Choosing a CA / CPA firm

Choosing your CA or CPA firm is not the most important task you have as a startup leader, but it’s important to surround yourself with the right professionals. As your company matures and you are able to add debt to your financing mix, and as you prepare for exit – you need a solid professional accounting firm behind you.

Much like law firms, you can start off with a sole practitioner / solo professional, but it is inevitable that you will end up with a bigger firm that has some specialization in hi-tech and with financing / exit transactions. On the law side, that should happen before you raise your 1st money. It can happen later on the accounting side.

Here’s my list of what a startup needs from its CA or CPA firm:

The fundamentals:

– Financials: Either reviewed or audited (not having reviewed FS can be a barrier to getting any kind of bank financing. Reviewed should be the minimum. Notice to Reader financials are not enough)

– Corporate tax returns, including SRED stuff in Canada. Don’t get your accounting firm to prepare the technical report for your R & D claim. It’s too expensive and they are too conservative.

– Sales tax compliance in your home country, state, province

– Confirm you are fully compliant with payroll taxes

– Founder tax planning

– Ability to advise as needed (usually not very much) on future financing transactions

– Knowledge of and ability to ensure you comply with revenue recognition rules (particularly SOP-97-2 and 98-1). If you are a Canadian startup, these are US software standards and not absolutely required under Canadian GAAP, but in my experience this can slow down an M & A deal as a US buyer tries to figure out your revenues according to the way they measure them. Best to just measure the same way from day 1.


– US sales tax compliance:Again, if you are a Canadian startup, if you pretty much set foot in California on behalf of your company you likely have a “nexus” problem there (requiring you to charge tax to customers there). You need advice on when and how you need to collect sales taxes in the U.S.

– Transfer pricing: If and when you have foreign investor, you may have subsidiary in that country. Your CA / CPA firm can help with optimizing the flow of money and minimization of taxes between the two entities.

The most important thing for me is that you work with someone with prior relevant experience, who wants your business and treats you as a very high priority and who is affordable. Does the partner and firm have a consistent history of working with the startup community? All professional service providers need to take a lifetime approach to their billings – discounting their services early on.