Today’s question comes from Wendy. How important is it to have an attorney or accountant as an early stage startup? Is this something you should be setting money aside from the beginning, pre-revenue, to fill these roles?
As an early stage startup, it’s hard to justify setting money aside for anything that won’t help you gain traction or customers. But let’s talk about how you should think about the role of accountants and attorneys during the early days.
Here at Launchpeer, we only hired an attorney once we got big enough where we felt we it was a necessity and we had the money and resources to do it comfortably. Before that, we only brought on attorneys when we needed them, for things such as filing an LLC, change incorporation status, terms and conditions created, etc (which are generally things you can even do yourself).
Having an attorney on staff is not necessary when you are just starting unless you are dealing with a lot of investor money and they require that you have one available.
The accounting side is a bit more complicated. When we first started, I was doing most of the accounting, sending invoices, etc. After about a year and half, we hired an accountant because we had so much money going in and out that I wanted more visibility into where all of the money was coming from and where it was going to. But we only did that once we had the money to pay for it.
However, when we did bring on an accountant, they looked through the books and it was a nightmare for them to get it all squared away. They spent a lot of time reconciling a lot of the mistakes I made. Though I wouldn’t have hired an accountant right away, if I could go back I would hire an accountant to teach me how to use Quickbooks and how to properly keep track of everything.
I also hired them to manage our accounting, projections, payroll, and taxes after we hit about $50k a month in recurring revenue. You have to determine what that amount is for your company, but set an amount where it makes sense to bring someone on to ensure transparency and an assist with all of your accounting and tax needs.
You don’t need an attorney or accountant on staff from the get-go, but do have the wherewithal to know when you need to bring them on.You don't need an attorney or accountant on staff from the get-go, but do have the wherewithal to know when you need to bring them on. Click To Tweet
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