Business Accounting FAQs

There are many questions that arise when running your business, especially around managing finances and accounting matters. Through our work with various types of companies across many industries, our team of experts put together these outsourced and business accounting frequently asked questions to help you find a solution. This FAQ page covers topics relating to outsourced accounting software, dashboards and KPIs, monthly close items and other business accounting scenarios.


Select which area you may have questions for additional information.

Business Cash Flow FAQs

1. Why “Cash is King?”

Cash drives your business operations, and it is critical to growth. Without sufficient cash, you will not be able to pay employees’ salaries; fund marketing and sales programs, acquire and retain customers; purchase equipment and facilities and other day-to-day activities. Business cash flow is a key factor in its potential for long-term success. A business with substantial revenue can easily fail if it is unable to generate cash.

2. Cash-how much should you keep in your business?

Depends on how much cash your company needs to operate, but you will need to create cash forecast that is based on historical and projected business activities and to effectively plan, you will need to utilize cash-flow management to determine how much cash you will need to keep in the business.

A good an effective cash flow management gives you the right amount of cash on hand to fund business expenses. Every business situation is different, but typically, cash flow level should be about 3-6 months of operating expenses. Things to have in mind when determining an optimal cash flow level are:

  • Historical cash usage?
  • What stage is your business in?
  • Planned cash usages.
  • Leadtime between raising funds and when to seek more funds.

For more information on business cash flow, contact our OASyS Team. FAQs

1. Why are some bills/invoices not showing up in from QuickBooks Online?

You must make sure you have set your sync preferences (unallocated expense, unallocated income, bank account GL, etc.). Only unpaid bills and invoices will sync from QuickBooks online to does not sync past paid or partially paid bills or invoices. If multi-currency is not enabled in, only USD currency is supported on bills by; bills and invoices in other currencies will not sync to Only USD currency is supported on receivables invoices by; invoices in other currencies will not sync to Bill and invoice numbers are required in order to sync from QuickBooks Online into Multi-currency preference in QBO must be turned on for international payments. This will let you manage the currencies in QBO and sync those currency vendors and bills to Bills that are $0 will not sync from to QBO.

2. Why do the sync errors occur?

It may occur when a payment is trying to sync from to QuickBooks for Windows, but the bill has a payment already applied in QuickBooks (status “Paid”), or when the sync cannot locate the bill in QuickBooks. It may occur when a bill or invoice is trying to sync to QuickBooks Online (QBO), but a list item on the bill or invoice has been deleted in QBO or, or the sync connection between the two has been broken. This can be related to any item on the bill or invoice such as accounts, items, classes, customers, vendors or the invoice/bill itself. It may occur when a bill or payment update is trying to sync but it is dated on or before the closing date in QuickBooks. When a Close Date and Password are set in QuickBooks, the password is required for changes that alter the balances for the closed accounting period.

For more information on, contact our OASyS Team.

Dashboard and KPI FAQs

1. Which Dashboards/KPIs (Key Performance Indicators) should a company use?

There is no one size fits all when it comes to financial dashboards and KPIs. Dashboards and KPIs need to be curated based on the user and their goals. A well thought out dashboard and KPIs enables leadership to make confident, smart and timely decisions supported with meaningful information. A brainstorming session with the key stakeholders and/or users in determining the meaningful dashboards/KPIs is extremely important first step.

2. What are the important KPIs to track for startups looking to raise funding?

Some of the important KPIs investors generally look at closely in analyzing their investment decisions are Earnings Before Interest, Tax, Debt and Amortization (EBITDA), Monthly Cash burn rate, Cost of acquiring customers (CAC), Customer Retention Rate and Revenue Growth. Depending on the industry you are in, there are additional KPIs that are key. Being able to track these KPIs requires a sound investment in systems and processes.

If there is a question that you have that is not on this list, please feel free to reach out to our OASyS Team for more information.

Financing FAQs

How should convertible note financing be handled on the balance sheet?

  • A convertible note should be classified as a Long Term Liability that then converts to Equity as stipulated from the contract (usually a new fundraising round).
  • If there’s a $3,027,000 note with $181,620 in total accrued interest, you’ll have the outstanding note as a liability, plus then you can add another line with the accrued interest. You could consolidate these for presentation purposes, but it’s often easiest to look at them broken out.
  • Remember, the balance sheet is trying to balance the assets against the liabilities + equity. So the cash coming in from your convertible note will generally equate to the liability that you add to the balance sheet. And, if your accounting is doing a good job, the accrued interest is a non-cash expense that flows through your income statement and impacts your accumulated net income in the equity section.

What to expect in a Due Diligence Check List

  1. Common Financial Diligence Items
  2. Past 3-year financial statements (income statement, balance sheet, cash flow)
  3. Booking’s history (if it applies to your startup)
  4. 3-to-5-year projections, usually by month (cash position is an important item)
  5. Top 10 client invoices and contracts (only matters for b2b companies)
  6. Material contracts with vendors/suppliers
  7. CAC (customer acquisition costs)
  8. Customer LTV
  9. Customer churn rate (assuming this applies to your startup)
  10. Common Tax Due Diligence Items
  11. Past 3 years Federal tax returns
  12. Past 3 years State tax returns
  13. Any correspondence with tax authorities
  14. Last 2 409A valuations

Most painful common mistakes made during this process are:

  • CEOs who fail to clearly articulate how their financials and business metrics drive value usually solved by a clear financial model and clean historical financials that the CEO understands.
  • Incorrect/poor bookkeeping – VCs do not expect historical financials to change dramatically during a fund raise, which can happen if you haven’t done a good job keeping and closing your books.
  • Failure to file tax returns – an angel or seed investor may not notice, but by the time you are raising a big round from a professional investor, you bet they are going to ask for tax returns. And if you’ve “forgotten” to file them, the IRS penalties can be steep. No VC wants to invest money into a startup that is going to immediately go out the door to the IRS, and VCs can and will delay the close of an investment for this to get figured out.

For more information on convertible note financing, contact our OASyS Team.

General Ledger Software FAQs

1. What to consider when selecting or upgrading your business general ledger software?

The general ledger is an essential feature included in an efficient accounting software that serves as a source for all financial data. When selecting a general ledger software for your business, consider the following:

  • A software that will suit your business based on the size of your business.
  • Compare and read the customer ratings and review before making your final decision. If there are no ratings provided ask the software company for referrals.
  • Compare monthly versus annual costs as well as costs per transactions (if applicable). Some software is based on monthly subscriptions, and some can be purchased/downloaded to your desktop.
  • Syncing your software to other apps can be essential for some business. For instance, payroll, A/P, and benefit apps.

2. Which general ledger software is the most user friendly for a small business or startup?

For small businesses and startups, QuickBooks has been the leading accounting software. The two types of software offered, desktop and online, are different but both are very user friendly. QuickBooks also integrates with most banks where it downloads the bank feeds, allowing users to generate rules so that QuickBooks can post the transactions automatically. In addition, QuickBooks also integrates with many applications that will either automate the data entry or provide a paperless solution for your business. Software such as, Gusto, Expensify, and Fathom.

3. When do you know it is a time to upgrade your general ledger software?

Part of the goals of many businesses is to have an efficient process and procedure. However, the focus is often on running the business and making a profit, leaving process and procedure for a project down the line. In many cases, businesses will utilize different applications that may or may not integrate with the main accounting software program as a solution to manage the needs of running the business. If your general ledger software has problems producing essential reports rapidly, and you find that the reports you need have to be created manually on another application, then it’s time to upgrade.

4. How much should a startup business spend on accounting software?

It depends on the type of business. A General Ledger software package can range between $15 and $1500.00 per month. If your company is a Non-Profit, you can join a third-party Non-Profit community and benefit from highly discounted subscriptions for software such as QuickBooks Online. The type and size of the business, the desired features, and cost will impact the final decision.

5. Cloud-Based or Locally Installed GL Software?

If cost is not the deciding factor for selecting a cloud-based versus a locally installed software, considering an accounting software could be based on preference and how many individuals need to access it. A Cloud-Based software offers mobility, flexibility for multiple users who may need to access it at the same time, and it is accessible from most browsers and popular devices. During the pandemic, many have found cloud-based software to be essential to continue to monitor their business.

For locally installed software, there is usually a single access within the computer network where the software is installed. It may have the option of multi-installations so that the same company file can be accessed by multiple employees at the same time.

Although cloud-based is easily accessible and is the popular option, some companies prefer the locally installed software, thinking that security may be better. However, that’s not necessarily the case.

6. Is it important to set up closing dates in your accounting software?

Yes. It can prevent changes to previously issued financials. By setting up closing dates after issuing financials, it can also prevent discrepancies.

For more information on General Ledger, contact our OASyS Team.

Monthly Close FAQs

1. Is a company required to close its books on a monthly basis?

There are no legal requirements, however it is a best place to do so. Closing the books provides the owner of a startup or any entity a “Monday Morning Quarterback” review of what transpired during the previous month. The results of the close might provide the preparer a trend that requires immediate action.

2. How long does a monthly close take?

It depends on the size and scope of your operations and the number of accounting staff. The time to complete your close is also dependent on the number of monthly transactions and whether or not you take advantage of automation to import data into your financial system or need to prepare and enter manual journal entries.

3. What tools do you need to perform a monthly close?

Many economical easy to use accounting systems are available by subscription (i.e. QuickBooks Online and Zero). They come with a pre-populated chart of accounts which can easily be adapted to a company’s industry or organization structure.

4. What are some of the major activities involved in a monthly close?

Monthly close activities include:

  • Reconciliations of Asset, Liability and Equity accounts: Many accounting systems provide built in reconciliation tools to assist in these activities. Equity tracking tools can be procured separately and integrated by journal entry into the primary book of record.
  • Running of comparative financial and actual vs. budget reports: These reports provide the preparer an opportunity to analyze current operations and determine if there are trends that require adjustment to a company’s forecast.
  • Preparation of Statement of Cash Flows: This is a great tool to know where your cash is being utilized and can be used to determine if there are cash low issues that need to be addressed by reduced spending or need for additional debt or capital financing.
  • Distribution of financial statement to members of management, shareholders and stakeholders (Bakes and Regulatory authorities as determined by agreement or law).

5. How do I organize my work?

Set up a monthly reporting structure that is easy for others to follow. For example:

  • Financials Year
    • Month
      • Reconciliations
        • Assets
        • Liabilities
        • Equity
      • Financial Statements

For more information on Monthly Close, contact our OASyS Team.

New Business Bank Account FAQs

During the startup of a new business, one of the main items that need to be done is the setup of the business bank accounts. Keeping cash transactions segregated in a bank account owned by the business is essential to quality record keeping.

Below is the information the banking institutions will need to open a business bank account:

  • Full business/entity name as registered with IRS 
  • Business address as stated on IRS Acknowledgement Letter 
  • Business/entity phone 
  • Business/entity email address 
  • Business/entity website 
  • Business/entity tax ID number – (provided a Copy of IRS SS-4 Acknowledgement Letter) 
  • Business date of formation 
  • State of formation 
  • Estimated annual revenue 
  • Business activities 
  • Source of funds 
  • Purpose of bank account
  • Beneficial ownership form - Government issued ID for all individuals to be listed on this  form  as well as email, phone #,  date of birth, social security #
  • Corporate authority documents (account authorization letter, articles of incorporation, and by-laws) 
  • Name, title, and government issued ID for the signers on the account resolution
  • Name, title, email and phone # along with a copy of government issued ID for the signers on the signature card  

The Account Resolution and Authorization Letter – This is a document and or letter stating that any one individual named  (a “Designated Representative”) is authorized to open accounts on behalf of the Entity, to close any account or obtain information on any account, enter into an agreement for cash management services, lease a safe deposit box, enter into an agreement for deposit access devices, enter into an agreement for credit cards, enter into an agreement relating to foreign exchange or enter into any other agreements regarding an account of the Entity. 

A Beneficial Ownership Form – The beneficial owner does not need to be the person completing and certifying this form. Please provide a government-issued ID and email address for all individuals named on this document.  

Bank Signature Card – The Bank is authorized upon the signature of any one signer on a signature card to honor, pay and charge the account of the Entity, all checks, drafts, or other orders for payment, withdrawal, or transfer of money for whatever purpose and to whomever payable. 

For more information on new business bank accounts, contact our OASyS Team.

Tax Considerations FAQs

1. Which type of entity should I choose?

There are many factors to consider when choosing the entity type for your start-up and each has its own advantages and disadvantages. It is best to speak with both a lawyer and a CPA when making this decision. Changes in tax laws from year to year can have an effect on the best entity to choose for tax purposes.

2. Do I need to file a tax return?

The short answer is yes. If an entity has any activity during its fiscal year this activity should be reported to the IRS, often in the case of start-ups the activity results in a loss that can be used in the future to offset taxable income. A CPA will help you to file all appropriate forms and to claim all appropriate credits and deductions.

3. I am selling widgets/SaaS all over the United States, do I have to pay/file sales tax?

As is the case with most tax questions the answer here is it depends. The sales tax laws have been changing dramatically over the past few years and enforcement is still catching up. The Wayfair decision, with its “economic presence” terminology has greatly expanded the sales tax nexus reach for most states. These taxes are an important factor for nearly all businesses and obtaining good advice is highly recommended to avoid tax liability exposure and penalties.

4. Why should I hire an accountant beyond preparing a tax return?

Accountants do much more than audit financial statements and prepare tax returns. The role of a CPA has been shifting to that of a business advisor who can help with many aspects of running a business from the regulatory compliance like income, excise, and sales taxes to providing referrals from everything from legal, insurance, payroll, benefits, human resources, banking, real estate and even where to get a decent meal. Working with an accountant as a consultant rather than the traditional tax return or financial statement engagement allows them to know and understand your business on a deeper day-to-day level and to offer solutions or improvements to your processes or current service providers in an effort to achieve your business goals as well as provide accurate, timely, and actionable financial data that helps management make informed business decisions.

5. Can a Tax Exempt Not -For-Profit Organization have a Tax Bill?

The answer is YES. If an NFP, tax-exempt organization regularly carries on a trade or business that is not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to a tax on its income from that unrelated trade or business (Unrelated Business Income Tax or UBIT). To obtain and maintain tax-exempt status, an NFP must adhere to the mission identified in its original tax exempt filing with the IRS. However, federal tax law permits an NFP to engage in a certain amount of income-producing activity that is unrelated to its exempt purpose. It is important to understand that an entity’s purpose is different than its activities. The entity’s purpose is the reason why the organization exists and its basis for qualification as a tax-exempt entity. Activities are the organization’s actions and undertakings. Unrelated Business Income consists of income generated by the nonprofit organization from activities that are not related to the exempt mission of the entity.

Income from an activity is considered unrelated if all three of the conditions listed below are met:

  1. The activity is conducted as a trade or business
  2. Regularly carried on
  3. Not substantially related to the organization’s exempt purposes.

6. What are some other activities that are likely taxable?

  • Consulting services, Job listing services, retail, food service, job training, community improvement, member categories in associations that essentially trade dues for marketing benefits and the sale of clothing and logoed merchandise.
  • NFPs can lose their tax-exempt status if the IRS determines that the percentage of their income that is from business activities unrelated to their specific exempt purposes is excessive. There is, however, no specific percentage of unrelated business income defined by the IRS as too large a percentage. The facts and circumstances of each unrelated business income situation would be considered. The tax code has many exceptions and rules that need to be considered in this matter. Determining whether or not the income from an activity is taxable can be difficult. The advice of a CPA is recommended.

For more information on tax consideration, contact our Tax Team.

Contact Us

For more information on this topic, please contact a member of Withum’s Outsourced Accounting Systems and Services Team.