/accounting

name: accounting
description: "Use this skill when the user needs to set up bookkeeping, track revenue and expenses, prepare for taxes, choose accounting software, understand SaaS revenue recognition, or manage the financial operations of their bootstrapped business. Covers bookkeeping setup, tax preparation, accounting tools, and financial hygiene for solo founders."

Accounting & Bookkeeping

Messy books cost you money in taxes, missed deductions, and accountant fees. This skill helps you set up clean financial tracking from day one — 30 minutes a week keeps you legal, informed, and out of trouble.

Core Principles

• Bookkeeping is not optional. Messy books cost you money in taxes, missed deductions, and accountant fees.
• Separate business and personal finances completely. Day one. No exceptions.
• SaaS revenue recognition has rules. Stripe payments are not the same as "revenue" for accounting purposes.
• You don't need a full-time accountant until $50k+ ARR. But you do need a system from day one.
• 30 minutes a week keeps your books clean. 30 hours in April fixes what you ignored all year.

Getting Started: Financial Foundation

Day 1 Checklist

Before your first dollar of revenue:
- [ ] Open a separate business bank account (checking)
- [ ] Get a business credit card (or dedicated personal card for business only)
- [ ] Set up accounting software (see recommendations below)
- [ ] Create a simple chart of accounts
- [ ] Set up Stripe (or payment processor) to deposit to business account
- [ ] Save a folder for receipts (digital — Google Drive, Dropbox, or in your accounting tool)
- [ ] Note your fiscal year start date (usually Jan 1 for calendar year)

Separate Your Finances

**Why it matters:**

• Legal protection (LLC/corp separation requires it)
• Tax deductions are easy to prove with clean records
• Makes tax prep 10x faster and cheaper
• Investors and lenders need clean books

**How:**

• Business bank account (Mercury, Relay, or any bank with no/low fees)
• Business credit card (Ramp, Brex, or a separate personal card dedicated to business)
• Never pay personal expenses from business accounts
• Never pay business expenses from personal accounts
• If you must (emergency), document it as an owner draw/contribution

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Accounting Software

Recommendations by Stage

| Stage | Tool | Cost | Why | |-------|------|------|-----| | Pre-revenue | Spreadsheet | Free | Don't over-invest before revenue | | $0-5k MRR | Wave | Free | Full accounting, free, good for solo | | $0-10k MRR | QuickBooks Self-Employed | $15/mo | Simple, widely supported by accountants | | $5k-50k MRR | QuickBooks Online | $30+/mo | Standard. Every accountant knows it | | $5k-50k MRR | Xero | $15+/mo | Clean UI, good for SaaS | | Any stage | Bench | $299+/mo | Done-for-you bookkeeping service |

**The short answer:** Start with Wave (free) or QuickBooks Online. Switch to QBO when you hire an accountant — it's what they all use.

Stripe + Accounting Integration

Connect Stripe to your accounting software to auto-import transactions:

• QuickBooks: Use the Stripe integration or Synder
• Xero: Use the Stripe integration
• Wave: Manual import via CSV (or use a connector like Zapier)

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Chart of Accounts (Simplified for SaaS)

Your chart of accounts is the list of categories for your money. Keep it simple:

REVENUE
  Subscription Revenue      (MRR from customers)
  One-Time Revenue          (setup fees, lifetime deals)

COST OF GOODS SOLD (COGS)
  Hosting & Infrastructure  (Vercel, Supabase, AWS, etc.)
  Payment Processing Fees   (Stripe fees, ~2.9% + $0.30)
  Third-Party APIs          (SendGrid, Twilio, OpenAI, etc.)

OPERATING EXPENSES
  Software & Tools          (GitHub, Figma, analytics, etc.)
  Marketing & Advertising   (Google Ads, sponsorships, etc.)
  Contractors & Freelancers (developers, designers, writers)
  Legal & Professional      (lawyer, accountant, registered agent)
  Domain & DNS              (domain registrar, Cloudflare)
  Office & Equipment        (computer, monitor, desk — if home office)
  Education & Training      (courses, books, conferences)
  Insurance                 (if applicable)
  Miscellaneous             (catch-all — keep this small)

OTHER
  Owner Draw / Distribution (money you take out for yourself)
  Owner Contribution        (money you put in from personal funds)

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Weekly Bookkeeping Routine

Spend 30 minutes every week. It prevents the year-end panic.

Weekly (pick a day, be consistent):
- [ ] Categorize new transactions in accounting software
- [ ] Upload receipts for any expense over $75
- [ ] Reconcile bank account (does your software match your bank?)
- [ ] Note any unusual transactions to ask your accountant about

Monthly (first week of each month):
- [ ] Review Profit & Loss statement
- [ ] Check: Is revenue matching what Stripe shows?
- [ ] Check: Are expenses categorized correctly?
- [ ] Review cash balance — how many months of runway do you have?
- [ ] Set aside estimated tax payment (see Tax section)

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SaaS Revenue Recognition

The Basic Rule

Revenue is recognized when you deliver the service, not when you receive payment.

Example:
- Customer pays $1,200 for annual plan on March 1
- You DON'T book $1,200 as March revenue
- You book $100/month for 12 months (March through February)

Why: You owe them 12 months of service. Until delivered, it's "deferred revenue" (a liability).

When It Matters

• **Pre-$50k ARR:** Most bootstrapped founders use cash-basis accounting (revenue = when you get paid). This is simpler and fine for tax purposes.
• **Post-$50k ARR or seeking investment:** Switch to accrual-basis accounting with proper revenue recognition. Your accountant handles this.
• **Lifetime deals:** Recognize over the expected customer lifetime (usually 3-5 years).

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Taxes

Estimated Tax Payments (US)

If you expect to owe $1,000+ in taxes, the IRS wants quarterly estim