Outsourced Accounting for Startups Doesn’t Have to Be Hard in 2025
Last week, we decided to bake a cake without following the recipe. We thought we were that smart (not really). So, we put in the ingredients, guessed the measurements, and put it in the oven. 40 minutes later, we pulled a burnt, lopsided cake. Gosh, it was horrendous!
The story tells us two things:
a. Always follow the recipe if you don’t know what you are doing.
b. If you don’t know about outsourced accounting for startups, managing your business can be chaotic.
We know some of you are good at accounting and don’t need outsourcing. Well, kudos to you! However, it’s always nice to have an expert by your side, doing everything you are doing and taking away the stress.
So, let’s see what outsourced accounting is and why you need it as a startup.
What is Outsourced Accounting for Startups?
Outsourced accounting is handing over a company’s financial responsibilities—like bookkeeping, payroll management, taxes, and financial reporting—to an accounting firm.
Instead of maintaining a traditional in-house finance team, startups can leverage the expertise of remote professionals who specialize in various aspects of financial management. These experts work with multiple businesses, which means they bring diverse industry knowledge, cutting-edge tools, and strategies to help your startup stay ahead of the curve.
What is an example of outsourcing in accounting?
Imagine you are an owner of Batcave Construction Company. You are brilliant at construction but struggle to keep track of your finances. You constantly deal with shoe-boxed invoices, payroll deadlines, and a looming tax season.
Instead of hiring a full-time accountant, which is costly for your construction startup, you decided to outsource. You partnered with an accounting firm (Tangent Consulting, of course!) specializing in startups. The firm oversees your bookkeeping, sets up automated payroll systems, prepares accurate financial reports, and plans for tax season.
Thanks to outsourcing, Batcave Construction saves money and gains access to top-tier accounting expertise.
This is just one example of how outsourcing in accounting allows businesses to offload complex financial tasks and focus on their core strengths.
But when should you consider outsourcing?
When to Outsource Accounting?
In the Harvard Business Review’s “Why Startups Fail,” Tom Eisenmann noted that running out of cash can be a major reason for a failed startup. This is a reminder of how important financial management is for any startup.
Let’s see some of the reasons why a startup should outsource:
Your Business is in a Stable Position
When your startup has over 12 months of runway, it signals a stable financial position. You can begin investing in tools and partnerships that help streamline operations. This is the perfect time to outsource your accounting.
Partnering with a professional firm ensures your financial operations are managed with expertise, allowing your internal team to focus on scaling operations, building new partnerships, and enhancing your product.
Your Team is Overwhelmed
Overworked teams are prone to burnout, and when your finance tasks fall to non-experts, the risk of errors skyrockets. When you spend hours checking financial statements, it drains your energy and pulls you away from core business activities. Outsourcing at this stage resets the mood and gives you and your team breathing room.
To Err is Human (But you can’t afford it)
Mistakes in financial records can lead to disasters; trust us, we have seen a lot. Small or silly mistakes can erode trust with investors, partners, and your team. When your numbers don’t add up, it signals a lack of professionalism and can lead to poor business decisions based on inaccurate data.
Outsourced accounting helps eliminate these errors by leveraging experienced professionals who can keep your books error-free.
You are Having Cash Flow Issues
As we discussed above, running out of cash is one of the major reasons many startups fail. Cash flow is the lifeblood of any business, and if it’s not being managed effectively, your startup could be in jeopardy.
Late payments to vendors, missed revenue, and a poor handle on expenses can snowball into bigger financial problems. Outsourcing accounting ensures you have systems to track every dollar coming in and going out, improving cash flow.
If you want to dive deeper, we have detailed guide on cash flow issues businesses face and how to solve them.
The Great Expectations
Investors and stakeholders need accurate, timely financial data to assess the health of your business. If your financial reports are inconsistent or lack the polish they expect, it can damage your chances of securing future funding. By outsourcing accounting, you gain access to experts who can prepare professional, investor-ready reports that meet (and exceed) expectations.
Why Outsource Your Accounting?
Accounting may not be the coolest part of running a startup, but it’s one of the pillars that keeps your business strong. Yet, trying to handle it all in-house can often feel like putting together a puzzle with missing pieces. Here’s why you should outsource:
It’s Cost-Friendly
When you’re running a startup, every dollar matters. Outsourcing accounting allows you to only pay for the services you actually need—nothing more, nothing less. If you don’t have enough bookkeeping or accounting work to justify hiring someone full-time, outsourcing becomes the perfect solution.
For example, you can start with basic bookkeeping services and scale up as your business grows to include financial forecasting, tax planning, or CFO services.
Getting Tips from the Pros
Startups grow quickly when they have access to the right talent—but hiring top-tier talent full-time isn’t always in the budget. That’s where outsourcing is helpful.
By outsourcing, you gain access to highly skilled financial professionals without having to cover the cost of their full-time salary and benefits. You’ll only pay for what you need, and since these professionals often work with multiple startups, they bring a broader perspective and understanding of the unique financial challenges startups face.
Preparing you for Funding
If you’re a startup, there’s a good chance you’ll need to raise capital at some point. And here’s the hard truth: investors won’t take you seriously if your financial records are messy or inconsistent.
Outsourcing to an experienced accounting firm ensures you have accurate financial statements that can withstand even the toughest investor scrutiny. In addition, these firms can also guide you through the fundraising process.
For example, they can analyze your burn rate and help you determine how much capital you need to raise. They might also provide a business valuation so you have a clear picture of your company’s worth. These insights are invaluable and can significantly impact your business operations.
Final Thoughts
Managing everything in-house, especially your accounting, can be like our baked cake. Outsourcing gives you the right expertise so you can properly manage your finances. And the best part is you don’t have to open a new tab to look for such expertise.
Tangent Consulting has years of experience as a fractional CFO, business coach, and tax consultant. With us, you don’t need to hire an accountant or business coach separately; you can get both in one place.
P.S. If you are reading this, it means you can have access to our free consultation for your business. Avail this for free today before we change our mind 😉
FAQs
How much do outsourced accounting services cost?
The cost of outsourced accounting services depends on your needs and typically ranges from $500 to $5,000 per month.
How can outsourced help manage cash flow?
Outsourced accounting can keep track of income and expenses, provide cash flow forecasts, and implement strategies to optimize payment cycles. So you can maintain a healthy cash flow.
What are outsourced CFO services?
Outsourced CFO services provide strategic financial guidance, such as budgeting, forecasting, financial analysis, and fundraising support, without the cost of a full-time CFO.
