Bookkeeping Cleanup: When to Fire Your Current Bookkeeper
Collated by Aparna Devalla, CPA
Curated by Rubric Financial
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The Six Warning Signs
- 1. MONTHLY CLOSE TAKES >10 BUSINESS DAYS. A healthy startup close hits books by day 5 (very early stage) or day 7 (Series A+). If your books are still 'pending' on day 12-15, you're operating on stale numbers, and board packs are out of date by the time they're sent.
- 2. RECONCILIATIONS ARE BEHIND. Bank rec, credit card rec, payroll rec: each should be done within 3 days of statement availability. If you find unreconciled items from 60+ days ago, you're carrying audit and diligence risk.
- 3. NO ASC 606 REVENUE RECOGNITION POLICY. If your bookkeeper records revenue when invoiced or when cash hits, instead of per ASC 606 (over the service period for subscription, per-event for usage), your revenue is wrong and your deferred revenue isn't tracked.
- 4. NO ACCRUALS FOR ACCRUED EXPENSES. Wages earned but not yet paid? Vendor bills received but not yet entered? Software annual prepayments not amortized? These accruals are GAAP-required and indicate a cash-basis-only operation that won't survive Series A diligence.
- 5. YOU DON'T GET MONTHLY FINANCIAL STATEMENTS WITH COMMENTARY. A good bookkeeper sends you a P&L, balance sheet, and cash flow statement WITH 3-5 bullets of context: what changed, what's a variance from prior month, what to watch. If you're just getting raw exports, you're paying for transactions, not for finance.
- 6. THEY DON'T KNOW WHAT QSBS OR §41 IS. Tax-naive bookkeepers cost startups six figures by missing R&D credit opportunities, mis-classifying expenses, or running founder comp in ways that blow QSBS eligibility. Startup-specialist bookkeepers come standard with this knowledge.
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Why annual SaaS contracts create a liability on your balance sheet, and what investors look for in your deferred revenue.
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