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Scene-Setting: The Startup Numbers Game
Picture this: You’ve just launched your startup, you’re gaining momentum, maybe you’ve got a few investors on board, and suddenly you realize – it’s not just about selling or building. The real test?
Building a financial foundation that keeps your business steady, fundable, and audit-ready.
That’s where experts like Johnnie Walker, director at Rooled and a veteran in outsourced accounting and CFO services for growing tech companies, come in.
About Johnnie Walker & Rooled
Walker’s journey spans advising tech ventures, leading sales at inDinero, and teaching impact investing at NYU. These days at Rooled, he’s immersed in helping startups of every size – from scrappy beginnings to companies clocking $500M+ in revenue – navigate finance. Rooled specializes in tailored CFO advisory and accounting for fast-moving, high-growth organizations.
Lately, they’ve been experimenting with innovative accounting platforms like Puzzle, Pilot, and more, always seeking what works best for startups.
Laying the Financial Freedom
- Bank Accounts: Separate Church and State
- Open a dedicated business bank account right away, even if it’s initially funded from your own pocket. Avoid mixing personal and business cash, not just for tax reasons but because it simplifies operations and builds real company credibility.
- Bank Choices: The big names like Chase and Bank of America work, but offer minimal advice. Mercury is a favorite for startups, with features designed for founders; HSBC shines in later stages. SVB is rebuilding post-crisis, keep an eye on them.
- Expense Tracking: IRS-Proof Your Startup
- Always keep receipts for any purchase over $75 – the IRS can ask for proof, and you’ll want to be ready.
- Expense platforms like Ramp and Mercury make this easy, helping document and categorize spending automatically.
- Use separate cards and accounts for every business transaction.
- Tax Compliance: File or Risk Major Penalties
- Even if you’re loss-making, file your company’s tax returns – deadlines and forms depend on your structure and location.
- C Corps must file by April 15 and pay Delaware franchise tax if incorporated there.
- International founders: If anyone with >25% of your company is not a US citizen, missing required filings can result in severe penalties.
- Single-member LLCs: Income passes through to your personal return.
Picking Your Tech Stack: Accounting Platforms
- QuickBooks: Dominates the US market (78% share), and is preferred by nearly every accountant. Seamless, familiar, portable data.
- Xero: Popular in Europe, but less supported stateside.
- Avoid proprietary-ledger platforms – data lock-in can hurt when you outgrow them.
- Emerging players:
- Puzzle: Free up to $5K/month expenses, affordable, great automation, dashboards, and solid transaction categorization. Caveat: has its own ledger, but it’s improving fast.
- Pilot: Uses QuickBooks or NetSuite as the backend, delivers full-service (including taxes), blends tech with real accountants.
Rule of thumb: Pick platforms that prioritize data portability and ease of hand-off as you scale.
Cash Basis or Accrual? Don’t Overcomplicate Early
Start on a cash basis: it’s simpler, and for pre-scale startups, totally adequate. Move on to accrual when investors or board requirements demand more granularity.
Forecasting & Fundraising: Two Models You Need
- Fundraising Forecast: Big-picture projections designed to sell your story – focus on the growth narrative, connect numbers to real-world drivers (customer growth, market factors), and illustrate long-term vision.
- Cash Management Forecast: This is for survival – models your actual cash in vs. out, tracks runway, and helps avoid running on empty. Update monthly, adjust as reality shifts.
Tip: Once you secure outside funding, these forecasts merge into a single full-blown financial model for board reporting and future planning – but you don’t need an insane level of detail until then.
Scaling Up: When to Bring in Help
- You don’t need a finance expert on payroll on day one. Until seed/Series A, founders can do the basics which is track money, meet legal obligations, keep receipts, file taxes.
- The first finance hire, or fractional CFO, usually comes after raising a meaningful round. Make sure they have startup experience. Traditional corporate CFOs often miss the startup tempo and demands.
- After fundraising, solid treasury management is key:
- Park excess cash in money market accounts (current yields around 4%), they’re safe and liquid.
- Avoid risky investments. Your goal is to preserve principal, not speculate with operating capital.
- Venture debt (SVB pioneered this) becomes relevant once you establish fundraising credibility; many banks will offer loans based on your fundraising track record.
- Keep finances housed with a blend of large, reputable banks and startup-centric ones.
Final Takeaways
- Keep It Simple and Separate: Set up the right accounts and tools early.
- File Everything: Tax compliance isn’t optional, regardless of profit or loss.
- Stay Flexible, but Precise: Use adaptable tools, keep data portable, and focus on what matters most: cash flow, runway, and compliance.
- Plan for Growth: Bring in professional finance help when you’ve got the runway, but until then, founders can (and should) own the basics.
“Don’t overcomplicate your early financials, but don’t wing it either," Walker said. "The right foundation gives you and your investors peace of mind.”
BONUS: Walker recommends his interview with Tom Wisniewski from New York Venture Partners – it condenses sharp advice on early-stage growth into just 20-25 minutes. Listen here.
