The decisions that you make about your financial due diligence can make or break your high tech startup. One of the first decisions you must make is the expertise you will have presiding over your finances. Do you need an accountant or a CPA? Here we will go over the differences between the two so that you can make an informed decision about the future of your company.
What kind of financial professional works best with high tech startups?
High growth companies in general need the best financial professionals they can get, and that would be the CPA. The major difference between a CPA and an accountant is that the CPA is certified while the accountant is not. The certification allows the CPA to legally create an audited financial statement like an income statement or a balance sheet. Accountants cannot legally do this.
Just because CPAs can do more does not mean that you need them. An accountant may be just fine for a startup business that is just beginning its journey. All that a startup company really needs is a professional to keep up with the base numbers, i.e., a bookkeeper. The accountant is a step up from the bookkeeper, giving a business the leverage that it needs to interpret financials to make strategic decisions for the future.
When to move up to a CPA
If your business scales as it should, then you will definitely have need of a CPA at some point. The CPA will provide the strategic interpretations of your financials needed to move a company forward. Basically, if your company is big enough to warrant a CFO position, then you should likely look to a CPA for your financials.
When your company has to start thinking about investments and investor structure, insurance, capital financing and banking, a CFO who is also a CPA becomes a necessity. Finances at this point are just as much a matter of knowing the rules, talking to regulators and working a system as it is about knowing accounting basics.
Finding the right person for the job
This comes straight from the Crush the CPA Exam post and it’s clear there are a range of accounting designations to keep in mind when hiring. However in order to find the right person for an accountant or a CPA position, you need someone who not only has the necessary skills but also shares the value set of your company. Because doing the financials is no longer a back end function hidden from the rest of society, your company can only grow if you fill this position holistically.
When it comes to the high tech startup, make sure that you weigh the balance between price and value when you are choosing between an accountant or CPA. Recognize that you will probably have to pay for a higher skill set as your business expands in order to keep up with this extremely fast-moving industry. The investment will be well worth it, however, if you invest in someone who knows how to keep you out of trouble and free up money for your future development efforts.