a cost-effective bookkeeping solution that allows users to stay organized and financially secure without requiring a large investment in hardware or software.

FreshBooks

FreshBooks is a cloud-based accounting software designed specifically for small and medium-sized businesses.

image represents freshbooks as best Bookkeeping Platforms for saas startup

It offers a variety of customizable invoicing, accounting, and billing features, as well as a self-service interface to make managing financials easier.

One of FreshBooks’ most unique features is its self-service interface, which allows users to enter data easily and quickly without the need for prior experience or training.

Additionally, the software has a more customized invoicing feature than other accounting SaaS software. This allows for more specific billing and can reduce errors in completing customer statements.

Additionally, FreshBooks has three different plans to choose from depending on business size and accounting requirements, offering various options to fit any budget.

FreeAgent

FreeAgent is a popular accounting software that is free for users with accounts from select UK banks. The software offers a range of features such as invoices, expenses, Self Assessment tax returns, payroll, and VAT filing, making it ideal for managing bookkeeping/accounting for a SaaS startup.

FreeAgent is easy-to-use and highly automated, helping users save time on such tasks as journaling and reconciling statements.

Spdload is an experienced development team that specializes in building future-ready SaaS startups. We provide our clients with end-to-end services including business analysis, technical design, and product development to help them build successful SaaS businesses.

Common Challenges in Managing SaaS Accounting

SaaS companies need to prioritize accounting early on in order to avoid stress and financial mess in the future. To stay on track, perpetual CPA companies provide SaaS firms with unique financial needs like revenue forecasting, CAC/LTV calculation, and financial statement preparation.

They also offer bookkeeping/accounting services such as:

  • Accrual
  • Revenue recognition
  • Working capital
  • Deferred revenue
  • Monthly/quarterly close
  • Invoicing
  • Cash flow management
  • Journal entry processing
  • GAAP bookkeeping standards
  • Tax Preparation

In addition to these services, companies can hire a bookkeeper for small businesses who can help with tracking business transactions and managing finances.

By taking care of financial affairs early on in the process of setting up a SaaS business, companies can ensure they are well-prepared for years of growth and profitability.

Get Professional Guidance to Streamline Your SaaS Bookkeeping & Accounting

Professional bookkeeping and accounting services can help SaaS businesses at any stage of growth, from startup to enterprise.

Bookkeeping/Accounting services include

  • Accrual bookkeeping
  • Revenue recognition
  • Working capital
  • Deferred revenue
  • Monthly and quarterly close
  • Client invoicing
  • Cash flow management
  • Journal entry processing
  • GAAP bookkeeping standards

An accounting solution should be set up on day one and can scale with the business’ growth. In addition to providing financial reporting and insights into business operations, an accounting system can also help track cash inflows and outflows as a business scales.

If you’re a small business owner with a SaaS business, it’s essential to have a firm grasp of financial reporting and financial statements. Different accounting standards apply depending on a business’s stage of development or size, so it’s vital to have professional advice on how to best account for your business’s finances.

For example, bookkeeping services can include monthly statements detailing revenue received and expenses incurred during the month. Further services may include cash flow tracking, income statement analysis, balance sheet auditing, and more.

Extensive resources are available to help Sahu finance teams manage their SaaS businesses effectively.

With the right bookkeeping and accounting services in place, small businesses can better understand their financials and make informed decisions about their finances.

Conclusion

To stay organized, you need a system. And to get started with the system, you must have books. By managing your business’s accounting, bookkeeping, and payroll needs with the right software solution, you can free up your time to focus on growing your business.

Besides making it easier for you and your team to work together and reducing errors and double-checking work, these platforms make it simple to connect with your accounting system securely and efficiently.

If you want to learn more about setting up a saas startup business accounting software solution, contact our experts today at (freecashflow.io).

Free E-book for E-Commerce Entrepreneurs

9 Most Crucial eCOM Tax Deducations The IRS Doesn’t Want You to Know

Explore More

How To File Taxes For Shopify Store?
Blog

How To File Taxes For Shopify Store?

How To File Taxes For Shopify Store? In this article, you will learn: Shopify Taxes Shopify Store Owners Need To Pay Shopify Income Tax: Forms,

Boost Your E-Commerce Business Now

drop us a line and keep in touch
Alan Chen

Schedule Your Call with Alan!

Hate working with accountants that don’t understand your online business?

By the end of this Strategy Session, you will have a clear understanding of the next steps you can take.

 This Call Is Completely FREE.

Have Urgent Questions You Need Answered?

Book a FREE consultation call with Alan and talk to a CPA who actually understands and cares for your business.

Alan Chen