Access to information is becoming more and more ubiquitous. By this I mean that information is found everywhere and anywhere at a moment’s notice. The entrepreneurs building startups rely on getting instant updates on almost every aspect of their business. From operations to marketing strategies to updates on development, staying current on the state of the startup ensures the entrepreneurs behind it will meet their intended impact while also generating revenue (startups are businesses after all).
However, more often than not, this moment’s notice lags when it comes to updates on perhaps one of the most touchy aspects of any business: its finances. But why does accounting traditionally take so much longer to provide access to crucial financial information, anyway?
This Is Certain
I don’t have a good answer to this question. And more importantly, as the founder and CEO of a new kind of firm which focuses on intentionally doing accounting differently, I recognize that our model proposes a solution to this lag when accessing financial reports. I also recognize that perhaps having this lag at all (especially expecting this lag in accessing financial insight as most entrepreneurs do) is why most startups avoid paying for a real or full-time accountant.
However, programs such as QuickBooks that allows your company to manage your own finances present their own lags in accessing financial information over time. These programs may offer a strong starting point for your bookkeeping needs, but they often become slow, lack direct professional support, and fail to generate the key reports needed to track your financial growth. In other words, not only do these programs take time away from someone on your team, but they also deny depth to the crucial details of your accounting which nourish the growth of your business.
Similarly, where a part-time bookkeeper can fulfill your startup’s everyday financial needs, bookkeepers generally have limited knowledge of only one or two Quickbooks-like programs, and are not fluent in the ins and outs of accounting beyond these tools. Where the bookkeeper may expedite accessing the status of your accounts and tax season preparations, they fail to fulfill all the financial needs of your venture and don’t support some of the more intricate components of your financial circumstances.
In other words, any money saved up front by using a do-it-yourself program or onboarding a bookkeeper is a cost to the return on investing in your finances (and yes, putting money toward managing your finances is an investment) and worsens the initial lag as the company grows (when it is increasingly more important that financial information is as ubiquitous as the rest).
Startups Have Unique Financial Needs
I know you’re probably asking yourself by now: but what if I get a really, really good bookkeeper to support my startup and handle my financials?
Believe it or not, here is the short answer. Startups, although as they generally have fewer transactions, tend to have more complicated accounting than even the most talented bookkeeper can handle on their own. This isn’t an excuse, but one of the challenges of launching any venture.
Most startups have to deal with more than just tracking spending and revenue, including:
- The type of tax structure it should have
- Figuring out the kinds of accounts needed
- Setting up the accounts— all of them
- How to account for investors in their financials (ever been asked for a cap table?)
- Starting a payroll system from scratch
- What kind of agreements their business needs, if any (and what kind of lawyers this entails)
- All the scary tax return questions and due dates that can absolutely not be messed up because they are unforgiving
- Preparing for tax season so it’s hopefully less of a cluster than the last one
- Figuring out how the startup is even doing financially (more commonly heard through cupped hands as they “are we still afloat?” call)
- What equipment and resources will propel success, and equally as important, which of these are tax write-offs
- How can we track revenue? (We can coach you on MRR, NRR, ASC 606, etc.)
This list only continues from here. And if a startup doesn’t address all of these things when launching, they only get increasingly expensive to fix later. The best practice is for you to seek financial help from a trusted firm right away, one that recognizes and curates their accounting approach to your company. But most entrepreneurs don’t know where to find a reliable accounting firm that they can afford and who also wants to see them succeed.
Startups’ Success Is Our Specialty
Part of why I founded High Rock Accounting was because I love the entrepreneurship community and the humans within it. I love the energy which surrounds launching a venture and the creativity that goes into innovating solutions to problems we face every day. In fact, you don’t even have to talk about your financials with us. If you have an amazing idea that you just need to share with someone, please, call us for that too!
At High Rock, our approach makes your financials available in a moment’s notice, just like every other aspect of your startup. We recognize how convenient it is to pull up current financial data on your phone or iPad when meeting with your potential investors or bankers (we like doing that too!). And, even if just for peace of mind, we realize the importance in having immediate access to the most current reports on your financials and budget (yes, budgets! I know that’s something most startups talk about but never actually do. We can help you with that, too, if you’d like).
So that’s what we do! We ensure that knowledge about the data surrounding your startup’s accounting, like every other aspect of your business, is ubiquitous.
How We Shorten the Lag
The short answer, High Rock can do all this for the startups we work with because just like them, we were a startup. My career didn’t begin with launching a new kind of accounting firm. My first job was as an accountant for one of those big-name, big-business firms. Sure, I learned a lot there, but the longer I stayed, the more I found myself uncovering problems within the industry.
The work obliged long hours. The firm’s demands were high. And I wanted to have a life outside of work. So I found myself dedicating more and more time to automating my more grueling tasks. You see, I am the special kind of lazy that will spend a ton of time up front to automate something if it means I never have to do it manually again.
Technology was my solution. I just always believed that computers could do anything I wanted them to do if I spent enough time figuring out a way to do it. I thank my sister for this somewhat stubborn, “just keep working on it until you make it happen” attitude. She is an exceptionally tech-savvy powerhouse of a woman who I am pretty sure started programming when she was still in the crib. No joke. When we were kids, she taught me how to program simple computer games. I was terrible at it, but I was determined to do it and learned a lot in the process.
Fast forward to my first accounting job. At 20 years old, I was still carrying that “make it happen” attitude I had adopted from my sister. Working in taxes, to say that the tax practice was very old school would be an understatement. Most of my work required printing hard copies, hand referencing them, then retyping the same information, sometimes multiple times, into a spreadsheet or a tax program before I could submit them to be reviewed.
So, here I was, thinking, “this is ridiculous. Why am I wasting billable hours typing stuff into excel, printing it out, handwriting a bunch of stuff, then going back and typing it into the tax system? There has to be a way to fix this!”
I started to write a bot that could pull the information from the PDF into Excel and then import the excel into the tax program. Like all good things, it took some—well, actually a lot of— time. I ran this in the background and made my job way more efficient. However, I thought if anyone found out that I would be in trouble for this but the firm I was with at the time ended up implementing it across the country (which was pretty cool).
It Just Makes Sense
Fast forward even further to 2013 and nothing has really changed. I was a decade or so into my career, thinking I could run a firm better than this. Yes, I realize how arrogant that sounds, but I think all entrepreneurs have to be slightly arrogant to actually launch their venture. But I had a vision, one where CPAs actually enjoyed accounting. It sounds crazy, right?
The way firms are traditionally run is grueling. They push service based work and charge hourly, which leads to overworked employees and creates this adversarial relationship with clients. This is frustrating to everyone, but especially startups and small businesses who then can’t comfortably afford to outsource their accounting to financial experts like their business needs (there is an irony somewhere in here, I’m sure).
With this thought, I quit my job, attended the CPA Leadership Academy and launched High Rock. Not fully recognizing it’s potential, I decided to do something unheard of and probably even more arrogant in accounting, but just seemed to make sense to an ever-evolving electronic world: I went paperless. I created a firm that kept all of its clients to the cloud and developed automated systems which streamlined the labor process. This approach saved time and led to accurate numbers the first time, which led to little need for correction come tax time. The people who helped make up the firm were happy to be there, and the clients we helped were outwardly excited to work with us.
As far as I know, accounting wasn’t like this anywhere else, especially not in 2013 when I founded High Rock. At the time, no other firms were on the cloud (well, not nobody. Only about 10 percent of firms at this point were using cloud-based technology at all though). This offered huge potential for High Rock to disrupt the old-school public accounting industry. Even today, only 58 percent of large firms use cloud-based programs, but even this number fails to represent how many of them exclusively rely on cloud-based technology. Even now, the industry continues to rely heavily on the old school approach which only benefits the firm.
What I unleashed by introducing an exclusively cloud-based firm was one which entrepreneurs could both afford and trust. We offer comparatively instant information on all our clients’ accounting while nurturing client-centered relationships. Our accountants are happy, even during tax season. And our clients generate more revenue than they thought they had the financial bandwidth for because we have more time to dedicate to ensuring their success. Even now, it’s crazy and surreal to see the potential we have to continue to disrupt the public accounting industry. And what I find even crazier is that we are still one of the few firms which are fully cloud-based, actively seeking to work with startups and striving to meet the expectation that accounting is as ubiquitous as all other business information.
This post has been adapted from Why Startups Love Us originally published on our blog in 2015.